Microgrid Market Trends

Growth Drivers

• Growing Number of Microgrid Projects and Installations- A total of 4470 microgrid projects were installed during the second half of 2019, representing nearly 25GW of planned and installed capacity around the world. Globally, remote microgrids and commercial and industrial microgrids account for roughly 65-70% of all microgrid capacity. Microgrids are becoming increasingly popular as they provide a reliable and resilient source of energy and are more cost-effective when compared to traditional grid systems. The growing demand for renewable energy and the need to reduce carbon emissions are driving the growth of the microgrid market.
• Increasing Microgrid Installation for A Range of Purposes - For instance, a new microgrid project for electrifying electric vehicles was planned by the Los Angeles Transportation Department in November 2021. A microgrid powered by solar plus storage will serve as the fleet's charging station for electric buses. The power output is expected to be around 7.5 MW. The solar microgrid provides a reliable source of power for these buses, reducing the need for diesel fuel. It also reduces the amount of energy consumed from the electric grid, helping to lower energy costs.
• Government Initiative to Provide Efficient and Reliable Power Supply - Governments are recognizing the need to provide efficient and reliable power supply, especially in rural and remote areas, and are investing in microgrid systems. For instance, the US government has announced that it will provide more than USD20 million in financial assistance to 17 microgrid projects across the country to better meet the needs of remote and regional communities.
• Increasing Initiatives for Reducing Greenhouse Gas (GHG) Emissions- Microgrid systems can be used to limit the use of large-scale generators and reduce the amount of GHG emissions. With the launch of TP Renewable Microgrid, Tata Power and The Rockefeller Foundation aim to connect 5 million Indian households and reduce annual carbon emissions by one million tons.
• Growing Production Of Electricity - In accordance with the International Energy Agency in 2019, the world produced 617 EJ of electricity, an increase of 2% over 2018. As demand for electricity continues to grow, the need for a more reliable and efficient way to generate and distribute power is becoming more important. Microgrids are a cost-effective solution, as they are able to generate and distribute power independently from traditional power grids.

Challenges

• Challenges related to the integration of microgrids with existing electrical grids- The complexity of the integration of microgrids with existing grids, the cost of the integration process, and the lack of standardization in the microgrid market are all factors that contribute to the difficulty of integrating microgrids. This makes it more difficult for microgrid companies to enter the market, resulting in slower market growth.
• High installation costs
• Lack of awareness among end-users