According to a new report from Navigant Research, deployments of microgrids globally is estimated to be approximately $8.3 billion in 2013, increasing to more than $40 billion annually by 2020 in the average scenario. This is significantly higher than previous market forecasts due to new market intelligence suggesting that microgrids — including retrofit projects incorporating legacy assets — require greater investment than previously recognized. Still, Navigant Research forecasts tend to be bullish on capacity (since many projects are under the radar) and conservative on revenue.
Navigant Research defines the fundamental concept of a microgrid as:
“An integrated energy system network consisting of distributed energy resources (DER) and multiple electrical loads and/or meters operating as a single, autonomous grid either in parallel to or “islanded” from the existing utility power grid.”
In the most common configuration, DER is tied together on its own distribution feeder, which is then linked to the larger utility grid at a single point of common coupling. In the case of remote microgrids, there is no interconnection to a larger grid. As a result, these remote networks are operating in island mode 24/7 out of necessity.
Geographic Market Shares
According to Navigant, North America is the leading microgrid market today and that will continue over the course of the 7-year market forecast period. At present, North America features 63% of total global microgrid capacity (992 MW), with Asia Pacific coming in at a distant second place with 17% of global capacity (271 MW). Europe is in third place with 14% of global capacity (217 MW), and the rest of the world – including Latin America, the Middle East, and Africa – has the remaining 6% of capacity (101 MW).
North America will remain the global leader in microgrid capacity by 2020, increasing its market share to 65% of the global market (5,973 MW) by 2020, with Asia Pacific remaining in second place, but with a proportionately larger share (22%) of the capacity market (2,012 MW). Europe’s share of the microgrid market will decline to 8% (694 MW), while the rest of the world region declines slightly in market share to 5% (475 MW). Beyond 2020, Navigant Research expects that the relative shares of both Asia Pacific and the rest of the world will increase, with the Asia Pacific region emerging as the global leader within the 2025-2030 timeframe due to growth in remote and grid-tied systems and the slowing of deployments in North America because of market saturation and the resulting improvement in overall power grid performance.
Assumptions contributing to these market segment forecasts are as follows:
Source: Excerpted from Market Data: Microgrids, by Navigant. Reprinted with permission.