Distributed Energy Resource Management System Market Size, Share & COVID-19 Impact Analysis, By Software (Virtual Power Plant {VPP}, Management & Control, Analytics), By Application (Solar, Energy Storage, Wind, EV Charging Stations, Others), By End-User (Residential, Commercial, Industrial & Utilities), and Regional Forecast, 2021-2028

The global distributed energy resource management system market size was USD 0.36 billion in 2020. The market is projected to grow from USD 0.42 billion in 2021 to USD 1.33 billion in 2028 at a CAGR of 18.0% during the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with energy requirements witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the global market exhibited a slow growth of 5.0% in 2020 as compared to the average year-on-year growth during 2017-2019. The sudden rise in CAGR is attributable to this market's demand and growth, returning to pre-pandemic levels once the pandemic is over.

The remarkable development in industrialization and urbanization worldwide has led to energy demand growth. The growing energy demand to support the current livelihood of the globe has resulted in massive renewable energy generation investments. The development of the renewable energy industry and distributed generation has propelled the demand for distributed energy resource management systems (DERMS). Distributed energy resource management involves maintenance, control, analytics, demand control, and remote handling of energy resources like solar, wind, and CHP, using software and networking.

Disruption in Industrial Activities has Impacted Global Distributed Energy Resource Management System Market Growth

The COVID-19 pandemic had a dismal impact on nearly every industry vertical. The industrial and commercial landscape has changed widely due to strict containment measures such as lockdowns to limit the coronavirus spread. The pandemic has significantly affected the demand for distributed energy resource management systems. As the market is dependent on the energy industry, the lowered energy requirement has led to a decline in investments in remote access and control facilities for distributed energy generation. These factors have directly impacted the demand for software and distributed energy resource management systems.

LATEST TRENDS

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Smart Grid Deployment Efforts by Governments To Augment Market Growth

Governments of various nations worldwide have mandated smart grid installation, making them critical to national energy policies. Energy policies of countries have been focusing on improving efficiency and carbon emission reduction. Governments have increasingly invested in smart grids to accelerate the replacement of aging grid structures.

In November 2021, the United States Government passed a new infrastructure investment and jobs act. According to the act, a huge investment in smart grid development is being made. The law includes a USD 3 million investment for Smart Grid Investment Matching Grant Program. The rising smart grid deployments further the demand for distributed energy resource management software and systems for smooth functioning and remote control of the grids.

Increased Deployment of EVs to Create Promising Opportunities

The growing responsibility to protect the environment by sustainable development is fueling electric vehicle adoption globally. The International Energy Agency (IEA) reports that nearly 2.1 million more electric cars were sold globally in 2019 compared to the previous year, recording a 40% y-o-y growth. With the development of technology, the cost of electric vehicles has been reducing over the years, further propelling their demand.

Various nations have promoted electric vehicles and developed suitable policies to accelerate the shift towards zero-emission vehicles. Pollution control mandates and fuel economy standards drive the EV  market. In July 2021, the Government of Maharashtra announced a Maharashtra EV Policy 2021, providing ₹ 5000/kWh of battery to ramp up EV sales. Furthermore, in October 2021, Tata Power announced having set up over 1000 EV charging stations across India. With the rise in EVs and a further increase in EV charging stations, the demand for energy management systems is expected to grow, driving the market.

DRIVING FACTORS

Increasing Demand Response Requirement to Drive Market

The swiftly developing industrial landscape and rapid urbanization have led to massive power demand. There is an enormous rise in demand for products with the increasing population and production activities in various industrial verticals. Furthermore, increased digitalization and vast consumerism have enhanced industrialization. This has enhanced the demand for production and manufacturing setups and materials. This has also rapidly inflated power demand. The global industrial landscape is faced with extreme peak loading conditions to suffice power requirements from time to time. With increased smart infrastructure development and increased power consumption, there is a massive requirement for demand response management software and systems, which is anticipated to drive the market.

