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Virtual Power Purchase Agreement Market Size - By Buyer Type (Corporations, Utilities, Financial institutions, Government agencies), By Technology (Solar, Wind, Hydro, Biomass, Geothermal), By Project Size (Large-scale, Medium-scale, Small-scale) and By Region: Global Forecast, 2024 – 2033

  • PUBLISHED ON
  • 2024-01-05
  • NO OF PAGES
  • 243
  • CATEGORY
  • Energy & Power

Market Overview

Virtual Power Purchase Agreement Market Size is predicted to develop at a compound annual growth rate (CAGR) of 39.42% from 2024 to 2033, when it is projected to reach USD 421.23 billion, based on an average growth pattern. The market is estimated to reach a value of USD 53.1 billion in 2024.

 

SOURCE: We Market Research

A consumer commits to paying for a specific project's renewable energy output for a predetermined period of time under the terms of a Virtual Power Purchase Agreement (VPPA). However, rather than being based on the actual physical supply of electricity, financial payments are based on the difference between the agreed-upon price and the market price for electricity. VPPAs enable businesses to meet sustainability targets, support renewable energy initiatives, and safeguard themselves against energy price swings without really obtaining the electricity generated. These agreements facilitate the construction of renewable energy infrastructure while providing financial advantages to participating parties and mitigating their environmental impact.

The global Virtual Power Purchase Agreement Market is being driven by several significant reasons. First off, companies' increasing commitment to renewable energy, which helps them to meet their environmental goals, is what drives the need for VPPAs. Additionally, the declining costs of renewable energy technologies—particularly solar and wind—are making VPPAs more financially attractive. This industry is further propelled by government programs that encourage the usage of renewable energy. Additionally, businesses are forced to employ greener energy sources as a result of stakeholders and customers' growing environmental consciousness, which is fueling the VPPA market's rise. Collectively, these factors contribute to the rise of VPPAs as a major renewable energy procurement technique in global marketplaces.

Market Scope

Report Attributes

Description

Market Size in 2024

USD 53.1 billion

Market Forecast in 2033

USD 421.23 billion

CAGR % 2024-2033

39.42%

Base Year

2023

Historic Data

2016-2022

Forecast Period

2024-2033

Report USP

 

Production, Consumption, company share, company heatmap, company production capacity, growth factors and more

Segments Covered

By Buyer Type, By Technology, By Project Size and By Region

Key Driver

The decreasing costs of renewable energy technologies, especially solar and wind, have made VPPAs economically viable. Companies can secure fixed or competitive prices for renewable energy through long-term agreements, contributing to cost savings and budget predictability.

Supportive government policies, incentives, and regulations at the local, national, and international levels encourage the adoption of renewable energy. This can include tax credits, subsidies, and renewable energy targets that drive companies to explore VPPAs.

Advances in renewable energy technologies, energy storage, and grid management enhance the reliability and efficiency of renewable energy sources, making VPPAs more attractive to businesses seeking a stable and sustainable energy supply.

Regional Scope

North America, Europe, APAC, South America and Middle East and Africa

Country Scope

U.S.; Canada; U.K.; Germany; France; Italy; Spain; Benelux; Nordic Countries; Russia; China; India; Japan; South Korea; Australia; Indonesia; Thailand; Mexico; Brazil; Argentina; Saudi Arabia; UAE; Egypt; South Africa; Nigeria

Virtual Power Purchase Agreement Industry: Dynamics & Restrains

Market Drivers

Increase in renewable Energy Demand - The global virtual power purchase agreement market has grown as a result of the rising demand for renewable energy. The increase in VPPAs can be attributed to businesses striving for sustainability and carbon neutrality and their increased pursuit of renewable energy sources. These contracts promote the growth of clean energy projects by enabling organizations to buy renewable energy directly from producers. Engaging in VPPAs enables businesses worldwide to support long-term environmental goals and gain access to affordable renewable power. This increase in demand drives innovation and investment in renewable energy infrastructure while also encouraging environmental responsibility and the expansion of the VPPA industry.

