Frost & Sullivan has released a new report which finds that a variety of factors are creating new market opportunities for microgrids, with particular opportunities in the developing world. Among the key developments identified by Growing Opportunity in the Global Microgrid Market is that microgrids are becoming more bankable, due both to price reductions in distributed solar and battery technology as well as improved control and management systems.
Frost and Sullivan estimates that microgrids were a US$4.1 billion market in 2015, but that they will rise to an $8.5 million annual market in 2020.
The consulting firm notes that microgrids are a means to integrate more renewable energy without the costly process of grid expansion. “Tying together decentralized power production through the use of microgrid control systems, energy storage, and smart technologies allows the efficient management of growing decentralised power production volatility without substantial investments into transmission upgrades and extensions,” notes Frost & Sullivan Energy & Environment Senior Industry Analyst Ross Bruton.
North America currently represents 50% of the global microgrid market, with most of this being in the United States, where microgrids can help to ensure security of supply for critical infrastructure while also assisting reliability on central grids.
However, the growth in microgrids is also expected to speed electrification in developing nations. Frost & Sullivan says that Asia is the second-largest regional market largely due to electrification in India and China, island grids in Indonesia.
The decline in the prices of photovoltaics and storage, and the use of microgrids for remote electrification purposes, will allow for more rapid, cost-effective and renewable electrification of developing countries,” states Burton.