According to the International Energy Agency, rapid progress is needed in demand response management, with 500GW of demand response requirement by 2030 due to the ever-increasing renewable energy project deployments to fulfill the net-zero emission targets. The agency further states a need for additional system flexibility on the supply and demand sides. Many countries like Canada, Singapore, the European Union, and China are announcing renewable energy targets and EV charging station infrastructure development programs. Hence, the demand for distributed energy resource management is expected to witness high growth over the coming decade.

Increasing Demand for Renewable Energy to Drive Distributed Energy Resource Management System Demand

A positive outlook towards reducing carbon emissions has increased efforts towards renewables adoption. The respective governments across the world are ramping up renewables capacity, from solar and wind to hydro and tidal energy. Moreover, increased government subsidies have pushed consumers to invest in distributed energy generation from rooftop solar and windmills.

The rise in renewables deployment is gaining momentum owing to the lower capital requirement compared to oil & gas. The International Renewable Energy Agency (IRENA) reports that the global renewable capacity surged by approximately 10.3% in 2020 to reach 2799 GW. The increased focus on remote management of these renewable energy resources requires specialized systems and software, including battery storage. Therefore, the rise in renewable power generation will drive the market during the forecasted period.

RESTRAINING FACTORS

Cyber Security Risks Associated with IoT to Limit the Technology Adoption

The distributed energy resource management system uses information and communication technology (ICT), the internet of things (IoT), automated control, energy storage, and demand management. The data from the systems is collected to analyze and control. This data can be hacked into and is vulnerable to cyberattacks and data breaches. The large investments for data breach prevention and cyber security add to the costs of the management systems. This financial drawback impacts distributed energy resource management adoption and is anticipated to hinder the market growth.

SEGMENTATION

By Software Analysis

Wide Range of Functionalities of Virtual Power Plants to Boost Segment Growth

This market by software is broadly categorized into virtual power plants (VPP), management and control, and analytics.

The virtual power plant uses cloud-based real time operational control to aggregate capacities of different distributed energy resources DERs to enhance efficiency and trade power. The wide range of functionalities of a VPP makes it a desirable choice for most consumers.

Management and control software help in remote handling of the distributed energy resource to smoothly control the operations and detect failures and necessary maintenance measures. Analytics tools and software help planners determine various parameters by incorporating large data sets to enhance efficiency and utilize visual data sets.

By Application Analysis

High Penetration in Solar Energy Management to Drive Market Growth

The market by application is categorized into solar, energy storage, wind, EV charging stations, and others.

Distributed Energy Resource Management System is utilized for controlling and optimizing the functionalities in solar energy generation. The broad penetration rate of the DERMS in the solar sector, along with massive utilization in rooftop solar, bolsters the segment growth.

Distributed energy resource management is also integrated with energy storage functionalities. The energy generated needs to be stored in batteries. The proper charging and discharging cycles of these batteries and their timely maintenance employ distributed energy resource management software. Distributed energy resource management can be used for wind power generation control and management and EV charging station control and maintenance.

The others segment accounts for combined heat and power(CHP) applications and demand in response management.

By End-User Analysis

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High Utilization Will Lead to Domination of the Industrial & Utilities Segment

Based on the end-user, the market is divided into residential, commercial, and industrial & utilities.

The industrial & utilities segment is the leading segment due to the high penetration of the Distributed Energy Resource Management System, especially virtual power plant software, for enhancing efficiency and facilitating smooth energy trade. Moreover, distributed energy is highly produced by industries and utilities, further propelling the segment growth.

The residential and commercial segment refers to distributed energy resource management smaller than utilities and industries. However, the massive growth of rooftop solar PV adoption in residential end-users propels the segment. Residential and commercial end-users generally use management & control and analytics software for smooth operation and optimization.

REGIONAL INSIGHTS

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The global market has been analyzed across major regions, including North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

The Asia Pacific is the largest market for distributed energy resource management systems and accounted for USD 0.12 billion in 2020. The growth in power generation using solar and wind and the growing energy requirement due to industrialization across the Asia Pacific drives the market. According to the Census and Economic Information Centre (CEIC), China's industrial production index growth rate rose to 3.1% year-on-year in September 2021. The country recorded a 14.1% industrial production index growth rate year-on-year in March 2021. China commenced developing its 10 GW solar and wind power project in November 2021 and is anticipated to be a significant aid in achieving net-zero goals. The increased investment in renewable energy projects in the region massively propels the market.

