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US Volt/VAR market to peak in the 2020s
Our research shows that the volt/VAR market will continue to grow steadily for the next eight years, presenting an opportunity for equipment manufacturers.
1 minute read
Grid modernization programs and distributed energy resource (DER) growth are revitalizing utility spending on distribution grid internet of things (IoT) technologies, according to a new report
The advanced volt/VAR control (VVC) market in the United States grew by 39 percent from 2014-2018, and currently totals half a billion dollars.
A new report finds that utilities in the US are recognizing the benefits of using IoT technology to more granularly manage voltage and reactive power (VARs). The VVC market is made up of hardware, software, and communications systems that chip away at system losses, reduce the amount of energy consumed by homes and businesses, and aid in renewables integration.
Grid modernization proceedings and similar state regulatory initiatives continue to be a main driver of VVC adoption for utilities.
Over the last decade, utilities have installed advanced VVC solutions across 15 percent of the United States. Our research shows that the volt/VAR market will continue to grow steadily for the next eight years, presenting an opportunity for equipment manufacturers.
However, in the late 2020s, the market’s growth rate will begin to fall at 11 percent annually as utilities approach their feeder coverage targets. This will result in fewer project starts and a corresponding shift from capital expenditure to operations expenditure.
The shift to operational expenditures will favor some segments of the VVC market. For example, ongoing opex will ensure that the market for advanced VVC software remains robust, as licensing fees and software-as-a-service contracts ensure ongoing revenue.
Utility preferences for VVC rollout remain quite diverse. One example of this is the lack of a dominant approach for hosting VVC system intelligence. Centralized control architecture, with intelligence embedded in distribution management systems, is the most common approach – but not by a large margin.
More utilities are looking toward advanced technologies like power electronics to meet emerging DER integration needs. Utilities in states such as Hawaii and Colorado are starting to combine software, smart inverters and power electronics to increase PV hosting capacity by 40 to 80 percent per feeder. As the solar market in the United States grows utilities will continue evolve their VVC strategies, using new technologies to augment their existing infrastructure.