Advancements in energy storage technologies - Technological developments in energy storage are driving the global virtual power purchase agreement market. By resolving intermittency issues, improved storage technologies provide a more seamless integration of renewable energy sources, such as solar and wind. Newer battery technologies provide a more dependable energy source, which is in line with the objective of VPPAs to guarantee a steady supply of renewable energy. These developments encourage purchasers to commit to long-term VPPAs by lowering costs, increasing efficiency, and ensuring a steady flow of clean energy. As energy storage technologies advance, more stakeholders are drawn to sustainable energy solutions by increasing the dependability and appeal of renewable energy sources, supporting the market's growth.

Market Restrains

Policy and Regulatory Uncertainty - The global virtual power purchase agreement (VPPA) market faces significant challenges due to policy and regulatory uncertainties. Renewable energy rules, subsidies, and incentives are fraught with risk for prospective buyers and sellers due to irregular or changing government policies. Due to unknown financial incentives or compliance challenges, unclear frameworks may discourage investments in renewable energy projects and impede long-term commitment to VPPAs. Businesses may find it difficult to establish and uphold these agreements in situations where policies are inconsistent across multiple domains or when abrupt changes in the legislation could compromise customer confidence. Clear and stable regulatory frameworks are essential to instill confidence and promote the broad use of VPPA for sustainable energy sourcing.

Virtual Power Purchase Agreement Segmentation

Market- By Buyer Type Analysis

By Buyer Type, the Virtual Power Purchase Agreement Market is Categories into Corporations, Utilities, Financial institutions, Government agencies. The Corporations segment accounts for the largest share of around 56% in 2022.


Corporations propel VPPA market growth by aligning with sustainability goals, securing stable energy costs, and enhancing brand reputation. They meet regulatory compliance while showcasing commitment to green initiatives. This strategic shift enables long-term financial planning and resonates with environmentally conscious stakeholders, fostering a sustainable energy landscape.

The following segments are part of an in-depth analysis of the Global Virtual Power Purchase Agreement Market:

Market Segments

 

By Technology

·         Solar

·         Wind

·         Hydro

·         Biomass

·         Geothermal

By Project Size

·         Large-scale

·         Medium-scale

·         Small-scale

Virtual Power Purchase Agreement Industry: Regional Analysis

Asia- Pacific Market Forecast

Asia- Pacific dominate the Virtual Power Purchase Agreement Market with the highest revenue generating market with share of more than 48%. Asia Pacific's largest share is being driven by China, India, and Japan's need for sustainable and renewable energy. The industry is further propelled by growing energy costs and government efforts that support expansion. The increased adoption of renewable energy procurement techniques by multinational corporations operating in the Asia-Pacific region is driving the need for VPPAs.


Europe Market Statistics

Europe is the second-largest region for Virtual Power Purchase Agreement market. Europe dominates the market due to mature regulatory frameworks and ambitious renewable energy targets. Germany, UK, and France lead the way, with innovative VPPA structures emerging. The corporate sector, in alignment with European commitments to sustainability, has aggressively pursued renewable energy sourcing, further amplifying the demand for VPPAs.

North America Market Forecasts

North America is expected to be the fastest-growing region for Virtual Power Purchase Agreement market during the forecast period. North America witnessing rapid adoption, particularly in the US, where corporate sustainability commitments and falling renewable energy costs are key drivers. California and Texas show strong potential. Corporate giants and tech companies, driven by sustainability goals, have actively engaged in VPPAs, reinforcing market growth. Their commitments to procure renewable energy have contributed significantly to the burgeoning VPPA landscape.

Key Market Players

The Virtual Power Purchase Agreement Market is dominated by a few large companies, such as

·         Orsted

·         Duke Energy

·         RWE

·         Enbala Power Networks

·         Autogrid Systems

·         Comverge

·         Nex2Gen

·         Pexapark

·         EnergyTag

·         Siemens AG

·         Schneider Electric

·         GE Digital Energy

Recent Developments:

·         2023, Ørsted signed a significant VPPPA with Google for a Texas wind farm and is involved in various other projects and platform development across the US.

