As sustainability becomes increasingly popular and people seek more affordable options, are the days of central power generation fading?
According to a February 2023 analysis from Wood Mackenzie’s Grid Edge Service, the U.S. microgrid market reached 10 gigawatts (GW) in the third quarter of 2022, with over 7 GW currently in operation or in construction.
“Despite the global COVID-19 pandemic and associated macroeconomic challenges causing a 2-year slowdown in the U.S., the microgrid market is developing at a rapid pace and 2022 is on track to be a record year for installations and scheduled pipelines,” said Elham Akhavan, senior microgrid research analyst at Wood Mackenzie.
A major benefit of microgrid implementation is uninterrupted electricity service. While microgrids may be connected to a traditional centralized utility grid, these sources are local and they have the ability to operate independently. This means that if the main service goes down, areas hooked up to the microgrid can still access electricity.
Compared to 2017, Wood Mackenzie found a 47% increase in solar and storage capacity in the U.S. microgrid market, with over 175 projects scheduled to go live by the end of 2022.
“If the market continues to develop at a rapid pace, we will see more than 20% growth in annual capacity installation across the U.S. compared to last year,” Akhavan said.
She said that the commercial and industrial sectors lead as microgrid customers, followed by retail and manufacturing.
Microgrid as a service, MaaS, is a financing mechanism that allows organizations to incorporate microgrids without upfront investment. According to Wood Mackenzie’s data, the percentage of microgrids owned by end-users dropped 31% from 2019, with MaaS increasing by 25%.
“Although utilities typically look to rate base microgrids, some are partnering with developers to offer microgrids to their customers under MaaS agreements. For example, Enchanted Rock announced a utility partnership program in early 2022 that enables utilities to offer comprehensive ‘resilience-as-a-service’ to its customers,” Akhavan said.
The report showed that 28 states currently have utility microgrids, with California and Texas leading their regions with the most developments and operations. A residential development in Ann Arbor, Mich., is designed to run solely on a solar-powered microgrid, the first of its kind in the United States.
