Driven by demand for autonomously operating networks of distributed energy resources in North America and Asia, "energy storage-enabled microgrids" are set for strong, steady growth over the next decade, a new Navigant Research report found.
Released Oct. 3, the report forecasts that 14,850.7 MW of new microgrids backed by batteries and other forms of energy storage will be installed worldwide over the next 10 years, generating roughly $22.3 billion in revenue, as annual additions jump to 3,291.8 MW by 2026 from an estimated 238.4 MW in 2017.
"The largest segment right now is remote, off-grid projects," report author Alex Eller said in an interview, pointing to installations on islands, electrification of remote villages and power for mining operations, where microgrids "are economical right now" as a replacement for diesel fuel. "These are really where the benefits are most clear."
Emerging business models and financial products, technology cost reduction and greater regulatory familiarity with microgrids, however, will facilitate wider deployments in grid-connected markets, Eller added. "Grid-tied microgrids only make sense right now in areas with high electricity prices and demand charges, but over the coming years that's where it's going to make more sense as costs come down for everything."
Navigant expects North America to add 5,847.7 MW of storage-backed microgrids through 2026, followed by the Asia Pacific region with 5,572.6 MW. Microgrids coupled with storage will grow at a slower pace than stand-alone behind-the-meter storage, because microgrids are more complex to install and commission, Navigant said.
Added impetus for microgrids could come from U.S. state and federal governments now considering support for autonomous distributed energy networks as alternatives to conventional grid power in hurricane-prone regions, the Navigant research analyst added. "We are seeing more and more microgrids at critical facilities for resiliency," Eller said. Congress is considering microgrid and storage funding, in part to help rebuild Puerto Rico's power system, which was demolished by Hurricane Maria.