In North America, the U.S. holds a significant distributed energy resource management market. The United States has pledged net zero emissions by 2050. The federal government rapidly invests in renewable energy projects to achieve this sustainable goal. A new offshore wind energy project called the 'Kitty Hawk' is anticipated to be developed by 2023 near the Outer Banks, off Virginia and North Carolina coasts. This project is expected to add 2,500 MW to the offshore wind energy capacity of the country. Such projects are anticipated to drive the market.

The European renewable energy industry is central to the region's economic development. European countries have massively invested in green and clean energies. The region has many offshore wind facilities and solar farms. Germany, France, Italy, Spain, the United Kingdom, and the Netherlands are a few countries that have invested in solar and wind energy capacities. According to International Renewable Energy Agency (IRENA), Europe has 162,429 MW of solar PV and 183,675 MW of wind power. The continuously increasing government efforts towards clean energy goals drive the demand for distributed energy resource management.

Middle East & Africa is the noteworthy region with increasing investment in the renewable sector. The G.C.C. countries like Saudi Arabia, U.A.E., Qatar, Bahrain, Kuwait, and Oman, in the Middle East, are increasing their dependence on renewable energy for power generation to combat the reduction of oil production. U.A.E. has pledged to increase its reliance on renewable energy to 10% of the country's total energy consumption by 2030. Turkey is a critical country in terms of renewable energy capacity in the region and has a solar PV capacity of 6,667 MW and 8,832 MW of wind power as of 2020. The increasing efforts are anticipated to help the market grow quickly in the region.

Latin America holds potential growth opportunities for distributed energy resource management due to increasing renewable energy dependence in the region. The future scope of the distributed energy resource management system in Latin America is massive and is anticipated to bolster the market in the forecast period. Brazil is a market leader in the Latin American region. According to the Brazilian Energy Planning Agency's Energy Expansion Plan, Brazil has pledged to increase its share of renewable energy consumption in overall energy consumption to 48% by 2029. This propels the market growth in the region.

KEY INDUSTRY PLAYERS

General Electric and Siemens to Lead with Wide Customer Reach

The market has several key players providing software and system support for distributed energy resource management. The major players are developing various technological advancements to the software to help increase reliability and cyber security. A majority of players in the market focus on virtual power plants. As the renewable energy industry grows due to the rise in demand for energy and increasing sustainability consciousness among consumers, the competitive landscape is anticipated to develop further.

LIST OF KEY MARKET PLAYERS PROFILED:

• Hitachi ABB (Switzerland)


• Siemens (Germany)


• General Electric (U.S.)


• Engie (France)


• Itron (U.S.)


• Oracle (U.S.)


• Generac (U.S.)


• Energy Hub (U.S.)


• Mitsubishi Electric Corporation (Japan)


• AutoGrid Systems (U.S.)


• Opus One Solutions (U.S.)


• Doosan Heavy Industries & Construction (South Korea)


• Blue Pillar (U.S.)


• Kitu System (U.S.)


• Enel (Italy)


• Open Access Technology International, Ltd. (U.S.)


• Sunverge Energy Inc. (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• November 2021 – Hitachi Energy launched the improved PowerStore battery energy storage system (BESS) products. It is the first update to the distributed energy solutions portfolio since Hitachi ABB Power Grids converted to Hitachi Energy.


• June 2021 – Itron Inc. deployed a grid-interactive water heater program for Fort Collins Utilities in Colorado. The program enables distributed energy resource management for combined heat and power (CHP) applications.

REPORT COVERAGE

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The global distributed energy resource management system market research report includes regional and country-level analysis to understand the user better. Furthermore, the market research reports provide insights into the latest market trends and provide a market analysis of technologies deployed rapidly globally. It further highlights some of the drivers and restraints, helping the reader gain in-depth knowledge about the industry.

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