According to Latest Report Study, the global microgrid market size is expected to expand at USD 28.51 billion by 2030 and growing at a CAGR of 17.34% from 2022 to 2030.

Microgrid differs from conventional electrical distribution systems as it acts as a close proximity medium between the power generation and power consumption sources which results in increasing efficiency and reducing transmission losses. These systems perform dynamic control over energy sources by enabling autonomous as well as automatic self-healing operations.

The improvement in manufacturing sectors of emerging markets including Mexico, China, and India as a result of favorable government policies to attract investments is expected to promote market growth.

The rising importance of captive electricity generation as a key alternative to the regulated power supply by municipal regulators in mining and mechanical engineering sectors is expected to have a strong impact. Furthermore, the rising production output of unconventional sources including shale gas in the U.S. and Canada as a result of high utilization of fracking technology is expected to ensure access of natural gas as a power source over the next eight years.

Report Highlights

The global microgrid market size was valued at USD 6.76 billion in 2021 and it is predicted to surpass around USD 28.51 billion by 2030 with a CAGR of 17.34% from 2022 to 2030.

• Combined heat & power (CHP) accounted for 39.5% of the global market share in 2021.


• Fuel cell is expected to foresee volume growth at a CAGR of 28.1% from 2022 to 2030.


• Solar PV is projected to account for 24.5% of global volume by the end of 2030.


• The grid-connected products market was USD 6.17 billion in 2021.


• Hybrid product forms are expected to account for 4.9% of global revenue size by the end of 2030.


• Education dominated the market, accounting for 42.2% of the total volume share in 2021.


• The commercial application is expected to witness volume growth at a CAGR of 26.3% from 2022 to 2030.


• North America accounted for 74.9% of global volume share in 2021.


• Asia Pacific is projected to witness revenue growth at a CAGR of 27.0% from 2022 to 2030.


• Central & South America is projected to account for 6.5% of the global revenue share by the end of 2030.

Key Market Trends

Remote Off-grid Communities Systems Expected to Witness Growth

- The demand for off-grid power networks has been stimulated in many parts of the world, particularly from sectors like defense, commercial places, data centers, and campuses.

- According to the US Department of Energy, as of 2021, the off-grid microgrid installed capacity was around 4225 MW (4.2GW). The country has planned more off-grid microgrid projects in cities and other strategic locations to make the energy infrastructure more resilient.

- In September 2021, Alphastruxure started the construction of a 5.6 MW microgrid with distributed energy generation, energy storage, and over 2 MW charging capacity at Brookville Smart Energy Bus Depot in Montgomery County, Maryland. The project is expected to serve the city's public transport by 2023. The initiative to decarbonize the transportation sector with microgrids is a part of a major goal to reduce carbon emissions by 2035.

- In January 2022, Ameresco Inc. announced that it had been awarded a microgrid project in Prince Edward Island, Canada. The "Slemon Park Microgrid Project" will be developed by the joint effort of Ameresco and Prince Edward Island Energy Corporation. The project is expected to be completed by the end of 2022. It consists of a 10 MW solar facility with DC-coupled energy storage, and both of them will share the same interconnection.

- Due to such developments, the off-grid microgrid segment is expected to dominate the microgrid market in the future.

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Drivers: Surging use of microgrids for rural electrification

Microgrids are increasingly becoming prevalent worldwide. They can be used in isolated installations for remote electrification, and grid-connected assets for developing resilient networks, along with facilitating local energy communities. According to the IEA, in 2020, roughly 860 million people worldwide did not have access to electricity. Of those, 87% lived in rural or remote areas ("SDG Indicators Goal 7" 2020). In areas without access to the main grid, where traditional grid extension is more expensive, microgrids can be a viable solution to energy access challenges. Furthermore, microgrids provide a way to access renewable energy sources within a local area. This has led to the adoption of microgrids as a viable option for rural electrification.

