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Volt/VAR Control and Optimization Trend Update

North America represents the largest market for software-based, centralized Volt/VAR control and optimization solutions, report finds

A new Navigant report examines the market for volt/volt-ampere reactive power (Volt/VAR) management and optimization technologies, providing global market forecasts, broken out by technology segment, system type, and region, through 2026. According to the new report, revenue from global annual Volt/VAR control and optimization solutions is expected to grow from $415.0 million in 2017 to $768.7 million in 2026. 

Newer, software- and analytics-based solutions represent only a portion of the market today—approximately $65 million in 2017—but are expected to grow rapidly.  By 2026, the market for Volt/VAR control and optimization software and analytics is expected to approach $200 million, indicating a 13.1% compound annual growth rate. 

The Navigant report points out the driver for the newer VVO portion of this voltage control solution category, namely, the rising penetration of distributed generation and an increasing focus on energy efficiency, demand response, and renewable energy integration, which are making the task of managing the distribution network, including Volt/VAR levels, increasingly complex.

While the technological potential of advanced Volt/VAR management systems is robust, widespread implementation remains constrained by cost-benefit tradeoffs, region-specific regulatory frameworks, and competing grid modernization priorities. As a result, hardware-based, localized Volt/VAR control solutions remain the leading form of Volt/VAR management worldwide.  The market for voltage regulators and load tap changer controls represents approximately half of the overall projected market through 2026.

In North America, where the majority of advanced, software-based Volt/VAR systems are deployed, the market tends to be concentrated in regions where regulations create incentives for utilities to achieve system-wide energy savings or reduce peak demand, encouraging the implementation of conservation voltage reduction (CVR) programs. Elsewhere, the market for centralized, software-based solutions is still nascent.

Recent technological advances in the form of intelligent controls, advanced communication systems, and sophisticated data and analytics solutions, however, are enabling utilities to manage voltage and reactive power as never before. “The market for Volt/VAR control and optimization solutions will vary considerably based on the local regulatory environment,” says Richelle Elberg, principal research analyst with Navigant Research. “Utilities operating under incentives to reduce electricity consumption, shave peak demand, and integrate increasing levels of distributed renewable generation will see the largest investment in advanced Volt/VAR management systems.”

The report, Volt/VAR Management and Optimization Technologies, focuses on controls for voltage- and VAR-regulating devices (capacitor controls, voltage regulator controls, and load tap changer controls) and the software and analytics systems used to manage and optimize voltage and reactive power levels across the distribution network.

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