The majority of the microgrids operating today started as pilot projects or R&D experiments. However, the industry is now moving into the next phase of project development. It appears that the main technology components of microgrids are reaching maturity, with energy storage technologies making the most dramatic leaps within the past 2 years. The key to future growth rests with greater flexibility in regulation and public policy that, in turn, are spawning business model innovation from market players both large and small.
Due to the diversity of microgrid segments, the business cases for microgrids continue to evolve. The modularity and highly variable configurations of microgrids make calculating an overall return on investment for all microgrids virtually impossible. Through their ability to enable networking and sharing of resources to match loads, microgrids can play a role in realizing greater utilization of existing generation and load resources. Yet, resiliency services enabled by technology are not free, and each microgrid segment leans toward a different business model.
This Navigant Research report examines the latest thinking among utilities, technology vendors, and regulators about emerging business models that can take the global microgrid market to the next level. The study explores 10 different business models being applied to this market today. It also provides an analysis of how different microgrid market segments gravitate toward different development strategies that reflect preferred resource mixes, existing contracting vehicles, and lessons learned from adjacent markets such as solar PV and energy storage. Tables included in the report highlight which of these models are being applied to different microgrid markets, as well as the relative maturity and financial opportunity attached to each development pathway.
Key Questions Addressed:
- What are the most common business models being deployed today for microgrids?
- How do these business models map to different market segments?
- Which business models are preferred by large technology companies?
- Which business models are preferred by smaller startups?
- What are the unique issues facing utilities entering the microgrid market?
- How are remote microgrids addressing the unique challenges related to providing energy access?
Who needs this report?
- Microgrid developers and systems integrators
- Distributed generation (DG) manufacturers
- Energy storage providers
- Smart grid software vendors
- Distributed energy resources (DER) controls specialists
- Government regulators
- Investor community
Table of Contents
1. Executive Summary
2. Business Model Taxonomy
2.1 What is a Microgrid Business Model?
2.2 An Inventory of 10 Microgrid Development Paths
2.2.1 Facility Owner Financing and Maintenance
2.2.2 Utility Rate Base
2.2.3 Pure Hardware Component Sales
2.2.4 Software as a Service
2.2.5 Government Energy Service Contracts
2.2.7 Non-Synchronous Direct Current
2.2.8 Operations and Maintenance Contracts
2.3 Mapping Business Models to Markets
3. Conclusions and Recommendations
List of Charts and Figures
- Total Microgrid Power Capacity Market Share by Segment, World Markets: 4Q 2015
- Microgrid Commercial Ecosystem Mapping: Business Model Considerations
- Microgrid Commercial Development Pyramid
- Energy Solution Bundle Blended PPA Model
- Siemens DBOOM Microgrid Offering
List of Tables
- Microgrid Business Model Matrix: Global 2016 Snapshot
- Mapping 10 Microgrid Business Models to Market Segments
- Utility Business Model Options for Microgrids: Pros and Cons