Microgrid Multi-Client Study

In recent years, microgrids have evolved from a nascent concept to a significant source of opportunity—and concern—to players across the electric power industry. Drivers of this evolution include the following:

  • Acceleration of distributed energy resource (DER) deployments (particularly solar PV and energy storage)
  • Increase in frequency and duration of outages due to aging grid infrastructure and extreme weather events
  • Rise of engaged prosumers (those who both produce and consume energy), communities, and their advocates, which place a higher value on independent control
  • Energy resilience as an economic enabler

In an effort to understand this emerging market, the sponsors of this multi-client survey commissioned Navigant to help them develop a deeper understanding of and sharper strategic approaches to the emerging microgrid industry.

Navigant engaged 12 project sponsors in a collaborative effort to define the scope of this research through a series of webinars and in-person workshops. Market research, expert interviews, strategy and business model tool development, and collaborative engagement between the sponsors and Navigant’s subject matter experts yielded the conclusions and insights presented in this report. The most important outcomes are summarized according to the mutually agreed upon five scope areas of the project—an introduction to microgrids, market and drivers, business modeling, strategy, and implementation. Navigant communicated these insights to the study sponsors through a series of deliverables, including a final report and other interim reports and presentations.

Study Findings:
  • Microgrids are complex and do not have a widely accepted definition.
  • The North American microgrid market is small, rapidly growing, highly fragmented, and driven by different factors in different regions and jurisdictions.
  • Microgrid business models are not well-established, resulting in significant financial risk—and opportunity.
  • Rigorous and careful microgrid strategy making is needed to address market fragmentation, complexity, and risk.
  • Microgrid technologies offer significant promise for value creation but require careful balancing of functional capability with benefit monetization opportunity and operating risk.
Study Outcomes:
  • Sponsors gained a deep understanding of the state of the microgrid industry.
  • The study developed tools and approaches to better enable effective pursuit of sponsors’ defined microgrid business objectives.
  • Sponsors gained a sharper understanding of where microgrids can, and cannot, add net value within a particular market segment and customer context.
  • Sponsors are in a position to develop, solidify, and articulate their microgrid expertise to others and thereby influence decision-making within their organizations and the industry.

Table of Contents

Executive Summary

Study Findings

Study Outcomes

Future Outlook

Report Highlights

Introduction to the Study

Introduction to Microgrids

Key Takeaways

Definition

Classification

Analysis Components

Market and Drivers

Key Takeaways

Trends and Drivers

Segmentation by Classification

Segmentation by Project Size

Segmentation by Implementation Revenue

Segmentation for Ontario

Segmentation by Technology

Business Modeling

Key Takeaways

Microgrid Business Model Definition

Microgrid Business Model Framework

Analysis Tools

Archetypal Players and Approaches

Strategy

Key Takeaways

Microgrid Strategy Definition

Microgrid Strategy Development Process

Implementation

Key Takeaways

Case Study Approach

Standards

Conclusions

Appendix A. Project Team

List of Figures

  • Key Takeaways from Introduction to Microgrids
  • Microgrid Commercial Ecosystem and Analysis Components
  • Stage of Development of the Microgrid Industry
  • Key Takeaways from Markets and Drivers
  • Total Capacity (MW) of Microgrids by Segment, Tracker Basis, North America
  • Number of Grid-Tied Microgrids by Total Capacity, Tracker Basis, North America
  • Microgrid-Enabling Technology Vendor Revenue Market Share by Technology, World Markets: 2014
  • Key Takeaways from Business Modeling
  • Commercial and Financial Business Model Components
  • Analysis Tools for the Microgrid Business Model Framework
  • Key Takeaways from Strategy
  • Business Model vs. Strategy
  • Key Strategy Development Questions
  • Navigant’s Microgrid Strategy Development Process
  • Key Takeaways from Implementation
  • Case Study and Highlight Study Projects
  • Conclusions from Study

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