Microgrid

Microgrid

The Microgrid market has witnessed significant growth in recent years due to a rise in investment by countries toward the energy sector. Countries such as China, India, Japan, Germany, and the USA are leading the market in terms of Microgrids market for the year 2022. The main driver of this market growth is its ability to produce clean energy.

The Microgrid Market is expected to grow at a steady rate of around 17.1% owing to the increasing investments in renewable energy. Microgrids can be powered by renewable technologies such as wind systems, solar systems, microturbines, hybrid systems, and combustion turbines. Microgrids can be integrated with these renewable technologies to reduce carbon footprints on the environment. Several governments worldwide are taking initiatives to reduce their carbon footprints on the environment, for example, the Government of Delhi, India started a transition to zero-emission vehicles in 2020, aiming to have 25% of all newly-registered vehicles to be EVs by 2024, which number is currently 0.2%. A few drawbacks that the microgrid market can encounter include the initial setting up cost and the high maintenance cost of microgrids. The setting up costs of microgrids are 25-30% higher than the traditional grids. Based on technology, the market is divided into alkaline electrolyzer, PEM electrolyzer, and SO Electrolyzer. Among these, the alkaline electrolyzer dominated the Microgrid and is expected to show the same trend in the forecast period. Alkaline electrolyzers are one of the most common types of technologies used in the production of hydrogen. These systems are usually composed of electrodes, a microporous separator, and an aqueous alkaline electrolyte of around 30% by weight KOH or NaOH solution. Moreover, alkaline electrolyzers provide value advantages over different forms of electrolysis technologies. They employ ample and inexpensive materials, including nickel-based catalysts, which make contributions to their affordability. This makes them a favorable preference for mass manufacturing and huge-scale hydrogen production, supporting the growing demand for clean energy solutions. Furthermore, alkaline electrolyzers have a high conversion efficiency, effectively splitting water into hydrogen and oxygen. This ensures minimal energy losses in the course of the electrolysis procedure, leading to higher overall performance in producing Microgrid. For instance, in 2023, ThyssenKrupp Nucera introduced a new product name for its 20 MW alkaline electrolysis module, which will henceforth be called ‘scalum’. The launch of the new product name marks the next milestone in the long-term development of the ThyssenKrupp Nucera brand.

A microgrid consists of interconnected loads and distributed energy resources (DERs) with defined electrical boundaries (e.g., Communities, cities, campuses). A microgrid can be connected or disconnected with the main grid according to the economic or physical conditions. This can operate both at grid connected mode (synchronous with the grid) or on island mode (functioning autonomously and disconnected from the main electric grid). Majority of the world’s microgrids are currently present in North America and Asia-Pacific. The People’s Republic of China (PRC) has the highest capacity in Asia Pacific.

