Strong potential growth for storage, distributed generation and microgrids28. November 2012 | Markets & Trends | By: Shamsiah Ali-Oettinger
IEEE announced today the release of a new report that they commissioned. The report details how energy storage, distributed generation and microgrid technologies stand to evolve given the rapid deployment of the smart grid across the globe over the next five years.
The report is based on a survey of 460 global smart grid executives. Zpryme Research & Consulting created the report, "Power Systems of the Future: The Case for Energy Storage, Distributed Generation, and Microgrids". Respondents were asked 25 questions on energy storage, distributed generation and microgrids. Some of the key findings are highlighted below.
The findings among others showed that the top three rated benefits were to meet peak demands, improve power reliability and reduce costs. Additionally, the biggest challenges were seen as costs, deployability and the lack of standards. The Institute of Electrical and Electronics Engineering or IEEE has been involved in standards setting and development. The report states that even though standards are necessary, "the associated regulation that emanate from these standards can be daunting". There are estimates that range from a doubling to tripling of regulation requirements from 2012 to 2020 in the wholesale market for energy.
Lithium ion technology also came out tops, as the technology with the highest demand over the next five years potentially. North America was cited as the region with the most growth potential in the sector.
Improved power reliability was again stated as one of the top three benefits of distributed generation. The flexibility of supply addition and reduced infrastructure costs were the other two. Europe is seen as the region likely to see the most growth in this aspect in the next five years. 28% of the respondents believe that the global capacity for distributed generation will increase by 10 GW to 15 GW over the next five years. 21% saw an increase of more than 20 GW happening.
The challenges from distributed generation and storage apply to microgrids as these technologies are contained in microgrids. Europe again comes out on top as the region where microgrids would see the highest growth in the next five years. The necessity for standards was seen as a pressing factor for microgrid development, more than for distributed generation and energy storage.
End-users must drive demand
The report also highlights that technology prices cannot fall on their own; end-customer demand must be present. Investment needs to be made in raising customer awareness. Education and marketing play a large role here. Governments need to support education efforts additionally to R&D for new technologies.
Innovation is also an emerging theme. The report states, "Innovation will lead the market for energy storage, distributed generation, and microgrids from an introductory phase into a high growth phase". Manufacturers needs to closely integrate customer feedback into their R&D roadmaps.
The Zpryme outlook
The Zpryme outlook sees the energy storage market going through a disruptive shift in the next five years. Many players will be forced out of the market due to poor cash positions and the lack of secure stable contracts with utilities. However, the manufacturers who tide through this period will be in a strong position thereafter. Governments in Japan, South Korea and China are seen as those who will continue to make strong investments in energy storage.
The distributed generation market is cited as possibly becoming the "darling of the energy industry" over the next five years. Solar and wind distributed generation providers can make substantial profits if they stay viable in the short-run.
On the microgrid front, many new entrants will come into the market over the next five years but they will face many of the same challenges as those in the energy storage market. Emerging markets will potentially turn to microgrids for economic and social support.
Zpryme believes that an integrated microgrid combining renewable energy generation, strategically selected software, and energy storage solutions holds great potential for users globally. Global deployment will increase three to four fold as manufacturing prices for energy storage and renewable energy manufacturing fall in the long run.
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