·         October 2023, Announced a 15-year, 160-megawatt (MW) VPPA with AT&T for the Frontier Windpower II project in Oklahoma. This expands the existing Frontier Windpower project and will generate enough wind energy to power roughly 193,000 homes.

·         November 2023, Completed the sale of its commercial distributed generation portfolio, including REC Solar, to ArcLight Capital Partners. This move allows Duke Energy to focus more on large-scale renewable energy projects like VPPAs.

 

Quality Assurance Process

  1. We Market Research’s Quality Assurance program strives to deliver superior value to our clients.

We Market Research senior executive is assigned to each consulting engagement and works closely with the project team to deliver as per the clients expectations.

Market Research Process




We Market Research monitors 3 important attributes during the QA process- Cost, Schedule & Quality. We believe them as a critical benchmark in achieving a project’s success.

To mitigate risks that can impact project success, we deploy the follow project delivery best practices:
  • Project kickoff meeting with client
  • Conduct frequent client communications
  • Form project steering committee
  • Assign a senior SR executive as QA Executive
  • Conduct internal editorial & quality reviews of project deliverables
  • Certify project staff in SR methodologies & standards
  • Monitor client satisfaction
  • Monitor realized value post-project

Case Study- Automotive Sector

One of the key manufacturers of automotive had plans to invest in electric utility vehicles. The electric cars and associated markets being a of evolving nature, the automotive client approached We Market Research for a detailed insight on the market forecasts. The client specifically asked for competitive analysis, regulatory framework, regional prospects studied under the influence of drivers, challenges, opportunities, and pricing in terms of revenue and sales (million units).

Solution

The overall study was executed in three stages, intending to help the client meet its objective of precisely understanding the entire market before deciding on an investment. At first, secondary research was conducted considering political, economic, social, and technological parameters to get a gist of the various aspects of the market. This stage of the study concluded with the derivation of drivers, opportunities, and challenges. It also laid substantial emphasis on understanding and collecting data not only on a global scale but also on the regional and country levels. Data Extraction through Primary Research

The second stage involved primary research in which several market players and automotive parts suppliers were contacted to study their viewpoint concerning the development of their market and production capacity, clientele, and product line. This stage concluded in a brief understanding of the competitive ecosystem and also glanced through the strategies and pricing of the companies profiled.

Market Estimates and Forecast

In the final stage of the study, market forecasts for the electric utility were derived using multiple market engineering approaches. This data helped the client to get an overview of the market and accelerate the process of investment.

Case Study- ICT Sector

Business process outsourcing, being one of the lucrative markets from both supply- and demand- side, has appealed to various companies. One of the prominent corporations based out of Japan approached us with their requirements regarding the scope of the procurement outsourcing market for around 50 countries. Additionally, the client also sought key players operating in the market and their revenue breakdown in terms of region and application.


Business Solution

An exhaustive market study was conducted based on primary and secondary research that involved factors such as labor costs in various countries, skilled and technical labors, manufacturing scenario, and their respective contributions in the global GDP. A comparative study of the market was conducted from both supply- and demand side, with the supply-side comprising of notable companies, such as GEP, Accenture, and others, that provide these services. On the other hand, large manufacturing companies from them demand-side were considered that opt for these services.


Conclusion

The report aided the client in understanding the market trends, including country-level business scenarios, consumer behavior, and trends in 50 countries. The report also provided financial insights of crucial players and detailed market estimations and forecasts till 2033.

Frequently Asked Questions

What is the market size of Virtual Power Purchase Agreement Market in 2024?

Virtual Power Purchase Agreement Market was valued at USD 53.1 billion in 2024.

What is the growth rate for the Virtual Power Purchase Agreement Market?

Virtual Power Purchase Agreement Market size will increase at approximate CAGR of 39.42% during the forecasted period.

Which are the top companies operating within the market?

Major companies operating within the Virtual Power Purchase Agreement Market are Orsted, Duke Energy, RWE, Enbala Power Networks, Autogrid Systems, Comverge, Nex2Gen, Pexapark, EnergyTag, Siemens AG, Schneider Electric, GE Digital Energy and Other.

Which region dominates the Virtual Power Purchase Agreement Market?

Asia- Pacific dominates the market with an active share of 48%.

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