Microgrids can be established in limited spaces and offer electricity at lower costs than conventional grids. For instance, the University of California claims annual savings of over USD 8 million on energy costs after the adoption of microgrids. Another factor driving the demand for microgrids for rural electrification is the growing government support and surge in the deployment of microgrid projects. For instance, in March 2021, General Electric (GE) won a contract to upgrade three gas-insulated substations (GIS) located in Khimti, Barhabise, and Lapsiphedi in Nepal. These modern substations will deliver uninterrupted hydro energy to several households in the power-scarce regions outside Nepal's capital Kathmandu that still does not have access to the national grid. In April 2021, the Indian government's e-governance services arm, CSC, announced a collaboration with Tata Power to set up solar-powered micro grids and water pumps in rural areas across the country.

In December 2020, Hitachi Energy was contracted by MCA to contribute to the development of Sub-Saharan Africa's largest photovoltaic project, increasing access to reliable and clean energy for Angola's 30 million people. Similarly, in May 2019, ABB supplied an MGS100 integrated microgrid solution to enable the delivery of 100% renewable power and energy storage for up to 39,000 homes and shops in remote regions in India.

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Restraints: Huge installation and maintenance costs of microgrids

Microgrids have a higher initial cost than conventional electricity grids, usually between 25% and 30%. Microgrid infrastructure costs include everything from the deployment of communication systems to the installation of smart meters, as well as their maintenance. Installing smart meters is 50% more expensive than installing electric meters. Distributed energy resources (DERs) used in microgrids are also more expensive than those used in traditional centralized power plants.

It can cost tens of thousands of dollars or even hundreds of millions of dollars to build a new microgrid or convert an existing system into a hybrid microgrid. Microgrids are most expensive when it comes to generation assets such as solar PV arrays, batteries, and/or combined heat and power systems. Furthermore, a significant amount of capital is needed for grid automation and microgrid control systems that can intelligently monitor and manage all components, controlling how the microgrid consumes and produces energy. Due to the fact that microgrids can store, convert, and recycle energy as well as offer better reliability and power quality than traditional grids, their costs are higher. Microgrid market growth is hampered by this.

Opportunities: Rising encouragement from governments for developing microgrid projects

Microgrid technology is increasingly becoming cost-effective and offers a way to provide reliable, and efficient power supply for various verticals. Governments of different countries have started investing in microgrid projects. For instance, in June 2020, the Australian government-backed 17 microgrid projects with over USD 19 million in grant funding under round one of the "Regional and Remote Communities Reliability Fund". In October 2019, the Federal Government launched a USD 50 million microgrid funding program for Australia. Of this, USD 20 million in funding was allocated for microgrid feasibility studies in the country. Such government initiatives are expected to act as growth opportunities for the microgrid market during the forecast period.

Challenges: Technical challenges of microgrids operating in island mode

During the initial stages of electricity generation in microgrids operating in the island mode, there is a sudden intake of current that can affect the frequency and voltages of power systems. This can cause generators to trip and go offline. This requires an analysis of the electricity generation methods used in microgrids that operate in the island mode. Specialized controls to ensure smooth microgrid operations are also a requirement. Island microgrids use more than one distributed electricity generation source. Voltages thus need to be regulated during microgrid operations, using voltage versus reactive power drop controllers to achieve local reliability and stability of power systems. Thus, operating microgrids in the island mode is a challenging task, which requires adequate technical knowledge.

Power Source Insights

Combined heat & power (CHP) accounted for 39.5% of the global market share in 2021. Shifting preference from conventional separate heat and power system (SHP) to energy generation from single fuel is expected to have a substantial impact.

Fuel cell is expected to foresee volume growth at a CAGR of 28.1% from 2022 to 2030. The superior ability of fuel cells to operate at high temperatures along with negligible electrolytic loss is expected to promote the market scope in the near future.

Solar PV is projected to account for 24.5% of global volume by the end of 2030. Favorable support by developed countries including the U.S., Germany, the U.K., and Japan aimed to upscaling the power generation output from solar energy is expected to have a positive impact. Furthermore, technological advancement regarding the development of organic solar PV modules is expected to open new market opportunities over the next eight years.

