Total Flexible Residential DER Capacity Estimated to Grow to More Than 96 GW by 2032
Market drivers include flexibility enabling technology advancements, opportunities for low-cost grid resources, and segment energy profile changes.
A new report from Guidehouse Insights examines the global market for flexibility from residential distributed energy resources (DER), composed of residential virtual power plants (VPPs) and traditional demand response (DR) capacity.
Historically, power grid flexibility has been provided by dispatchable fossil fuel power plants. However, as economies around the world look to cut emissions from the power sector by installing more renewable energy capacity, that flexibility must come from additional sources. According to a new report from Guidehouse Insights, more than 28.4 GW of total flexible residential DER capacity is expected to be online worldwide by the end of 2023. This is projected to grow by an average compound annual growth rate of 14.5% to 96.1 GW by 2032.
The number of residential DER like controllable loads (e.g., thermostats, water heaters, and electric vehicle chargers), behind-the-meter batteries, and distributed generation connected to grids is also increasing, giving utilities and grid operators additional tools for grid management.
“Flexibility needs on the power grid have traditionally been addressed by dispatchable fossil fuel power plants. However, as economies around the world look to cut emissions by installing more renewable energy capacity, new methods must be used to meet those flexibility needs,” says Dan Power, research analyst with Guidehouse Insights. “When aggregated into VPPs, residential DER can support the larger grid by providing flexibility and other essential services.”
Outside of flexibility enabling technology advances, the market for flexibility from residential DER is being driven by opportunities for low-cost grid resources and segment energy profile changes. Hindering further market growth are cybersecurity concerns, legacy customer attitudes toward energy providers, and antiquated energy sector regulations. Other remaining business issues include customer financial considerations for DER and limited customer education. Companies involved in residential DER and flexibility are diverse with some focusing on hardware, others on software, and several choosing to aggregate and operate VPPs. Technology vendors in the market are adapting their solution offerings to facilitate further market growth, according to the report.
The report, Residential Distributed Energy Resources and Flexibility, examines the flexible residential DER market including retail and wholesale VPPs along with traditional DR. Regional level analyses for capacity, implementation spending, and revenue are presented across five major geographic regions from 2023-2032 with capacity outlooks segmented by technology type. Total flexible residential DER capacity is projected to be largest in North American throughout most of the analysis period with Europe showing the largest total capacity by 2032. An executive summary of the report is available for free download on the Guidehouse Insights website.
* The information contained in this press release concerning the report, Residential Distributed Energy Resources and Flexibility, is a summary and reflects the current expectations of Guidehouse Insights based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in this press release or the report. Please refer to the full report for a complete understanding of the assumptions underlying the report’s conclusions and the methodologies used to create the report. Neither Guidehouse Insights nor Guidehouse undertakes any obligation to update any of the information contained in this press release or the report.