The global microgrids market is estimated to be valued at US$30 billion in 2022, growing at a compound annual growth rate (CAGR) of 15% between 2018 and 2022, according to GlobalData.
The company’s latest report Microgrids, Update 2018 Global Market Size, Competitive Landscape, and Key Country Analysis to 2022 reveals that despite the slowdown in the market, compared to the 23% growth during the 2013–2017 period, it is expected to showcase a healthy growth, mainly attributed to trends in the Asia-Pacific region. Americas will continue to be the largest market, reaching $18 billion in 2022, underpinned by movements in the U.S. market. The Asia-Pacific market is expected to grow with a CAGR of 18%, making it the fastest growing market during the forecast period.
Nirushan Rajasekaram, Power Analyst at GlobalData commented: “Globally, there is an increasing demand for electricity. In addition, the global power market is in a transition phase, supporting the expansion of distributed generation to circumvent volatile fossil fue l costs and supply market risks.
“The deployment of microgrids varies based on the needs of the country within a particular region. Within Americas, the US market is primarily focused on grid resiliency and reliability of power supply; whereas the Brazilian market is primarily focused on ensuring universal access to electricity, similar to developing countries in Asia and Africa.”
Well-developed power markets such as the United States, Canada, and Japan are prone to natural disasters. Microgrids offer backup capabilities during periods of network downtime, reducing the impact on day to day activities. In addition, a microgrid allows end users to reduce their dependency on the grid in areas with high retail prices such as in California, South Australia and Japan.
However, the development of microgrids has been hindered by the lack of regulations and poor establishment of relevant business models. In certain underdeveloped markets, the cost and integration of energy storage is a big challenge and may not provide for a viable business case.
Rajasekaram concludes: “Microgrids are seen as a viable technology to supplement the central grid. The shift in utilization of technologies within the power sector and growing influence of consumers at the distribution level would necessitate the use of smart infrastructure to support grid operations.
“Government mandates, technology advancement, changes in utility perception, and the eventual market acceptance are key factors that will determine the future of microgrid installations.”