Utilities could benefit from microgrids, says Navigant report
June 30, 2015
Rather than viewing microgrids as a threat, a small but growing number of utilities view the microgrid they may own and operate – a utility distribution microgrid (UDM) – as the next logical extension of their efforts to deploy smart grid technology, according to a report from Navigant Research.
Although still a small slice of the overall microgrid pie, utility deployments and investigation into this emerging market have picked up in key regions such as North America, Europe and Asia Pacific. The overall UDM market represents significant investment opportunities for both the regulated and unregulated business units of utilities, says the report.
Government programmes that have popped up in the USA due to major power outages caused by extreme weather have set the stage for regulatory reforms that may enable both customer-owned microgrids and UDMs to move forward in the next decade. There is a clear need to examine the overarching architectures and related business models for microgrids if utilities are to remain relevant in an energy future characterised by diverse, bidirectional distributed energy resources.
The issue still unresolved is how best to quantify the societal benefits that the resiliency, security and sustainability offered by microgrids, especially those owned and operated by utilities, can provide. According to Navigant Research, global UDM implementation revenue is expected to grow from $2.4bn in 2014 to $5.8bn in 2023 under a base scenario.
The report analyses the global market opportunity for UDMs in three key segments: investor-owned utility grid-tied, public power grid-tied, and public power remote. The study provides an analysis of the significant market issues, including policy and technology drivers and implementation challenges, associated with UDMs. Global market forecasts for capacity and implementation revenue, broken out by segment, region and scenario, extend to 2023. The report also examines the current composition of and key technologies related to UDMs, as well as the competitive landscape.