Despite regulatory and legal barriers, the microgrid market in 2014 looks more dynamic than ever, as highlighted in a new GTM Research report. Several key trends provide strong prospects for the emerging U.S. microgrid landscape.
The profile of the typical microgrid customer is undergoing a substantial transformation. Remote communities and military bases have traditionally built fossil-fuel-fired microgrids when there was no viable alternative. Today, however, cities, communities and public institutions are emerging as new microgrid customers, often in densely populated areas where reliability matters most. This development is indicated by the recent wave of announcements of state-level resiliency programs. These projects will result in modest near-term capacity growth due to the small size of critical loads, but in combination with distributed solar, military and university market growth, they are expected to push the market out of its demonstration phase.
Microgrids can become a substantial component of renewable integration in regions with rapidly increasing solar PV penetration like Hawaii and California. Projects such as the Hawaii Department of Education’s Ka Hei program, which involves plans to construct 100 megawatts of solar PV at Hawaiian schools, partially in microgrids, are early indications that this trend is taking hold. Many advanced distribution network capabilities such as volt/VAR management can be enhanced and utilized by microgrids, simultaneously addressing reliability and renewables integration targets.
The growth of renewables-based microgrids will be tightly coupled with increased battery storage deployment for capacity firming and energy time-shifting. According to data from GTM Research's Deployment Tracker, one-third of operational microgrids now include electrical energy storage, 90 percent of which has been commissioned between 2011 and 2014. This makes storage in microgrids a relatively recent phenomenon, and indicates spillover effects from distributed energy storage growth fueled by state policies and FERC rulings.
For storage vendors, the microgrid market offers an opportunity to prove the business case. Demand charge reduction, peak shaving, backup power and renewables capacity firming are storage services that microgrid controllers can accentuate and customize to the local electricity market environment, offering opportunities for both large- and small-scale storage deployments.
Overall, the larger number of project announcements in 2011-2014 will create substantial capacity growth in the coming years. While still firmly rooted in the public sector, these deployments can serve as anchor points for business continuity-focused microgrid commercialization within ten to fifteen years. Early examples among top-tier real estate projects, such as Hudson Yards in New York City, are harbingers of more commercial interest to come.
But newly built communities are not the only pathway for microgrid deployment. Utilities will play a key role in determining where in their service territory microgrids can be of greatest benefit, for purposes including meeting reliability goals, the deferral of investments, and the alleviation of network congestion.
GTM Research forecasts U.S. microgrid capacity will exceed 1.8 gigawatts by 2018.
Click here for more information on GTM Research's report, North American Microgrids 2014: The Evolution of Localized Energy Optimization.
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