Distributed Power Market Update

North America is the leading region for microgrids today, but the largest and fastest-growing nanogrid markets are remote systems operating in the developing countries of the Asia-Pacific region, the Middle East, and Africa.

Several recent reports put numbers on some of the underlying technologies associated with distributed generation (DG). Analysts at Navigant Research, Chicago, have been working the distributed generation space intensively of late, and coming up with estimates for market size over the next 10 years. Together they paint a picture of rapid growth in DG technologies and rapid transformation of the electric power landscape.

Residential generation and storage. Once the cost and convenience of generation and storage on a home scale become competitive with grid-source power, the groundswell of defections will begin to roll unless utilities find a value offering to counter it. Navigant analysts forecast that residential energy generation and storage will reach $71.6 billion per year worldwide by 2023. Leading the technological surge are solar photovoltaic (PV) panels. Worldwide revenue from all forms of residential distributed generation and energy storage now stand at $52.7 billion annually in 2014, suggesting an increase of almost $19 billion, or 36%, over the next 10 years.

Virtual power plants. One of many technologies utilities may use to counter defections applies software to bundle distributed generation resources together and manage them as “virtual power plants” (VPPs).

Navigant analysts found that VPPs offer the highest profit for owners of generation assets. According to their report, total annual VPP vendor revenue will grow from $1.1 billion in 2014 to $5.3 billion in 2023.

Nanogrids and microgrids. Small grid power systems are a key part of the commercial and institutional distributed generation picture, particularly in developing countries. North America is the leading region for microgrids today, but the largest and fastest-growing nanogrid markets are remote systems operating in the developing countries of the Asia-Pacific region, the Middle East, and Africa. According to Navigant, worldwide installations of nanogrid capacity will grow from nearly 8,900 megawatts (MW) in 2014 to 14,200 MW in 2023 — an increase of 60%.

Storage solutions. Advanced batteries and fuel cells are key technologies for operating a distributed generation system. Fuel cells have been struggling to attain commercial viability, but Navigant found that stationary fuel cell systems are showing strong growth and forecast that more than 1.2 million stationary fuel cell systems will be shipped annually by 2022.

Navigant estimates that the worldwide market for next-generation advanced batteries — including ultracapacitors, lithium sulfur and new flow-battery technologies — will reach $9.4 billion annually by 2023, from an estimated $182 million in 2014.

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