In this issue: Microgrids: North American and World Markets

Transcription

1 Issue 96 January 23, 2014 In this issue: Microgrids: North American and World Markets By Peter Asmus and Mackinnon Lawrence Navigant Research

2 Microgrids: North American and World Markets BY PETER ASMUS AND MACKINNON LAWRENCE, NAVIGANT RESEARCH Overview Until recently, the vast majority of microgrids coming online, whether grid-connected or off-grid, have been pilot projects or research and development experiments. Today the industry is moving into the next phase of project development, focusing on how to develop projects on fully commercial terms. It appears that the main technology components have made significant headway, and new market subsectors are opening up. Navigant Research expects annual microgrid capacity to increase from 685 MW in 2013 to more than 4 GW by 2020, a compound annual growth rate of 29.3 percent. The key to future growth now rests with greater creativity in both the public policy and business model arenas. North American Market North America is currently the largest microgrid market, having captured over half of all vendor revenue activity. The increasing frequency of severe weather is prompting utilities in the United States and around the world to reconsider their historic opposition to customer-owned microgrids that can disconnect from the larger grid and island, allowing critical mission functions to stay up and running. Yet, utilities continue to worry about how a proliferation of customer-owned microgrids might complicate their job and perhaps erode their traditional revenue base. Should regulators instead allow utilities to build, own, or control these microgrids in some sort of coordinated, enterprisewide fashion? 2

3 Although a comprehensive suite of policies necessary to stimulate wider microgrid deployments has yet to be articulated by any single government, a variety of incentives are helping to build the business case for microgrids in the United States, the world s biggest microgrid market. These incentives range from the expansion of net metering for distributed renewables to natural gas utility revenue decoupling. 3

4 Market Segments The microgrid market has clearly undergone an evolution. Traditionally, it is understood as comprising five segments: Commercial/industrial microgrids: This segment is quickly maturing, especially in North America. Community/utility microgrids: Europe leads this segment, with Denmark s high penetration of distributed wind requiring aggregation networks that represent over 80% of all microgrid activity there. Campus/institutional microgrids: The typical focus of these microgrids is to aggregate existing onsite generation with multiple loads that are co-located in a campus setting. Military microgrids: The focus of these microgrids is security, both cyber and physical. Remote microgrids: These microgrids never connect to a larger grid and, therefore, operate in island mode on a 24/7 basis. In addition, Navigant Research has sliced up the market into two new subsegments that are attracting increased market attention: Grid-tied utility distribution microgrids: A subset of the community/utility segment, these microgrids face the largest regulatory barriers, but could lead to the largest-scale deployments over the long term. Direct current microgrids: This subsegment overlaps with some of the others listed above, as it encompasses both grid-tied and remote systems and is a technology rather than an application approach to microgrid segmentation. 4

5 Worldwide Forecasts As can be seen in the chart, North America will maintain its leadership role over the 7-year forecast period. The Asia Pacific region will gradually increase market share over time, with a CAGR of 33.9 percent for microgrid capacity. Navigant Research believes that while North America dominates the microgrid market today and through 2020, the Asia Pacific region will likely emerge as the global leader for microgrid deployments by 2030 or 2035 due to the huge need for power for growing populations not served by traditional grid infrastructure. Europe is, relatively speaking, a laggard on microgrids because its preferred aggregation and optimization platform is the virtual power plant. The region s grid reliability is far superior to that in North America, limiting the appeal of islanding capability. About Navigant Research Navigant Research is a market research and consulting firm that provides in-depth analysis of global clean technology markets. The company s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of these industry sectors. The Navigant Report, Microgrids, is available at 5

6 Author Profile: Peter Asmus As a Principal Research Analyst, Peter Asmus has emerged as a leading global expert on microgrids and virtual power plants. With 25 years experience, Mr. Asmus is author of four books on energy and environmental issues, and has served as a consultant to many leading corporations (General Electric, Sunpower, Clipper Wind), government agencies (California Energy Commission, California Air Resources Board) and non-profit agencies (Center for Energy Efficiency & Renewable Technologies, Governor's Wind Energy Coalition, Independent Energy Producers, Center For Resource Solutions.) His prime expertise is integration of renewable energy to the grid, public policy analysis, writing and public speaking. Author Profile: Mackinnon Lawrence Mackinnon Lawrence is a principal research analyst contributing to Navigant Research s Smart Energy practice, with a focus on advanced biofuels and bioenergy. Lawrence has extensive experience as an attorney, consultant, and analyst with deep expertise on topics ranging from environmental policy and international affairs to clean energy. Lawrence is frequently quoted in leading industry publications, and he has spoken and led panels at major conferences. Prior to joining Navigant Research, Lawrence was managing editor of Biomass Hub, an online resource covering emerging law and policy issues for the global bioenergy industry. He has also served as Of Counsel with Cleantech Law Partners, and has advised project developers and cleantech companies on regulatory and legislative developments affecting the biofuels and biopower industries. Lawrence holds a JD from Washington College of Law, an MA in global environmental policy from American University, and a BA from Amherst College, and is member of the California Bar. 6

7 Contact Information Peter Asmus Tel: URL: LinkedIn: Contact Information Mackinnon Lawrence Tel: URL: LinkedIn: 7