Microgrid Market Growth
Forecasts call for dramatic growth ahead for microgrids, particularly in North America.
Navigant Research projects that the market will expand from just under $10 billion in 2013 to more than $40 billion in annual revenue by 2020.
The research firm has identified 4,393 MW of microgrid capacity worldwide, with 66 percent of the market potential in North America. North America also is site of the largest amount of microgrid development underway or proposed – about 67 percent of world share. The research firm finds that community/utility microgrids represent the largest kind of microgrid, about 1,111 MW of capacity.
“At this point in time, microgrids can provide a quality and diversity of services that incumbent utilities have been unable to match,” says Peter Asmus, principal research analyst for Navigant Research. “While utilities have shown institutional biases against the entire concept of microgrids for decades, extreme weather events and the growing recognition of microgrids as potential sources of demand response resources are building engineering and cultural support for these systems in a variety of settings.”
CHP by the Numbers
Meanwhile, combined heat & power systems also appear to be on a growth trajectory. CHP already provides about eight percent of electricity in the U.S. through 83 GW of CHP capacity at 4,300 facilities, according to ICF International’s “From Threat to Asset—How CHP Can Benefit Utilities.” Significant CHP capacity appears poised to begin operating in 2014 to 2016 time frame, as the figure below shows. ICF International attributes the rise to favorable natural gas pricing and the growing attention and value North America is placing on distributed energy because of storms and grid disruptions, some of the same forces encouraging microgrid development.
In all, ICF pegs CHP potential in the U.S. to be about 130 GW. It is not clear how many of these CHP projects will immediately incorporate microgrid technology, especially since microgrids are often not built all at once, but developed over time. For example, a large energy user might install CHP and later add microgrid capabilities, and still later add solar generation and storage, or undertake some other gradual configuring of the microgrid.
Many of the same industries that benefit from CHP also would benefit from microgrids, creating a natural path for one technology to foster adoption of the other.
What is clear is that many of the same industries that benefit from CHP also would benefit from microgrids, creating a natural path for one technology to foster adoption of the other. A company looking at CHP might consider the added capability of a microgrid; and conversely a company looking into microgrids is likely to study CHP as possible generation and heat source for the system. The ‘buzz’ surrounding one spurs the other. The graphic below gives a sense of the kind of facilities that have incorporated CHP in recent years.
District Energy by the Numbers
The International District Energy Association (IDEA) has identified 601 district energy systems in the US; 289 of those systems are currently district heating-only (DH-only) systems with 16.6 GW of installed heating capacity. They currently do not have CHP and represent a good market opportunity for installation of CHP.
CHP installed as part of DHC (district heating/cooling) systems has grown in recent years—there is currently 6.6 GW of CHP generating capacity at DHC systems, spread across 55 downtown systems and 153 university campus district energy systems. This growth is expected to continue as cities, universities, and other DHC installations realize the economic and environmental benefits of CHP. State governments also have an important role in fostering these technologies —35 states, including the District of Columbia, have some type of state-level incentives or regulations encouraging the deployment of CHP and DHC. On the other hand, aside from eligibility for tax exempt financing and federal loan guarantees, there are few federal, state or local policy incentives intended solely for deployment of district heating and cooling systems in the U.S.
Not surprisingly, district energy is seeing strong growth as demand for air conditioning increases (especially in cities) and building owners seek a clean, efficient, reliable and cost-effective way to meet this demand. In a survey of its members, IDEA found that 114 buildings began using district energy last year in North America. This represents 30,666,772 square feet that contribute to a total 615,428,328 square feet committed to North American district energy systems since 1990.
District energy systems exist at many college campuses and cities. But the largest customer additions last year occurred in cities in commercial-office buildings, followed by hotels, schools/hospitals/institutions, and government. District energy growth is likely to foster microgrid and CHP markets, since both can add capabilities and efficiency to a system.
The Energy Efficient Microgrid: What Combined Heat & Power and District Energy Bring to the Microgrid Revolution is provided as a free download, courtesy of Solar Turbines and the International District Energy Association.