Microgrids and Local Energy: A Fad or a True Market Force?

May 7, 2015
We’ll be the first to admit that there is a lot of cheerleading surrounding microgrids and local energy right now. Is it all just clapping and banner waving? Or are microgrids a technology with staying power?

We’ll be the first to admit that there is a lot of cheerleading surrounding microgrids and local energy right now.  Is it all just clapping and banner waving? Or are microgrids a technology with staying power?

Navigant Research,  which closely tracks microgrids, has recently published data that looks very encouraging for the microgrid industry.

The data reveals a “robust global microgrid market,” according to the research firm. In fact, microgrid projects tripled worldwide over the last year, according to Navigant Research’s 2Q 2015 Microgrid Deployment Tracker.

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A big driver is government programs meant to spur the technology in its early stages, especially along the U.S. East Coast.  Such subsidy or policy support is fairly common when a promising energy technology is first emerging. Without such support, it can be difficult for new technologies to make inroads into the electric power arena, particularly since the industry is heavily dominated by utilities.

The majority of microgrids are still early stage,  proposed or in beginning development, so are not actually delivering energy services yet, according to Navigant. The research firm has identified 12,031 MW of total microgrid capacity throughout the world, up from 4,393 MW in 2Q 2014—a near tripling of “the known scope” of the microgrid market.

North America is still the market leader with 66 percent of market share, compared with 65 percent in 2Q 2014. However,  Asia Pacific may emerge as the leader over the long term, according to Navigant.

Meanwhile, separately, Navigant forecasts that the market for combined heat and power — a key part of many North American microgrids — will reach $14 billion annually by 2024 for projects installed in buildings. The research firm expects to see CHP grow from  32.7 GW in 2015 to 74.4 GW by 2024.

Like microgrids, CHP is gaining traction because of concerns about grid reliability and the need to reduce greenhouse gases.

In fact, governments around the world are increasingly focused on boosting subsidies and other incentives for CHP adoption and related building efficiency tech, Navigant said.

A great deal of potential CHP remains untapped.

“While the market as a whole is experiencing steady growth, CHP’s penetration into global building infrastructure has been minimal,” says Brett Feldman, senior research analyst with Navigant Research. “In 2015, globally, the technical potential of floor space that could be served by commercial CHP is estimated at 441 billion square feet —but only a fraction of this total can be realistically served due to the high upfront capital cost associated with these types of systems.”

CHP faces other obstructions as well: high spark spreads, thermal requirements, and utility resistence, Navigant said.

Most CHP installations are being installed in the U.S., northern Europe, South Korea, and Japan, according to Navigant.

Navigant noted that CHP technologies have been under development for more than a decade, and now the market is beginning to gain momentum. An increasing number of companies are introducing  standardized commercial products and  governments worldwide are increasing subsidies and other incentives for efficiency.

Meanwhile, growth also is occurring for another form of local energy — solar gardens. Also called community solar or shared solar, the approach grew 150 percent from 2013 to 2014, according to the Solar Electric Power Association.

So the numbers look good for local energy; movement is in the right direction, the technologies are taking hold.

More details about Navigant’s microgrid findings are here and CHP here.  A report by SEPA on solar gardens is here.


About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is the editor and founder of EnergyChangemakers.com. She is co-founder and former editor of Microgrid Knowledge.

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