Show Notes
The global market for Virtual Power Plants is assessed around 100GW (+/- 20GW). It is a 7bnUSD expected to grow at a CAGR above 20% in the next 5 years to reach 40bnUSD within a decade. VPP are a digitally coordinated flexible network of distributed resources: cheaper than central stations. They manage behind the meter assets like Solar, batteries, HVAC, EV…
VPP is a term invented 30 years ago by US economist and finance scholar Dr Shimon Awerbuch, who died 20 years ago in a light plane crash over the Alps. Only aged 51, he leaves a great legacy. His foundational work in 1996 was called “The Virtual Utility” where he demonstrated that Electricity generation must be treated like a financial portfolio. He proved that Renewables (even if they were very expensive at the time) were a powerful hedge against fossil fuel volatility.
In our series about how digital is transforming the how we track, trade, and optimise energy, Gerard and Laurent have invited Marc Rühs, CEO Next Kraftwerke, the world largest VPP with 15GW Capacity. Connecting more than 14,000 decentralised electricity producers, consumers, and storage facilities, the company contributes to grid stability and optimizes electricity production and consumption based on price signals. It trades its electricity on various European exchanges via its own 24/7 electricity trading platform. Next Kraftwerke has been part of the Shell Group since 2021.
We have a deep conversation about how VPP work, their impact on flexibility, and the fact that they used to be ignored or discarded by incumbents. But that is changing with the arrival of AI providing better systems and increased demand.
Along the way, we pop some balloons, such as V2G or Heating management, which work great in theory but are non-significant from a volume point of view. Maybe they will in the next decade. As Shell is reducing its footprint in Clean Energy transition assets, it is reinforcing its position in the VPP market, as Next Kraftwerke is fully integrated into Shell trading organisation.
Marc demonstrates that the future of energy lies in intelligently connecting renewable generation, storage, demand-side flexibility, and trading capabilities to create a more resilient and sustainable energy system.
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