With 20.1% CAGR, Microgrid Market Growth to Surpass USD 79.0 billion

Posted by edwardzmusso on July 27th, 2023

According to MarketsandMarkets, the microgrid market is estimated to be USD 31.5 billion in 2023 and projected to reach USD 79.0 billion by 2028, at a CAGR of 20.1% during the forecast period.

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Several key factors within the business landscape are driving the growth of the microgrid market. These include the escalating focus on decarbonization among end users and government entities, the expanding adoption of microgrids for rural electrification purposes, and the rising occurrence of cyberattacks targeting energy infrastructures. Additionally, governments of prominent countries worldwide have initiated initiatives to promote the development of microgrids, thus providing further impetus to the market’s expansion.

A microgrid is a localized network comprising interconnected load and energy sources that operate in coordination with the primary power grids. They can also function as independent off-grid systems in remote areas. Microgrids are small-scale localized power plants with their own power generation resources and loads, with well-defined boundaries for supplying electricity. They can serve as backup or supplementary power sources for main grids, effectively meeting the increasing electricity demands of end users.

Based on connectivity, the grid-connected segment of the microgrid market is expected to hold a larger market share throughout the forecast period. Grid-connected microgrids dominate the market share due to their higher reliability, cost efficiency, flexibility, and regulatory support. They provide a stable power supply by staying connected to the main grid, reducing the need for expensive equipment. Grid integration allows them to participate in programs, sell surplus energy, and quickly scale up. Governments and utilities incentivize their adoption, streamlining interconnection and regulatory processes. While off-grid microgrids have their place, grid-connected microgrids are preferred in urban and industrial areas for their dependable, affordable, and scalable power solutions.

According to estimates, the hardware segment accounted for the largest share of the microgrid market in 2022. The hardware segment in microgrids is crucial, as it encompasses essential components like power generation sources, energy storage systems, inverters, transformers, and control systems. These components are vital for efficient microgrid operation and management. The demand for hardware components rises as microgrids gain global adoption across residential, commercial, industrial, and utility-scale sectors. Technological advancements in hardware, such as more efficient power generation sources, advanced energy storage systems, intelligent control systems, and seamless grid integration technologies, contribute significantly to the growth of the hardware segment.

Based on end users, the remote areas segment of the microgrid market is likely to hold the largest market share in 2023. This is primarily driven by the increasing demand for microgrids in rural electrification initiatives, bolstered by government support and a significant surge in microgrid deployments in remote locations. Governments worldwide are intensifying their investments in electricity infrastructure to ensure affordable and sustainable power supply. Consequently, there is a rising necessity for microgrids in remote areas to generate electricity while effectively managing and controlling distributed energy resources. This trend reflects the growing emphasis on providing clean, cost-effective electricity solutions to underserved regions.

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Americas region to hold largest market share in 2023. Due to several factors, the Americas region is poised to hold the largest market share in the microgrid market in 2023. These include advanced energy infrastructure, supportive government policies and incentives, a focus on integrating renewable energy sources, resilience needs in the face of challenges like extreme weather events, and a mature market with significant industry expertise. These elements create a conducive environment for the adoption and development of microgrids, making the Americas a prominent market leader in the industry.

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