ALL ABOUT MICROGRIDS

Microgrids; Smart Energy Aggregation Platforms for Distributed Power Generation, Safe Grid Islanding, Reliability, Security, and Emergency Services
Peter Asmus, Brian Davis and Clint Wheelock, 4Q 2010 (Pike Research)

"…[F]ew fully commercialized state-of-the-art microgrids with significant generation capacity are actually up and running in North America, the world’s leading market for microgrids…[A]nalysis by Pike Research…[finds] the issues involved are…complicated…

"The Pike Research definition of a “microgrid” …[is] an integrated energy system consisting of distributed energy resources (DERs) and multiple electrical loads operating as a single, autonomous grid either in parallel to or “islanded” from the existing utility power grid. In the most common configuration, DERs are tied together on their own feeder, which is then linked to the larger grid at a single point of common coupling. Though similar in many ways to a virtual power plant (VPP), this report tries to draw firm lines between the two…[though] business models that overlap."

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"Pike Research developed a proprietary database that identified 1.3 gigawatts (GW) of existing or planned microgrids, which served as the foundation for a 2009 market forecast…[K]ey assumptions underlying the 2009 forecast that were adjusted for this 2010 update are…[1] The United States still has not implemented a meaningful carbon regulation regime, which the 2009 Pike Research market forecast assumed would have been enacted by now…[2] The lack of a clear market for carbon-free energy hindered the evolution of the green technology/green jobs sector, further dissipating momentum…reducing the need for near-term microgrids…[3] [S]timulus funds deployed on behalf of the smart grid have…[failed to create] new jobs linked to thoughtful and effective grid upgrades (including microgrids)…[4] [R]egulatory support for microgrid developments [has] yet to coalesce…[except] with regards to military applications – one of the most promising near-term market opportunities – and within engineering circles at the Institute of Electrical and Electronics Engineers (IEEE).

"Since last year, Pike Research has learned of more than 50 microgrid projects that are operating in some capacity or are in current development…[T]he Pike Research database now includes more than 140 microgrid projects totaling over 1.1 GW in capacity…[Adding] industrial sites and college campuses…the total capacity of microgrids currently operating, or in the development phase, globally, climbs to more than 1.8 GW…Pike Research has incorporated some significant changes to the 2010 forecast for global microgrid capacity…[It] is rooted in a more granular assessment of each segment within each country. In addition, three different scenarios were developed, acknowledging that the future microgrid market still faces great uncertainty."

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"A clear market niche exists for…energy services tailored to the precise needs of underserved utility customers, both in the industrialized world as well as emerging markets…Pike Research’s 2010 market forecast takes a more sobering view of the microgrid opportunity, though the aggressive scenario shows microgrid capacity reaching nearly 4.5 GW by 2016…[It may] take longer than visionaries and venture capitalists have the patience for, but that potential exists for rapid growth toward the end of the market forecast period…[and] federal military agencies have clear mandates – some funded, some not – to bring a host of microgrids online within the 5-year forecast period.

"…[S]ignificant progress has been achieved on the security, safety, and engineering standards supporting commercial microgrid deployments, which should drive technology cost decreases over the next five years…[setting] the stage for greater growth in the later years of the forecast period, an exponential growth trend that will continue to explode beyond 2016…[T]otal microgrid revenues for all five segments in 2011 are approximately $200 million. By 2016, however, the market is expected to total $2.3 billion, and, under the best of circumstances under the aggressive scenario, exceed $3 billion…[The Institutional/Campus] enjoys the largest cumulative capacity over the forecast period…[The Military] segment is an early adopter, but is restricted to the United States…[Remote “Off-Grid” Systems] will always be smaller than other segments…Europe leads [the Community/Utility] segment to date…[The Commercial/Industrial] sector should be robust over the long term…[though] the lack of well-known standards limits near-term commercial projects…"