Guess Which North American Microgrid Market is Growing Fastest?

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The fastest-growing North American microgrid market surprised even the Navigant researchers who uncovered it in a report, “Market Data: Microgrids.”

Public utilities took the prize, growing at 45.2 percent, which is the compounded annual growth rate of annual deployments between 2015 and 2024.

“For North America, the biggest surprise over the 10-year forecast is that the fastest-growing segment is public utility distribution microgrids,” said Peter Asmus, principal research analyst for Navigant Research.

There are a number of reasons that growth in public utility microgrid market makes sense, he said in an interview this week.

Investor-owned utilities are generally larger than public utilities in size, but they are installing a relatively smaller number of microgrids, according to Asmus.

“We see public utilities over time becoming a better market because they’re more aligned with the scale of microgrids,” he said.

“We see public utilities over time becoming a better market because they’re more aligned with the scale of microgrids.”

Because municipal utilities generally serve one community, the scale is more appropriate, he said.

North American microgrid market vs Asia Pacific

Overall, the report predicts that the North American microgrid market will surpass the Asia Pacific market by 2024. Right now, the numbers of remote, community and utility microgrids in the Asia Pacific make the region the leader in growth. But by the end of the decade, North America is expected to take back its market lead.

“Over time, grid-connected microgrids will pick up, as New York’s Reforming the Energy Vision picks up, for example. It will overtake the Asia Pacific market.” The grid-tied microgrids take longer to develop and will slowly build momentum over time, he said.

Not only is the market for remote microgrids growing; these off-grid microgrids generate higher revenues than those that are grid-tied, Asmus said.

Remote microgrids, according to our modeling, generate more revenues per megawatt than grid-tied microgrids. They are also more expensive to build in a lot of cases,” he said.

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The off-grid microgrids generate higher revenues because they’re built to supply 100 percent of the energy users’ needs. They have to have a lot of “cushion” for meeting three needs. Developers of grid-tied microgrids, on the other hand, generally don’t aim to provide 100 percent of their clients’ needs. Microgrid owners and managers whose systems are tied to the grid can always import power if it’s priced well, Asmus said.

The extreme heat and cold that characterize the weather where remote microgrids are located also creates higher demand for the microgrids’ output.

In the Asia Pacific market, the fastest growing segment is DC microgrids built largely for data centers, according to the report. They’re growing at a rate of 79.6 percent, which represents the compounded annual growth rate of annual deployments between 2015 and 2024, said Asmus.

The numbers start out low and accelerate over time, said Asmus.

“A single data center can be a large number of megawatts,” he said. “In China, Singapore and other places large data center microgrids are coming online in this forecast period.“

Data centers upgrading

Some of the data center microgrids studied in the report are older facilities with older technologies – lead acid batteries and diesel generators — that have extra capacity. And some are served by two utilities for backup.

The data center owners are upgrading some of the technologies and also looking for ways to make money with their over-sized microgrids by selling excess power and offering services, Asmus said.

“The data center owners with old technology are looking to do more and make money,” he said. For example, they’re integrating more advanced batteries, cleaner energy sources and more sophisticated controllers.

Also highlighted by the report is the need for standardization in the microgrid industry. Among other things, this would allow developers to build microgrids in different parts of the country without having to customize each one.

“There’s such a patchwork of regulation and market incentives; there isn’t a lot of standardization,” said Asmus. “They’ll never be totally standardized; they are in some ways custom projects.” However, with more standardization, some of the costs—including engineering — would drop, he said.

An executive summary of Navigant’s “Market Data: Microgrids” report is available here.

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Read more about the North American microgrid market, by visiting the North American channel on  Microgrid Knowledge.

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