Military, Utilities Key to Microgrid Growth, Multi-Stakeholder Ownership Models
GTM Research waxes optimistic on U.S. microgrid market prospects in a Grid Edge market research report released Aug. 29. The market research company forecasts U.S. installed microgrid capacity will Grow 115% to reach 4.3GW over the next five years.
Greater participation in the microgrid market by utilities will be a key to growth prospects being realized. Encouragingly, utilities’ interest in participating in multi-stakeholder as opposed to single-entity microgrid ownership models is on the rise, according to GTM’s ¨U.S. Microgrids 2016: Market Drivers, Analysis and Forecast.¨
Buffeted by the winds of technological and market regulatory change, utilities are showing greater interest in co-developing microgrids, as well as a new means of relieving grid congestion, reducing infrastructure costs and enhancing overall system resiliency and reliability.
Stacking multiple microgrid owners as well as services
Industry participants have zeroed in on the ability of microgrids to provide multiple valuable services, and potentially revenue streams, in promoting microgrid investment. Known as services stacking, it really isn’t possible to realize this vision in full as yet, however.
For one thing, state and federal market regulatory changes are needed to open up opportunities for microgrid owners/operators to earn compensation for ancillary grid services outside of power generation and transmission. That’s been taking place, as in the case of PJM Interconnection paying for frequency regulation, but slowly and incrementally.
Secondly, stacking and earning revenues by stacking multiple microgrid service isn’t easy. Doing so may require assembling a group of investors rather than being able to rely on one.
* GTM Research
That’s what makes the multi-stakeholder microgrid ownership model so attractive, particularly one in which an electric utility or military facility is involved.
“These new models can significantly reduce the capex and O&M burden on end customers. At the same time, strategically located, dispatchable generation becomes very attractive to regulated utilities targeting congestion relief and substation peak demand reduction,” Grid Edge senior analyst and report author Omar Saadeh was quoted in a GTM news report.
Most microgrid projects have been focused on benefits ¨behind the meter¨ – for utility customers, GTM points out. End-users own more than two-thirds of installed U.S. microgrid capacity.
PwC makes the same observation and point in a recently released market survey and analysis. ¨Traditional utilities can play a crucial role in expediting market adoption. They can diversify their traditional centralized grid operations with microgrid participation as an alternative service offering and revenue stream,¨ the PwC report authors wrote. Furthermore, ¨[i]f suppliers are able to partner with power utilities, there is a greater possibility of unlocking the customer base to decentralized generation without the risk of losing the customer accounts,¨ they state.
Corporations that own regulated power utilities, such as Duke Energy, have been investing in microgrids and building the organizational capacity of their energy services business groups to offer them in various markets around the country. Their participation in a microgrid owned by multiple stakeholders adds credibility and enhances a project’s economics.
The U.S. military taking a part ownership stake in a microgrid can do similarly, according to GTM. Accounting for just shy of one-third in installed U.S. capacity, the Armed Forces are and are expected to continue as the largest owner of microgrids in the U.S. GTM notes.
The military is also a principal driver in the installation of renewable fuel microgrids, GTM Research points out. GTM forecasts installed renewable fuel microgrid capacity will double from 2016-2020.
