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Microgrids have long been something of an outlier in global energy supplies, with the prefix ‘micro’ often even failing to do justice to just how small such networks can be. But, as more and more microgrids seem to be cropping up around the world, it would appear that such systems are integrating with major electrical power grids on a grander scale, transforming the energy sector with a particular emphasis on renewables.
So where does the reach of this increasing number of microgrids stretch and how are the networks developing? How are businesses overcoming the challenges and what are the benefits for investors?
On a very basic level, a microgrid is a power source used by a limited number of devices or users. Whether generating energy through traditional means of burning fossil fuels or utilising renewables such as wind, solar or hydropower, microgrids can operate in isolation or even work as part of a major power network, stepping in as a backup when outages occur. Think of a traditional backyard generator that would need filling with petrol when the power cuts out and you get the idea.
Of course, today things are a bit more advanced, but the principles are the same. The majority of such microgrids are now connected to some of the world’s major networks, simply taking over and keeping connected users powered in the event of an outage for these key utilities. But they are far more refined than filling up the smokey backyard generator. With renewables making microgrid projects more affordable, cleaner, and more sustainable than ever, they are gradually becoming a key player in offering reliable and resilient power for end users.
In fact, there is plenty of empirical evidence demonstrating the growing popularity of microgrids in recent years. Management consultant Navigant’s Microgrid Deployment Tracker has already recorded over 2,250 microgrid projects globally, accounting for 19,575MW of power capacity. Whether connected to larger wide-area synchronous grids or standalone – or rather, island – networks, the production and generation of energy is steadily becoming more affordable and easier. Even still, there are always challenges to be faced and how we overcome such stumbling blocks is key to how the sector will develop.
Arguably one of the major challenges facing those wanting to enter the distributed microgrid sector is the fact that more and more energy dependant organisations are able to rely on microgrid infrastructure of their own. As such, distributing the energy in order to profit – perhaps through Power Purchase Agreements or via structured peer-to-peer deals – requires careful consideration, as does embracing more sustainable and efficient forms of production i.e. renewables.
With the associated costs of microgrid technology and infrastructure becoming more and more affordable, and storage of energy easier than ever, the attractiveness to organisations has never been higher. For companies engaging in green energy production and microgrids distribution, the potential to capitalise is substantial.
Far and away the most significant benefit for the microgrid sector is that, to all intents and purposes, it is still in its infancy. As such, the potential for growth is huge. Not only that, but users demand reliability to be complete, reserves to be unending, and sustainability to be maximised. This means that, in developing nations in particular, scope for establishing microgrid networks that offer a ready and reliable energy source are in dire need.
Community, manufacturer and production centres too face economic loss in the event of power outages, so identifying the opportunities for growth in such marketplaces presents the opportunity to showcase the reliability and resilience of microgrid technology.
Of course, with the gradual phasing out of nuclear and fossil-fuel energy production, major utility suppliers are investing heavily into renewables, with microgrid architecture integral to this market shift. Realising ambitions of carbon neutrality and sustainability is far more achievable for those engaging in renewable energy production, meaning that such microgrid technology is only going to become more refined and popular in the coming years.
As Navigant’s Microgrid Deployment Tracker report demonstrates, the adoption of microgrid technology indicates that this truly is an area of great importance in the future of the energy industry. Reliability and resilience will always be the core demands from end users, and with a greater network of microgrids able to support larger grids, the ability to deliver the stability expected could transform the industry as a whole.
Understanding the challenges and potential of microgrids can present a number of opportunities for savvy investors and organisations. By utilising the expert network of microgrid specialists, getting the inside track on developments and opportunities couldn’t be simpler. Connect to the right people in the right places via Pangea Strategic Intelligence to fully understand the complexities and potential of microgrids today.
