A couple of weeks ago, Barchart’s Senior Market Strategist, John Rowland, CMT, fielded a question about refining stocks like Valero (VLO), Marathon (MPC), and Phillips 66 (PSX) during the ‘Market on Close’ livestream. At that time, he suggested that the price action represented a pause, as the market had mispriced the risk in the refined product market.

Since then, the VanEck Vectors Oil Refiners ETF (CRAK) has experienced a significant surge, with a 10% increase in value and new highs being reached. Although CRAK is now close to overbought based on its 14-day Relative Strength Index, the fundamental narrative is not over yet.

Market Strategist John Rowland will continue to share his thoughts on this topic via ‘Market on Close’ and in this article. However, for investors seeking the next big thing in the energy space, a promising area of focus is virtual power plants (VPPs).

Virtual Power Plants: A Growing Market Opportunity

Virtual power plants (VPPs) are a rapidly evolving concept that enables power grids and software to connect to and reverse-flow electricity from home power-producing sources. This includes electric vehicle (EV) batteries, solar panels, and gas or propane generators.

Google (GOOG) (GOOGL) is an early adopter of this technology, having partnered with Voltus to explore the potential of VPPs. The market for VPPs is still in its early stages, with most software companies being start-ups and pre-revenue.

However, if VPPs become widely adopted, homeowners with power-producing assets like Generac (GNRC) at their home could potentially make $25-40K or more, depending on the grid conditions. This could be a catalyst for companies like Generac (GNRC) and Sunrun (RUN).

Investors interested in tracking this emerging trend should explore Barchart’s curated watchlists of Battery Stocks, Clean Energy Stocks, and Power & Electricity Infrastructure Stocks for further research.

It’s essential to note that the software companies in this space are still evolving, with the help of artificial intelligence (AI), and are addressing the complex challenges of integrating various power sources into the grid.

Key Takeaways and Future Developments

For investors, the key takeaway is that the VPP market is still in its early stages, and most software companies are start-ups and pre-revenue. However, if this technology continues to gain traction, it could lead to significant opportunities for companies like Generac (GNRC) and Sunrun (RUN).

As the VPP market evolves, we can expect to see more innovative solutions and partnerships emerge, further driving growth in this space.

Barchart will continue to provide updates and insights on this topic, so stay tuned for further analysis and commentary from our Senior Market Strategist, John Rowland, CMT.