Market for Utility Microgrids Is Expected to Experience a 19% Compound Annual Growth Rate
A new report from Guidehouse Insights examines the market for utility microgrids across grid-tied investor-owned utility projects, grid-tied government utility projects, and government-owned remote off-grid projects.
Increasing power outages and deployments of distributed energy resources (DER) are forcing utilities to confront the limits of traditional grid infrastructure. As a result, more utilities are showing interest in microgrids and are working to overcome a past bias against the technology due to fears of negative impacts on incumbent grids and potential loss of revenue. According to the report, the total global market for utility microgrids is expected to grow from 779.9 MW in 2020 to 3,739.6 MW by 2029 at a compounded annual growth rate (CAGR) of 19%.
“There is a growing recognition of how microgrids can overlap and integrate with platforms such as DER management systems and virtual power plants (VPPs), which proves that creative aggregations can provide value across the new energy landscape,” says Peter Asmus, research director with Guidehouse Insights. “Forward-looking utilities seek to refine their role within the emerging Energy Cloud framework.”
While utilities play an increasing role in the microgrid industry, they are not a uniform market segment and ownership structures differ immensely, which can affect whether microgrids are a good fit for utilities. Even if utilities share similar ownership structures, they may operate in markets that vary from vertically integrated monopolies to entities operating in partially or fully deregulated markets. These utilities may or may not own generation assets. They may serve industrialized economies benefiting from traditional grid distribution and transmission systems, or they may serve a customer base that has no choice but a microgrid, such as island nations. Finally, the unregulated branches of utilities are pushing the envelope, particularly on the financing front, by fostering project development outside of traditional regulatory realms that have revolved around traditional rate base systems.
The report, Market Data: Utility Microgrids, provides capacity and implementation spending forecasts by region and the following segments: grid-tied investor-owned utility projects, grid-tied government utility projects, and government-owned remote off-grid projects. An executive summary of the report is available for free download on the Guidehouse Insights website.