MICROGRIDS How microgrids are shaping the power industry

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A new report by Global Market Insights has highlighted the trends likely to shape the microgrid market between 20217 and 2027, with the need to integrate renewable energy sources and technologies being one of the biggest driving forces.

2020 was a defining year for the power industry and highlighted both new challenges and potential opportunities.
Not only did it struggle through the most difficult moments of a global pandemic, but we also saw witnessed the sheer fragility of centralized power distribution systems due things like natural disasters and severe weather events at a time when the need for a reliable power supply had never been so high. This has highlighted the potential for microgrids which, during a time of crisis, could help keep power flowing and support continuity.

What are microgrids?

A microgrid is a decentralized group of power sources and loads that normally operate as a connected and synchronous systems within a synchronous grid but are capable of disconnecting and functioning autonomously as physical, technical, or economic conditions require.
To meet energy demands, a microgrid must have a generation source. These were historically powered by fossil fuels, but newer microgrids today supply electricity with a combination of renewables—i.e., solar—plus battery storage.

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Indeed, the need to reduce greenhouse gas emissions is prompting energy stakeholders to integrate more renewable sources and consequently helping to drive the microgrid market. With this ability to integrate cleaner energy sources into the grid, provide more control over energy costs, and boost resilience, microgrids are changing the way we consume electricity and as we look at the years ahead, significant market growth is expected as a few key power sector trends change the game.

Microgrid market growth outlook

According to a new report from research firm Global Market Insights, the global microgrid market exceeded USD6 billion in 2020 and will record a 27 % compound annual growth rate (CAGR) between 2021 and 2027. Ongoing grid modernization in addition to the installation of advanced sustainable energy generation sources across the network will propel the industry to such an extent that it will hit USD33 billion by 2027, says the study.

The report highlights trends likely to shape the market in this time, with the need to integrate renewable sources identified as one of the key driving forces. This is in addition to the increasing demand for off-grid electricity in growing countries and economies such as South-East Asia and Africa. Here, national governments and utility companies are desperately trying to improve energy access to households, which is a huge driver for new microgrid deployments.

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In 2019, for example, the government of Myanmar approved a microgrid project developed by InfraCo Asia an Electricite de France (EDF) for Kha Laing village. Also in 2019, Maharashtra Energy Development Agency issued a tender for a 29.4 KW microgrid project for Maharashtra, India. The project is likely to provide electricity to more than three villages. The market in Canada is also expected to grow due to a strong regulatory and community focus on the integration of sustainable networks and reliable power infrastructure. The country approved three-year plans in 2018 backed by both the government and industry which will address technical issues such as microgrid operation, stability, and reliability.

Overall, the coming year looks as if it will be one of rapid growth for the microgrid market which will continue throughout the decade. This growth will be fuelled by less complex and more repeatable solutions, battery energy storage systems, and new as-a-service business models. The result will be a centralized power grid significantly enhanced by the resilience and sustainability of tomorrow’s microgrids.

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