Worldwide vendor revenue from microgrid deployments is estimated to grow from $4.3 billion in 2013 to $19.9 billion in 2020 in the base scenario, says a new research from Navigant Research.
Under a more aggressive scenario, revenue could reach $36.2 billion annually, the study said.
Microgrids, the small-scale versions of the centralized electricity system, are used to generate, distribute and regulate the flow of electricity to consumers. They are the ideal way to integrate renewable resources on the community level. By doing so, they allow small communities or even a single consumer to participate in the electricity enterprise.
As the renewable industry flourished, microgrid deployments grew around the world in a variety of application segments. The industry is now moving to the next phase of development, focusing on how to develop projects on commercially viable terms, the research said.
“Microgrids are inching their way into the mainstream, with the focus of the market shifting from technology validation to questions surrounding the most promising business models,” said Peter Asmus, principal research analyst with Navigant Research, in a statement. “The number of companies active in the space, and the range of applications of microgrids, are growing exponentially, yet there is little consensus on the pace of development in the coming years.”
The market for microgrids is driven by the need for a more advanced, robust and responsive power grid framework than the currently existing one. Developed countries, which are responsible for majority of the carbon emission, are taking special interest in developing a massive microgrid infrastructure.
Recent research from Lawrence Berkeley National Laboratory says 80 percent to 90 percent of all grid failures begin at the distribution level of electricity service. This is the exact portion of the power system where microgrids operate.
Another recent industry report said global installed capacity of microgrid has seen a staggering growth since 2011 and is forecast to grow at a CAGR of over 17 percent from 2012- 2022 to attain a total installed capacity of over 15GW by 2022.
In terms of market value for vendors, the market presents a potential of more than $5 billion and is likely to reach up to $27 billion by 2022 growing at a CAGR of over 17 percent from 2012-2022.
According to the report, campus/institutional microgrid is the largest microgrid by application and is expected to grow at a CAGR of 18.83 percent from 2012-2022.
Edited by Rachel Ramsey