US Volt/VAR Market to Peak in the Late 2020s

Grid modernization programs and distributed energy resource
(DER) growth are motivating utilities to spend on distribution grid
IoT technologies, but this growing market will peak in the late
2020s.

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.

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. Utilities in the US are recognizing the
benefits of using IoT technology to manage voltage and reactive
power (VARs) at a granular level.

Over the last decade, utilities have installed advanced VVC
solutions across 15 percent of the United States.
New research
shows that the volt/VAR market will continue to
grow steadily until the late 2020s, presenting an opportunity for
equipment manufacturers.

Figure: Cumulative expenditures of utilities in advanced
VVC projects

 


Source:
Wood Mackenzie Power & Renewables

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.

Grid modernization proceedings and similar state regulatory
initiatives continue to be a main driver of VVC adoption for
utilities. 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.

***

More detail on the Wood Mackenzie Power & Renewables report
‘Advanced volt/VAR control and optimization 2019-2028: US
regulation, adoption and market forecast’ can be found in the

report brochure
. For the full analysis, including raw data,
pivot tables and figures covering VVC market deployments, a VVC
market forecast with feeder coverage, and a VVC market forecast
with expenditures, see the
full report
.

Source: FS – GreenTech Media
US Volt/VAR Market to Peak in the Late 2020s