Report Examines Nanogrid Market Potential

Editor’s Note: The following is reprinted with permission from Navigant Research’s recent report, “Nanogrids.”

The basic concept behind the nanogrid is simple: small is beautiful. Nanogrids are modular building blocks for energy services that support applications ranging from emergency power for commercial buildings to the provision of basic electricity services for people living in extreme poverty. In many ways, nanogrids are just small microgrids, typically serving a single building or a single load. Because of the simplicity, the technology requirements for nanogrids are less complex (in most cases) than those for either microgrids or the utility-dominated smart grid. Given the diversity of nanogrids applications, it is difficult to sum up what nanogrids mean for technology innovation, utilities, and vendors of smart grid and distributed energy resource solutions. Nevertheless, one could view them as building blocks of microgrids. In some cases, nanogrids represent an alternative path forward to increasing resiliency and renewable content into onsite power solutions. 

Ironically, nanogrids are big business. While microgrids exhibit exponential growth and share synergistic properties with many nanogrid segments, substantial deployments of nanogrids are already in place. This is because they actually face less technical and regulatory barriers than their microgrid counterparts. 

Given the lack of consensus on the definition of a nanogrid, Navigant Research has developed its own classification, with the most critical criterion being size: 100 kW for grid-tied systems and 5 kW for remote systems not interconnected with a utility grid. While these size thresholds may seem arbitrary, they have been vetted with vendors in the space and line up with technology offerings by many of the companies profiled in this report. 

In many ways, nanogrids appear to be an even more radical rewiring and rethinking of the world’s energy future than microgrids. Nanogrids mimic the innovation that is rising up from the bottom of the pyramid and capturing the imagination of growing numbers of technology vendors and investment capital, particularly in the smart building and smart transportation spaces. 

In other ways, nanogrids are more conventional than microgrids since they do not directly challenge utilities in the same way. Nanogrids are restricted to a single building or a single load and therefore do not bump up against regulations prohibiting the transfer or sharing of power across a public right-of-way. 

From a technology point of view, perhaps the most radical idea behind nanogrids is a clear preference for direct current (DC) solutions, whether these systems are connected to the grid or operate as standalone systems. The efficiency benefits of minimizing power conversions are amplified when designing nanogrids to serve the rural poor in the developing world.

Despite the small scale of nanogrid solutions, a number of familiar names are active in these nanogrid markets, among them Bosch, Eaton, Emerson Network Power, Johnson Controls, and NRG Energy. While nanogrids can be synergistic with the growing movement toward enhancing resiliency and therefore complement microgrids, there are times and situations when microgrids and nanogrids will be competing for the same customers. 

Market Forecasts 

Navigant Research forecasts that global nanogrid vendor revenue will reach $37.8 billion by the end of 2014. Over the next decade, the nanogrid market is forecast to grow to $59.5 billion in annual vendor revenue. While there are viable nanogrid markets in every region of the world, the Middle East & Africa represents the greatest near-term and long-term market opportunity, with revenue forecast to increase from $14.4 billion in 2014 to $25.2 billion in 2023. The Asia Pacific region, which accounts for the second greatest share of annual nanogrid vendor revenue, is forecast to climb from $12.8 billion to $20.3 billion over the same timeframe. 


Source: Navigant Research