With a current global market share of 28.6 billion USD and an expected rise to 47.6 billion by 2025, the microgrid market appears poised for significant growth. A CAGR of 10.6% confirms this expectation, and anticipated shifts in the global energy landscape give good reason to believe that microgrid market shares will only expand.
No industry is homogeneous, however, and given the custom-fit solutions that each energy user requires, it’s understandable that microgrid markets would uniquely fluctuate according to geography, population and technology. Still, some microgrid market shares offer more opportunities as emerging microgrids than others, and are worth a more intentional look.
As countries in the Asia-Pacific region continue to invest heavily in infrastructure and development, microgrids are sure to be a part of the solution. Many of these developing nations currently possess a power supply network that is sporadic at best, unable to meet the needs of a dense and rural population that expects reliable electricity as a part of its rising standard of living and often relies on “dirty” energy such as goal and diesel. These factors coupled with a booming economy and large carbon footprint all culminate to position microgrid and more broadly distributed energy system (DES) technologies as a prime solution for APAC countries in need of reliable power, and are the reason they comprise both the largest segment of the 47.4 billion dollar market share, and its highest CAGR.
Of the APAC nations, Australia is anticipated to be one of the leading microgrid investors, as its increasingly environmentally-friendly legislation and remote communities and industrial businesses, lend well to microgrid solutions.
In the same way that APAC nations are experiencing explosive growth in the power sector, South America is also looking to expand its share of the energy market, and will have a difficult time doing so without microgrids and DES. Much of South America is tangled in a densely tropical landscape, and the inaccessible terrain coupled with highly rural population segments and remote businesses that are still in need of electricity leave authorities searching for energy answers that only microgrids can provide. Uniquely capable of delivering on-site energy production to particularly hard-to-reach regions on a reliable basis, microgrids are often the only solution available, leaving utilities and governments with a need to invest in DES. This is why South America is expected to experience a 10% CAGR in DES investment by 2025.
It may seem strange that a single state could share the energy market list with entire regions of the planet, but an economy like California is capable of doing so. California alone boasts the fifth-largest economy in the world. While it enjoys abundant energy resources, its intensive carbon footprint has left its legislators seeking alternatives. Bill SB 32 requires this state to reduce its carbon emissions to 40% less than 1990 greenhouse gas levels before the year 2030, and reaching this goal will require significant investment in renewable energy technologies which can be a part of a well designed microgrid solution. Enormous wildfires of recent years, high winds and heat waves have also highlighted vulnerabilities in the centralized power grid. California is not alone and in the US alone, New York, the US Gulf Coast and Massachusetts are all seeing significant growth and interest in developing microgrid and DES solutions.
Emerging Microgrids Overview
DES market shares vary by power source, region and size, so examining which aspects of the microgrid industry offer the most opportunity for growth is a nuanced affair. When surveying the investment landscape on a regional level, the APAC nations with the greatest rural populations are expected to spend the most in microgrid development, with South American nations possessing geographical challenges keeping pace. Economies enjoying the luxury of an incumbent centralized power grid are still expected to invest in DES and microgrid developments, as states like California will pursue microgrid solutions to meet their carbon reduction goals, enable greater electrification of their economies while meeting the demand for cost effective, safe and reliable power.
With so many applications for microgrid and DES solutions, it seems that any place in need of reliable, clean, decentralized electricity is likely to look to microgrids to meet its energy demands. If seeking a market that’s expected to grow in its DES usage, look for one that has these needs. You won’t have to look far.