Financing/Energy as a Service

Banking on It: Financial Forecast Consensus Favors Robust Microgrid Growth

Jan. 26, 2024

Every one of these financial forecasts offer projected percentage growth well above what one could reasonably expect from the stock markets over a comparably long term. Even the much larger and relatively fresh video streaming industry is only predicted to grow 12% annually through this decade

Rod Walton, Managing Editor

It’s hard to see around corners, so no one can really define exactly what the dollar side of microgrid sector will look like in five or 10 years. Most financial experts can’t even come to a consensus on whether the economy will have a soft landing or not.

One thing these forecasters agree on, though, is that microgrids will be bigger, investment wise. Much bigger.

Mordor Intelligence recently estimated the microgrid market size at about $15.9 billion for this year. Globally, Mordor predicts, it will grow 19% annually to $38.1 billion before this decade is out.

The Mordor Intelligence report summary interjected that the off-grid systems will dominate the market, as developers try to navigate the complicated and oft-delayed interconnection issues.

Fortune Business Insights, another prognosticator of the market variety, values the global microgrid sector as somewhat lower than Mordor, at about $9 billion in 2022. The growth projection, however, is right in line with a forecast of 15% expansion every year to reach a $23.5 billion market value by 2029.

Global Market Insights calculated the global microgrid sector at about $11 billion three years ago and anticipated it would elevate 22.4% annually to reach an enormous $73 billion by 2030.

Allied Market Research is predicting a 15% annual growth rate in microgrid investment and development to about $60 billion by 2030.

The value chain argument for microgrid investment apparently is loaded and making inroads among fellow travelers in the financial lanes.

All of this is music to the ears of microgrid providers, technology and project developers such as PXiSE Energy Solutions, Enchanted Rock, Schneider Electric, Scale Microgrids, Block Energy, Eaton, Ameresco, Spirae, New Sun Road, PowerSecure, CPower and more. Most, if not all, of these companies will be at the Microgrid 2024 Conference happening April 22-24 in Baltimore at the Marriott Waterfront Hotel.

Long-time and highly respected technology research firms such as Wood Mackenzie are confirming the vast expansion in microgrid capacity, from more than 10 GW in the past year and advance about 19% annually through 2027. Solar and energy storage microgrid capacity has increased nearly 50 percent since 2017, according to the research firm.

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The federal government incentives, much of it stemming from the Inflation Reduction Act, is funding close to $350 billion in anticipated microgrid, electric vehicle and clean energy infrastructure projects through this decade and beyond. Most of that is tied to production or investment tax credits.

The feds are not out there on their own. Private equity is already highly invested in microgrid companies and project developments.

Warburg Pincus, for example, committed about $300 million in Scale Microgrid Solutions earlier this decade.

Schneider Electric and financing giant Carlyle Group partnered up to spin out the large-project microgrid developer AlphaStruxure several years ago. Schneider Electric also teamed up with Huck Capital to create GreenStruxure as a means of providing affordable microgrid options for smaller customers.

Large-scale commercial and industrial (C&I) end-users such as Costco, Microsoft, Bimbo Bakeries and Pittsburgh International Airport are only a few of the C&I and mission-critical service providers installing microgrids are their facilities.

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About the Author

Rod Walton, Managing Editor | Managing Editor

For Microgrid Knowledge editorial inquiries, please contact Managing Editor Rod Walton at [email protected].

I’ve spent the last 15 years covering the energy industry as a newspaper and trade journalist. I was an energy writer and business editor at the Tulsa World before moving to business-to-business media at PennWell Publishing, which later became Clarion Events, where I covered the electric power industry. I joined Endeavor Business Media in November 2021 to help launch EnergyTech, one of the company’s newest media brands. I joined Microgrid Knowledge in July 2023.

I earned my Bachelors degree in journalism from the University of Oklahoma. My career stops include the Moore American, Bartlesville Examiner-Enterprise, Wagoner Tribune and Tulsa World, all in Oklahoma . I have been married to Laura for the past 33-plus years and we have four children and one adorable granddaughter. We want the energy transition to make their lives better in the future.

Microgrid Knowledge and EnergyTech are focused on the mission critical and large-scale energy users and their sustainability and resiliency goals. These include the commercial and industrial sectors, as well as the military, universities, data centers and microgrids. The C&I sectors together account for close to 30 percent of greenhouse gas emissions in the U.S.

Many large-scale energy users such as Fortune 500 companies, and mission-critical users such as military bases, universities, healthcare facilities, public safety and data centers, shifting their energy priorities to reach net-zero carbon goals within the coming decades. These include plans for renewable energy power purchase agreements, but also on-site resiliency projects such as microgrids, combined heat and power, rooftop solar, energy storage, digitalization and building efficiency upgrades.