Diesel-source grids market was valued at USD 15.1 million in 2021 and is projected to foresee moderate growth as a result of stringent regulations aimed at limiting the power generation from fossil fuels. However, the high adoption rate of diesel source of electricity generation in the manufacturing sectors of developed economies is expected to be a favorable factor.

Product Insights

The grid-connected products market was USD 6.17 billion in 2021. Gaining popularity of smart micro-grid connected PV system on account of supplying power provides electricity to consumers by reducing transmission losses is expected to have a substantial impact. Over the past few years, North Power Systems have been utilizing technology, which integrates their wind turbines with solar PV, diesel gensets, or other power sources of the microgrid. This hybrid technology has been used in grid projects located in Hawaii, Alaska, Bahamas, and Antarctica. Hybrid product forms are expected to account for 4.9% of global revenue size by the end of 2030.

Application Insights

Education dominated the market, accounting for 42.2% of the total volume share in 2021. Rising government spending toward the improvement of education infrastructure for ensuring school education in rural areas in developing countries including China India is expected to have a positive impact.

The commercial application is expected to witness volume growth at a CAGR of 26.3% from 2022 to 2030. Extensive requirements of power supply for ensuring lighting, heat ventilation air conditioning (HVAC), and operating electronic goods in hospitals, corporate offices, and retail outlets are projected to have a high impact.

Regional Insights

North America accounted for 74.9% of global volume share in 2021. The high adoption rate of captive power generation methods in the industrial and municipal sectors of the U.S. for reducing the reliance on the government-controlled power supply is expected to have a substantial impact.

Asia Pacific is projected to witness revenue growth at a CAGR of 27.0% from 2022 to 2030. The positive outlook for manufacturing and construction sectors in the major markets including China and India owing to regulatory support for promoting investments on a domestic level is expected to be major driving factors.

Central & South America is projected to account for 6.5% of the global revenue share by the end of 2030. The firm foothold of mineral processing units of silver and copper in Peru and Chile on account of the abundance of mineral reserves is expected to expand the market size of power distribution systems over the next eight years.

Some of the key findings of the microgrid market report include:

• A positive outlook toward clean environment along with large-scale renewable integration will spur the market expansion.


• The increasing demand for uninterrupted power supply across industrial & commercial facilities coupled with large-scale penetration of distributed power sources will augment the industry landscape.


• Ongoing government mandates and regulations to reduce carbon footprints in line with extensive research & development activities for sustainable development will stimulate the industry outlook.

Key Players

Recent Developments

- In November 2021, the Los Angeles Transportation Department planned a new microgrid project for the electrification of EVs. The microgrid, with a solar plus storage power supply system, is expected to become the charging station for the fleet. The project, to be developed by Proterra Energy, received a grant of USD 6 million from the California Energy Commission. It is expected to produce around 7.5 MW of power output.

- In June 2020, Sri Lanka Electricity Company Ltd (LECO) signed a contract with Dimo and DHYBRID GmbH to construct Sri Lanka's first-ever national grid-tied renewable energy-based microgrid at the University of Moratuwa. The project is funded by the Asian Development Bank (ADB) and will embark on a new paradigm in the field of distributed power generation in Sri Lanka.

• Lockheed Martin Corporation


• Siemens AG


• GE


• Power Analytics


• ABB Group


• Microgrid LLC


• Spirae Inc


• Schneider Electric


• ZBB Energy Corporation


• Pareto Energy


• Toshiba Corporation


• Honeywell International Inc.


• Echelon Corporation and Viridity Energy Inc.

Market Segmentation

By Power Source Outlook

Natural Gas

CHP

Solar PV

Diesel

Fuel Cell

Others

By Product Outlook

Remote

Grid-connected

Hybrid

By Application Outlook

Government

Education

Commercial

Utility

Defense

Others

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