The global market for microgrids, and other forms of aggregation and optimization for distributed energy resources, made some major leaps forward during 2011. While not the commercial opportunity being hyped by some organizations such as the Galvin Electricity Initiative, this smart grid network platform is coming of age, especially in the U.S., due to two major developments.
The first was the adoption of standards for safe islanding by the Institute of Electrical Energy Engineers (IEEE) in July 2011, which should accelerate the shift from pilot validation projects to fully commercial microgrid ventures. Since 2009, a handful of large projects have come on line, especially in California – as platforms for aggregation of distributed renewable resources – and in New York, with combined heat and power (CHP) units as anchor technologies.
Second, a series of Federal Energy Regulatory Commission (FERC) orders – 719, 745, and 1000 – takes steps toward harmonizing innovation occurring independently at the wholesale and retail market levels. Demand response (DR) is seen as a stop-gap resource whose role will expand in markets characterized by volatility, high demand peaks, and lack of new transmission level generation capacity. Microgrids are now being viewed as the ultimately reliable DR resource, since islanding securely takes load off of the utility grid.
The recently updated Pike Research Microgrid Deployment Tracker 4Q 2011 identified over 100 more microgrids than previously highlighted, representing more than 300 megawatts of planned or operating additional capacity, primarily in the remote microgrid segment.
Pike Research’s new report, Remote Microgrids, highlights the fact that this remote sector represents the largest potential investment and revenue, a market currently valued at $3 billion and projected to grow to over $10 billion in the average scenario forecast by 2017. These figures reflect the fact that remote microgrids require the build-out of new renewable distributed energy generation facilities, whereas many of the grid-tied microgrids previously profiled by Pike Research only derive revenues from networking and optimization of existing generation assets.
Pike Research has also identified four sub-segments of the remote microgrid market, which is further commercialized than other segments, but heretofore sorely lacking in available data:
- Village Power Systems: Perhaps the largest number of remote microgrids operating today would fall into this category, though data is extremely scarce due to the small scale of such projects and to the fact that most installations are located in Asia. According to leading purveyors of this remote microgrid sub-segment, the average village power system has a capacity of 10 kW. It typically provides power to a medical clinic, school, and/or community center in the center of the village.
- Weak Grid Island Systems: To a purist, microgrids that have any linkage to a larger grid would not be considered “remote.” From the Pike Research perspective, these systems belong in the remote microgrid camp since the underlying assumption is to design and operate a power system as if the larger grid is not there. Weak grid island systems could represent an even bigger opportunity than the campus environment and military microgrid sectors that have been featured by Pike Research in previous microgrid segment reports.
- Industrial Remote Mine Systems: This sub-segment of the remote microgrid market is the least mature, but also boasts the highest growth rates due to a groundswell of interest in shifting to more sustainable energy strategies for sites controlled by large multinationals. Globally, nearly 75% of existing mines are remote operations, though very few deploy renewable energy generation.
- U.S. Mobile Military Microgrids: This last category of remote microgrids is the least developed, but has the most policy and financial support from the U.S. Department of Defense. At present, these systems are being deployed in pilot projects in combat missions at FOBs in Afghanistan and other remote DOD sites. They are included in this report because many mobile systems will likely become village power systems to serve humanitarian services once U.S. troops pull back from combat zones such as Afghanistan.
And while Africa and the rest of the developing world are ideal markets for remote microgrids, Comverge, the struggling demand response provider, ended 2011 with a bang when it announced a major deal with South African provider Eskom, one of the largest utilities on the continent. With DR technology now spreading more rapidly throughout the world, new synergies between microgrids, DR and virtual power plants will certainly emerge.