With an increasingly distributed energy system, rapidly falling energy storage costs, and a growing demand for flexibility and energy autonomy, microgrids are fast becoming a key topic of commercial relevance in many global markets. In short, microgrids are one of the hottest topics in the industry right now - and key players don’t want to be left out.
This post reflects on the findings that emerged from the three polls we conducted during our recent 'Microgrids are coming - how can you benefit?' webinar. With the highest number of registrants a Delta-ee webinar has ever had, this in itself says a lot about the level of interest surrounding the topic. If you missed the webinar, it is available to watch again on YouTube here.
A graphical representation of a microgrid, with multiple distributed loads and generation assets.
Interest in microgrids is growing.
Where is the interest coming from?
Utility companies are actively exploring the opportunities and threats associated with the emergence of microgrids, as can be seen by the breakdown of the results from the 1st webinar poll.
However, manufacturers are also taking a keen interest in microgrids. For example, Delta-ee knows of a number of manufacturers who are developing microgrid solutions today with the objective of widening their service offerings to include energy services through an ESCo business model. The continued emergence of manufacturers offering energy services alongside their hardware is a very real threat to the established utilities in some countries / sectors.
If companies fell into the ‘Other’ category, we asked them to let us know who they represent and a significant proportion identified as housing developers or housing associations. The interest from these companies is noteworthy given the applicability of microgrids in a community energy application as a force to drive down energy prices and improve grid resiliency and reliability – in both urban and isolated contexts.
How active are the viewers in the development of microgrids?
The largest share of those watching the webinar (39%) stated that they are in the early stages of exploring and understanding microgrids as an opportunity, highlighting the relatively early nature of microgrid activity within many companies. While this result is not highly surprising given the nature of the webinar, what was perhaps most interesting is the large number of viewers (nearly a third) that are ‘actively engaged’ in developing microgrids but without having a fully developed strategy, product or service - yet.
What this suggests to us is that there are many companies that are currently in the ‘strategy development’ phase who are considering how best to position themselves to maximise the opportunities associated with this space. And it will only be a matter of time before many of these companies come to market.
Therefore, we can be sure that the ‘microgrid’ space will become a whole lot more competitive in the next 5 to 10 years.
What will be the greatest enabler for microgrid market growth?
Viewers saw the following factors as being important for microgrid growth over the next 5-10 years, from most to least important:
- Microgrid component price reductions,
- Innovative business models,
- Regulatory reform, and
- Increased promotion/competition.
A reduction in component prices, the most voted for option, will undoubtedly spur microgrid growth. For example, as was discussed in one of the case studies examined during the webinar, generating off-grid power using solar PV is often now much more affordable than using diesel generators. This is largely attributable to the rapid decline in the cost of solar PV panels over the past 10 years. Julian Jansen, Delta-ee’s energy storage expert, described, during the webinar and in the Q&A session at the end of the webinar, how the decreasing cost of energy storage has also been a key enabler of microgrid market growth.
Innovative business models, identified as the next most relevant driver of microgrid market growth, is a very topical area and one that is a focus of ours as we continue to research microgrids ahead of the publication of our Microgrids Multi-Client Study in April. Just under a fifth of viewers identified policy reform as an important enabler of market reform. This is something which is largely location specific. It is becoming more common for early developers of technologies to inform policy development as regulatory frameworks often lag behind industry developments.
What we think
There are a range of actors at different stages of development, with a large number of companies taking an interest in microgrids. Microgrids will undoubtedly evolve to become a very important, perhaps disruptive, market opportunity within the energy industry. It is therefore time to act sooner rather than later.
Delta-ee’s Microgrid Multi-Client Study is the perfect tool to help position your organisation towards the leading edge of microgrid developers and provide insight into developing the right strategy for your company before being crowded out of the market.