• Based on connectivity, the global microgrid market is segmented into Grid Connected and Off-Grid. Amongst connectivity, the off-grid segment of the global microgrid market would register substantial growth during the projected period. The usage of off-grid microgrid systems is gaining popularity as the need for power outages in remote areas is growing. There is an increasing demand for power infrastructure in rural areas and due to this, it is easiest to install off-grid microgrids to enhance the already built-up infrastructures in these regions. Myanmar Government approved the microgrid project developed by Electricite de France (EDF) and InfraCo Asia in 2019 to provide electricity in remote locations such as the Kha Laing Village in Myanmar. Also, in 2018, Canada approved a 3-year plan with a multidisciplinary team in Alberta to lead microgrid projects with industrial and government support.
• Based on grid type, the global microgrid market is segmented into AC Microgrid, DC Microgrid and Hybrid. Amongst grid type, AC microgrid accounted for a significant market share in 2022 and is expected to showcase high growth during the projected period. AC microgrids can lower transmission losses with minimal heat generation and have effective high-end voltage levels across the network. This is likely to sway the demand for this technology. Additionally, these are also highly compatible with grid networks and do not need any invertors for power supply. Moreover, they can be deployed with large solar and wind farms which may further enhance their market growth. As most governments around the world are trying to lower their carbon emission this could be a benefit for the market growth of the AC microgrids. For example, in 2020 Santa Barbara allocated over US$ 500,000 to the designing and studying of microgrids for schools around the county. The preliminary assessment by Clean Coalition identified more than 15 megawatts of solar generation potential across and 18 school sites.
• Based on power source, the global microgrid market is segmented into Diesel generators, Natural Gas, Solar PV, CHP, and Others. The natural gas segment captured a significant share in the market in 2022 and is expected to showcase substantial growth during the forecast period. Government policies are favoring the integration of efficient and sustainable power generation to boost the natural gas (NG) powered microgrid infrastructure. Shifting towards renewable power sources and lowering their carbon footprint is boosting the use of natural gas microgrids. In 2020, Stadtwerke Kiel, the municipal utility of Germany inaugurated a new 190 MW CHP natural gas plant and decommissioned the 323 MW CHP coal-fired plant. All developed as well as developing economies are focusing on decommissioning their coal-based pants and minimizing their carbon footprints. Apart from the natural gas microgrids, the Solar PV microgrids are also expected to show a lucrative CAGR during the forecast period.
• Based on storage device, the global microgrid market is segmented into Lithium-ion, Lead Acid, Flow Battery, Flywheels, and Others. Amongst storage devices, the lithium-ion segment of the global microgrid market registered major market share in the year 2022 and is expected to showcase substantial growth during the forecast period. Batteries are an important part of the microgrid system as they improve the performance, generator efficiency and system reliability. These storage devices can minimize the fuel consumption. Until recently, lead-acid storage devices were considered the most economical and were the most popular. Recently, lithium-ion storage devices have gained popularity. Even though lithium-ions have a high initial cost which goes as much as US$ 600/kWh, they have benefits like high efficiency (95%) and short discharge time. Power range of lithium batteries is around 100 MW or higher and the response time may be a few milliseconds. This makes them highly efficient and long-lasting which is boosting their popularity and thus market growth. One drawback of lithium batteries is, however, due to their high cost they are less favorable in remote locations.
• Based on application, the global microgrid market is segmented into Healthcare, Educational Institutes, Military, Utility, Industrial/ Commercial, Remote, and Others. Amongst application, industrial/commercial segment accounted for a significant market share in 2022 and would showcase ample growth during the projected period. The growing efforts of the government to revamp and reconstruct the existing T&D networks along with the installation of energy-efficient solutions will help drive the business outlook. For example, the State grid of Liu Zhenya of China has nearly 1 million employees and 1.1 billion customers and has plans to connect the entire world with transmission lines, starting with Asia. Industrial and commercial sectors are focusing of developing intelligent solutions across new as well as conventional grid infrastructures. The incline of government authorities to reduce carbon emissions across the electrical network is boosting market growth as well as technological advancements in grid modernization.
• For a better understanding of the market adoption of the Microgrid, the market is analyzed based on its worldwide presence in the countries such as North America (U.S., Canada, Rest of North America), Europe (Germany, U.K., France, Spain, Italy, Rest of Europe), Asia-Pacific (China, Japan, India, Australia, Rest of Asia-Pacific), and Rest of World. APAC has dominated the market and is projected to be the dominating region in the forecast period. There are many developing countries in Asia-pacific including India, China, Indonesia etc. Over the decades, urban areas have developed with good grid infrastructure, but rural areas have been deprived of this. With the help of microgrid systems, electrification can reach rural and less privileged regions. This is possible because microgrids are cost-effective and can save the money needed for transmission and distribution equipment. There can reach remote locations. Additionally, as they are rural energy-based, they can comply with the Paris Agreement and other sustainable climate pacts and are helping the countries promote clean energy policies. For example, half of the Indonesian population is living in rural regions, and with the help of microgrids, over 88% of Indonesia has access to electricity. Additionally, India has over 160 microgrid solutions spread over four Indian States – Bihar, Uttar Pradesh, Rajasthan, and Odisha. Over 80% of these microgrids are solar-powered.

Some of the major players operating in the market include ABB, General Electric Company, Siemens AG, Eaton Corporation Inc, Schneider Electric SE, Honeywell International Inc., HOMER Energy LLC, S&C Electric Company, Power Analytics Corporation, and Exelon Corporation.