Frost & Sullivan: Bankability Of Microgrids Is On The Rise

Microgrids are set to transform the distributed energy resources and energy storage systems market and are increasingly becoming more bankable, according to a new report from Frost & Sullivan.

The report says significant price declines in both distributed renewable power and battery technologies, coupled with increased technological advancements in control and energy management systems, have created a vision of highly reliable, efficient, flexible, renewable and “islandable” grid networks embedded with advanced smart grid technologies.

“Tying together decentralized power production through the use of microgrid control systems, energy storage, and smart technologies allows the efficient management of growing decentralized power production volatility without substantial investments into transmission upgrades and extensions,” says Frost & Sullivan Energy and Environment Senior Industry Analyst Ross Bruton. “These systems will ensure electricity supply reliability, while trading electricity to the central grid to be used for ancillary services in grid balancing. 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.”

According to the report, North America accounts for almost 50% of the global microgrid market, driven largely by the U.S. market. The Asia-Pacific market, presenting key growth opportunities, is the second-largest market due to electrification in India and China, island grids in Indonesia, and industrial microgrids in Australia. The European Union, with the most secure electricity grids and highest penetration of smart grid technology, shows a limited need for islandable microgrid systems and is instead expected to represent a leading market for virtual power plant solutions, says the report.

“With governments setting regulations and standards for efficient interconnection and operation, players across diverse sectors are swiftly entering the market with proprietary solutions for installation and management of distributed energy resources and storage to support associated loads,” notes Bruton. “Consolidation of these solutions into more standardized microgrid projects will represent one of the key vehicles to carry the market to broad-based commercialization.”

(Editor’s note: For more information on microgrids, check out the recent article in Solar Industry’s October issue, “What Are Microgrids, And Should Utilities Be Afraid Of Them?” by clicking here.)



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