The global demand for residential flexibility solutions is set to exceed £4.6 billion ($6.5 billion) by 2030, according to a new report from Guidehouse Insights.
Maturing demand response (DR) solutions along with growing penetration of distributed energy resources such as rooftop PV, battery storage and electric vehicles have created new opportunities for residential customers in the virtual power plant (VPP) space.
As such, the role of flexible capacity in an increasing number of markets is forecast to grow from less than $1 billion in 2021 to more than $6 billion by the end of the decade, at a compounded annual growth rate of 23.3%.
In Market Data: Residential Demand Response and Virtual Power Plant Markets, Guidehouse goes on to suggest that customer engagement trends, an evolving market ecosystem and supportive regulatory environments are driving forward VPP growth.
Additional factors include residential sector programming during COVID-19, load disaggregation for targeted marketing, pre-enrollment through utility marketplaces and time-varying pricing adoption.
“Extreme weather phenomena are just one factor fueling the growth of residential automated flexible capacity in response to price signals and more traditional behavioral or load control-based residential DR,” said Peter Asmus, research director with Guidehouse Insights.
“As grid operators develop a more urgent need to procure flexible capacity, we anticipate that the engagement of the aggregated residential capacity segment will become competitive with commercial and industrial customers.”
The report follows the Carbon Trust finding that embedding flexibility in Britain’s electricity system could deliver up to £16.7 billion in savings per annum in 2050, largely due to displacing the need for relying on gas generation during unfavourable weather periods.
This is a particular concern as the country increasingly moves to a renewable energy heavy electricity mix in order to decarbonise, relying more on wind and solar power. A recent report from Imperial College London argued that increasingly changeable weather in Britain could put net zero and the security of the electricity grid at risk.