Microgrid systems to gross $1.7 billion by 2016

Microgrids -- isolated smart grids for distributed power generation and energy storage, separate from the utility power grid -- will gross $1.7 billion by 2016, according to a new report.
Written by Andrew Nusca, Contributor

Before the nation's power grid is able to get smarter across the board, it needs to get smarter in pieces.

Microgrids -- which use smart grid tech to control distributed power generation and energy storage on localized grids, separate from the utility power grid -- will gross $1.7 billion by 2016, according to a new report.

According to Pike Research, the more than 140 microgrid projects around the world -- which have more than 1.1 gigawatts of collective capacity -- will see a 64 percent compound annual growth rate in the next five years, increasing from $144.2 million in 2011 to $1.7 billion by 2016.

With a more aggressive forecast that allows for the regulatory, industry and public policy stars to align, microgrid revenues could reach $3 billion.

Microgrids use several energy sources to generate power, from fossil fuels to renewable sources such as wind and solar. The benefits are best for commercial and industrial sites, university campuses, the military and any remote community.

The problem, according to the report, is that the reality hasn't yet met the hype. Only a few fully commercialized microgrids with significant generation capacity are actually online in North America, the world’s top market for the tech.

The hurdles? Business models that actually work, for one, as well as regulatory bodies that aren't fixated on centralizing the nation's power distribution infrastructure.

(It's the smart grid catch-22: networking everything allows for a wealth of benefits and intelligence, but it also opens the door for the possibility of more catastrophic outages.)

It also doesn't help that the U.S. has yet to implement a carbon regulation regime and poorly spent stimulus funds on easing utility companies' costs rather than creating new jobs, according to Pike.

For now, microgrid systems represent a market minority, but they're vital for towns who don't have the benefit of a utility power grid. How big a part in the nation's overall power portfolio microgrids will play is largely dependent on legislation for the green energy industry at large.

This post was originally published on Smartplanet.com

Editorial standards