Microgrid experts say the industry was impacted by the COVID-19 pandemic, but the pandemic could actually end up being a boost for the deployment of microgrids.
The pandemic is affecting the microgrid industry negatively in the short run, but could be more positive in the long run and even result in microgrid growth, according to Peter Asmus, Research Director for consulting service Guidehouse. The industry has seen some impacts from the pandemic this year, he said, making his remarks at a recent panel discussion at the Microgrid 2020 Global Conference held virtually by Microgrid Knowledge.
“Generally speaking, we did revise some of our forecast to downgrade 2020 just a bit,” Asmus said. The overall pipeline for microgrid projects is still similar to before the pandemic, but some projects that developers hoped to get in the ground this year were delayed due to economic uncertainty, social distancing protocols and designations of what entails “essential services.”
Among the types of microgrids that could be boosted by the pandemic are data centers as workers operating from home increase computer usage for communications.
That said, smaller commercial and industrial customers might be overwhelmed with dealing with COVID-19 and invest less in microgrids. Other types of projects that could be negatively affected are community microgrids, microgrids at hotels and premium real estate sites, and energy-access projects in developing countries, many of which already function in difficult economies.
Guidehouse reviewed about 7,000 global projects totaling about 34 GW over the past 10 years and found that about 45 percent were financed as energy-as-a-service, many of them smaller energy-access projects. This was followed by owner-financed projects at 21 percent, government projects at 19 percent, and utility ratebase projects at 10 percent and the remainder “other,” Asmus said.
Looking at microgrid capacity, owner-financed had the biggest share at 36 percent and energy-as-a-service at 19 percent, just edging out utility-ratebase projects. Owner-financed projects are probably in the lead in this category because of large projects on college campuses, such as a 35-MW project at University of California, San Diego, according to Asmus.
Asmus said he expects energy-as-a-service for commercial and industrial projects to grow in number because they do not require an up-front capital investment from the customer. By segment, remote microgrids had the biggest global share of world markets in the third quarter of this year, followed by commercial and industrial at 26 percent, utility distribution microgrids at 14 percent; community and institutional at 6 percent each; and military at 4 percent. Development is strongest in North America and Asia Pacific, while Europe is a smaller market because the grid is reliable there, he said. The Middle East and Africa are also seeing microgrid development, such as at remote mining sites.
As far as the pandemic, microgrids “contribute to this idea of preparation for unexpected events, and I think microgrids fit right in with that, so in the long run, this is actually going to help the market,” he said.
Asim Hussain, representing Bloom Energy, said that in the future, “it won’t be the microgrid industry, but instead a convergence of the microgrids with the centralized system to essentially create a new system overall that is more resilient, more sustainable and that enables more choice from an end-user standpoint.”
Resiliency in the primary driver of microgrids, he said, as climate change increases wildfires, hurricanes, storms and other events that disrupt electrical infrastructure and create a need for back-up power systems. Technology progress will be another driver as costs come down for technologies such as fuel cells, energy storage and renewables technology.
“Microgrids are going to proliferate, and they are already proliferating today in an accelerated fashion,” Hussain said. This will include behind-the-meter microgrids as well as adoption by utilities of front-of-the-meter microgrids to target where they would like to provide more reliability. This could be similar to what happened in the computing industry as it moved from centralized devices to distributed computing, to now a hybrid with the advent of cloud computing.
“I think it’s going to be a new world in terms of the entire electric infrastructure itself,” he said.