U.S Microgrid Market - Forecast (2024 - 2030)

U.S Microgrid Market - Overview

The U.S Microgrid Market size is forecast to reach USD 10.6 billion by 2030, after growing at a CAGR of 13.1% during the forecast period 2023-2030. Microgrids are small scale localized power stations that have their own storage resource, generating plant and defined boundaries. The system can be powered by batteries, renewable sources and distributed generators based on the fuel requirement, application area and easy availability of generation source. The U.S. microgrid market is experiencing significant growth, driven by several key factors. Firstly, the increasing demand for reliable and resilient energy solutions has spurred the adoption of microgrids, which provide localized and decentralized power generation. This trend is particularly prominent in regions prone to extreme weather events, where microgrids offer a more robust and resilient energy infrastructure . Additionally, the integration of renewable energy sources, such as solar and wind, into microgrid systems aligns with the broader sustainability goals pursued by businesses and communities. According to the Center for Climate and Energy Solutions, the United States had 692 microgrids installed at the beginning of 2023, with a total capacity of nearly 4.4 gigawatts. This indicates a significant contribution to the U.S. energy landscape. It's worth noting that the microgrid capacity has seen substantial growth in recent years.

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Report Coverage

The report “U.S Microgrid Market – Forecast (2023-2030)”, by IndustryARC, covers an in-depth analysis of the following segments of the U.S Microgrid Market.

By Components: Hardware, Software and Services.

By Grid Type: Grid-Connected, Off Grid, Hybrid

By Area: Urban/Metropolitan, Semi Urban, Rural

By Grid Power: AC Microgrid, DC Microgrid, Hybrid

By Business Model: Purchase Power Agreement (PPA), Utility Rate Base, Owner Financing, Others

By Power Rating: <1MW, 1MW to 5MW, 5MW to 10MW, Above 10MW

By Source: Non-Renewable, Renewable, Storage System, Others

By End User: Commercial/Industrial, Community, Utility Distribution, Institutional/Campus, Military, Remote

By Region:? Northeast, Southwest, West, Midwest, Southeast, Alaska/Hawaii

Key Takeaways

? Northeast held the largest market share with 31% in 2022. Microgrids are able to power individual buildings, or entire cities even if the surrounding power grid is facing outage. The U.S. Northeast is one major region that has been witnessing an increased number of power outages in recent years due to natural calamities and bad weather.

? The pandemic has made healthcare and senior facilities particularly attuned to the importance of reliable power. Hospitals have emergency backup generators, but a majority do not have enough to back up their entire facility. Therefore, microgrids are gaining popularity in US.

? In 2022, Citizens Medical Center, a hospital in Victoria, Texas, in partnership with Texas-based Enchanted Rock announced its plans to install 2.8 MW microgrid, to keep the hospital fully powered during a grid failure, however due to some issues the plan delayed. The project is expected to be commissioned shortly. As the COVID-19 pandemic has further highlighted the importance of microgrid in healthcare facilities.

By Components - Segment Analysis

Hardware segment dominated the U.S Microgrid Market in 2022. Functional elements, such as the CPU module, digital input module, digital output module, analogue input / output module, local controller, data logger, data recorder, relays, metres, and communication network are the hardware components of the microgrid control panel. The growing number of major power plant microgrid projects and high demand from process industries such as construction, oil & gas, refining, steel and chemical industries will push the hardware segment of the market for microgrid control systems. In December 2023, Cuyahoga County, Ohio, launched the first microgrid electrical utility in the United States. The initiative, approved by County Council, involves a 10-year contract with Compass Energy Platform of Los Angeles for design and financing. Construction on the initial three microgrids is projected to start in 2025, with completion and operation expected in 2026 and 2027. In a microgrid, one of the most critical aspects is the operation of power converters, with multiple distributed generators (DGs), energy storage systems and loads. These converters add interfaces between the microgrid bus and the DGs. In addition to improving control algorithms, inverters help to achieve greater functionality, performance and reliability.

By End User - Segment Analysis

Institutional/Campus dominated the U.S Microgrid Market in 2022. A wide range of institutions are using microgrids in order to boost electricity reliability, green energy supply, lower cost and to improve efficiency. In the U.S, the colleges and universities are regarded as the early adopters of microgrid technology, as they provide a campus with reliable and affordable power supply. Educational institutions often require microgrid, as it keeps their critical facilities running cost effectively especially university research labs which often requires temperature-sensitive specimens and power outages that may incur high cost. Additionally, colleges and universities are widely installing microgrids in order to achieve climate goals and to train students for energy related jobs. In the US, the healthcare institutions are also bringing intelligence and efficiency to hospital’s energy planning which is enhancing the demand for microgrid. This is also leading to the need for an advanced microgrid controller that can optimize and synchronize the various pieces of energy equipment. Moreover, the growing need for reliable power generation with low cost in institutions including healthcare and educational in the US will further boost the demand for the US Microgrid Market.

