Market dynamics driving more companies, communities to try microgrids

More than 100 new microgrid projects came online between the second and fourth quarter reports published by cleantech analyst firm Pike Research.

Just before Christmas, I wrote a piece on three smart-grid trends I'll be watching in 2012 and touched on microgrids as one of them. Lo and behold, cleantech research firm Pike Research is out with a new report this week suggesting that microgrids are poised for a breakthrough year.

Microgrids are localized electricity generation resources that rely on smart-grid technologies to help integrated distributed resources. They could aggregate generation sources using traditional approaches, but many of them are using newfangled systems such as fuel cell technologies or renewable energy sources.

Pike Research published a quarterly tracker on microgrid activity. The fourth-quarter edition is following details of close to 270 microgrid projects, worldwide, compared with 166 in the second-quarter report.

I've reported on a number of such projects in my coverage of fuel cell technologies from Bloom Energy, UTC Power and FuelCellEnergy. A couple of examples: "Energy-in-a-box: More businesses try prime fuel cells" and "Off the grid: 10 fuel cell deployments."

What makes the activity different, Pike Research suggests, is that many of the microgrid projects are moving into the realm of commercial viability. New York and California are particular hot beds of activity, given the high electricity costs in those two regions.

"A wide range of electricity users are demonstrating strong demand for power generation and distributions systems that can be operated independently from the utility grid," said Pike Research senior analyst. "A few of the market drivers include concerns about grid reliability, rising costs of fuel, broader availability of distributed generation technologies, and a drop in prices for some nontraditional energy sources such as solar photovoltaic systems."

The most active segments for microgrids will continue to be campus projects, military deployments and remote community installations, reports Pike Research. Remote projects, in particular, will generate an enormous amount of revenue between now and 2017. Three of those subsegments will become billion-dollar markets in their own right: village power systems, island grid systems and remote industrial mining projects.