The billions of dollars of public and private investment spent on distributed generation (DG) technologies in recent years have yielded strong results in both cost reduction and technical capabilities, says a new report from Navigant Research.
As both a cause and effect of this investment, new DG business models have been deployed – such as third-party ownership enabled by leases and power purchase agreements – and are reaping returns. According to Navigant, worldwide revenue from DG is expected to grow from $97 billion in 2014 to more than $182 billion by 2023.
To date, DG has had more of an effect on traditional electricity markets in western Europe than in any other region, according to the report. Utilities are losing hundreds of billions of dollars in market capitalization as DG reaches higher levels of penetration in leading countries such as Germany, the U.K. and Italy. The prospect of similar losses by utilities in the U.S. is prompting a struggle among utilities, the DG industry and regulators over the future of DG models, Navigant says.
‘One of the most important issues for the energy industry is striking a balance between DG growth and fairly compensating utilities for the ability to effectively use the existing electrical grid as a backup service for on-site power at higher concentrations in the future,’ says Dexter Gauntlett, a senior research analyst with Navigant Research. ‘Utilities that proactively engage with their customers to accommodate DG – and even participate in the market themselves – limit their risk and stand to benefit the most.’
An executive summary of the report, ‘Global Distributed Generation Deployment Forecast,’ is available here.