By Region - Segment Analysis

Northeast Microgrid Market generated a revenue of $1.2 billion in 2022 and is projected to reach a revenue of $3.1 billion by 2030 growing at a CAGR of 12.1% during 2023-2030. The Northeast Microgrid Market is projected to experience significant growth during the forecast period. The North East region of the United States has positioned itself as the fastest-growing hub in the U.S. microgrid market, exhibiting a remarkable surge in microgrid installations and developments. Several factors contribute to this notable growth trajectory. Firstly, the North East is home to a cluster of densely populated urban areas, where the demand for reliable and resilient energy solutions is particularly pronounced. The region's vulnerability to extreme weather events, such as hurricanes and nor'easters, has intensified the focus on robust energy infrastructure, making microgrids an increasingly attractive option. Additionally, state-level initiatives and supportive policies, driven by a commitment to clean energy and sustainability goals, have created a conducive environment for microgrid projects. States like New York, Massachusetts, and Connecticut have implemented forward-thinking policies, offering financial incentives and regulatory support for microgrid deployment.

Drivers – U.S Microgrid Market

? Increasing Energy Resilience

The U.S. microgrid market is witnessing a surge driven by the growing emphasis on energy resilience. In an era marked by increasing climate uncertainties and the rising frequency of extreme weather events, businesses and communities are recognizing the paramount importance of resilient energy solutions. Microgrids, with their decentralized and localized power generation capabilities, offer a strategic response to this need. The ability of microgrids to operate autonomously or in conjunction with the main grid during disruptions enhances energy security and ensures uninterrupted power supply, making them a critical asset for various sectors. The Northeast region, with its vulnerability to severe weather, is particularly embracing microgrid solutions to fortify its energy infrastructure. State-level policies, such as those in New York and Massachusetts, supporting the development of microgrids further fuel this trend. Technological advancements, such as smart grid integration and energy storage systems, amplify the effectiveness of microgrids, making them an attractive investment for entities seeking energy resilience in an increasingly uncertain environment. According to U.S. Energy Information Administration, as of the end of 2022, the total nameplate power capacity of operational utility-scale battery energy storage systems (BESSs) in the United States was 8,842 MW and the total energy capacity was 11,105 MWh

? Electrification of Transportation

The growing popularity of electric vehicles is driving the need for an expanded charging infrastructure. Microgrids provide an efficient and localized solution for managing the increased electricity demand associated with widespread EV adoption, ensuring reliable and sustainable charging options. The mass deployment of EVs poses challenges to the centralized grid, such as increased peak demand and the need for additional grid infrastructure. Microgrids can support EV charging stations by managing the load and providing localized power generation, reducing strain on the grid and enhancing grid stability. According to The International Energy Agency (IEA), In the United?States, the Inflation Reduction Act (IRA) has triggered a rush by global electromobility companies to expand US manufacturing operations. Between August 2022 and March 2023, major EV and battery makers announced cumulative post-IRA investments of USD?52?billion in North American EV supply chains, of which 50% is for battery manufacturing, and about 20% each for battery components and EV manufacturing.

Challenges – U.S Microgrid Market??

High installation costs of microgrids

The initial costs involved in the installation and maintenance of microgrids are relatively higher than traditional grids. The installation costs of microgrids are 25–30% higher than that of the conventional electricity grids. They include costs for setting up a complete microgrid infrastructure, right from the deployment of communication systems to the installation of smart meters, as well as their regular maintenance. The costs of installing smart meters are 50% higher than the costs involved in installing electric meters. Distributed energy resources (DERs) used in microgrids are costlier than the ones used in traditional centralized power stations. This acts as a barrier to the growth of the microgrid market. As microgrids can store, convert, and recycle energy, as well as offer better reliability and power quality than traditional grids, their costs are higher than traditional grid. Additionally, the installation of renewable energy sources, such as solar panels and wind turbines, involves not only equipment expenses but also intricacies related to site-specific requirements. The permitting and regulatory processes, varying across states and municipalities, add complexity and can extend project timelines, amplifying costs.