Microgrid Market: Top Drivers, Global Opportunities & More

Despite a drop of around 4.47 metric tons per person, electricity production accounted for roughly 37% of global emissions in 2020. The year 2021 witnessed a further 5% growth in power consumption, majorly due to the growing population. As a result, the demand for robust energy generation systems has gained prominence globally. Microgrid technology has proven as an ideal solution to integrate renewable sources and offer emergency power by switching between island and linked modes. Our research report indicates the global microgrid market to advance with a CAGR of 10.73% during the forecast period 2022-2028.

Among all, solar microgrids have gained popularity as cost-effective integrated networks that generate and supply clean electricity for longer and support economic development. For instance, California’s Taylor Farms partnered with Bloom Energy, Ameresco Inc, and Concept Clean Energy to deploy a microgrid with 2 MW of solar power to operate a 450,000-square facility.

Expansion in Industry Verticals to build Power Resilience

Since a microgrid prevents millions in outage costs and enables effective critical infrastructure functioning, their adoption across sectors has mounted. This has triggered a robust rush in project development. As per the International Energy Agency, energy demand is anticipated to increase by 40% by 2040, encouraging an expansion of distributed power systems across industry verticals such as:

1. The commercial microgrid has emerged as the fastest growing category in the industrial vertical segment due to the growing reliance on renewable sources. Several companies opt for hybrid electric structures as they limit interruptions and continue operation despite system breakdown. For instance, in 2020, AlphaStuxure partnered with John F. Kennedy International Airport to deploy microgrid technology to capture and convert solar or wind sources into electricity.
2. Estimates suggest that the healthcare category captures the highest share in the industry vertical segment. These facilities require a high energy supply for daily business, making power outages lethal for patient security. Microgrids have taken center stage in optimizing various power components and establishing reliable power supply. For instance, the Indian Institute of Science installed a 5.2 kW microgrid plant as a backup power source. Hence, the medical sector’s power supply advancement majorly drives the market.
3. Advancements in technology have influenced governments to boost funding for hybrid and mobile grid solutions for military applications. The US military is among the major forces supporting the North America microgrid market expansion. For example, the country’s army announced microgrid installation across 130 locations by 2035. Presently, the government and its partners are investing in on-site renewable production units, microgrids, and battery storage to strengthen military operations.
4. The studied market’s growth in the educational institute category is primarily attributed to the rising initiatives to demonstrate efficient energy-saving measures. The pre-existence of combined heat and power (CHP) systems is another factor responsible for its robust adoption in schools, universities, and colleges. For instance, 10 renewable microgrids were deployed across schools in Puerto Rico, which proved beneficial during severe weather conditions or grid failures. In this regard, grid-connected microgrids determine economic viability for academic institutes.

Smart City Initiatives: A New Pathway

According to the UN, approximately 55% of the world’s population resides in urban settings, which is expected to reach around 68% by 2050. This increases overall power demand. Globally, Asia-Pacific power consumption has soared immensely, with China and India accounting for the highest demand. This has compelled governments to invest in smart city development, pushing for rapid uptake of digital technologies to meet the high demand. These aspects largely support the Asia-Pacific microgrid market.

For instance, the HOMER hybrid optimization software by the US Department of Energy beats the technical complexities of energy planning and creates programs to qualify island microgrid projects for funding. Besides, the Indian and the US governments invested in new research on smart energy grids and energy storage to improve the efficiency of electric infrastructure. Such initiatives create new pathways for contenders, contributing heavily to the studied market.

Future Outlook: IoT Integration to create High Demand

In line with robust energy demand, IoT amalgamation with microgrids is expected to expand their capabilities for remote management. From load balancing to moderating line voltage, the internet of things significantly reduces losses in the system and inspection times by isolating fault locations. Additionally, if a microgrid generates more power than required, this technology helps users sell the excess energy to a utility, creating a new income source. The IoT is a strategic necessity for digitally transforming industrial operations, which may create ample opportunities for the global microgrid market over the forecast period.

FAQs:

Q1) What is the size of the microgrid market?

The global microgrid market was valued at $23.26 billion in 2021 and is estimated to reach $46.21 billion by 2028.

Q2) Which are the major end-users in the microgrid market?

The commercial and healthcare sectors are among the major end-users in the microgrid market.