The global market for Distributed Generation (DG) is projected to reach US$183.2 billion by 2025, driven by the growing focus shed on decarbonizing power generation and transmission. Ambitious clean energy targets aimed at increasing the share of renewables in the energy mix is also helping bring DG into the spotlight as the energy architecture of the future. Defined as energy generated close to the point of consumption by independent or grid connected microgrids, DG offers a host of benefits that promise to accelerate the pace of the global energy transition to a cleaner future. DG systems are rapidly proliferating the residential as well as commercial and industrial sectors in the form of solar photovoltaic panels, small wind turbines, natural-gas-fired fuel cells, emergency backup generators, municipal solid waste incineration, biomass combustion or cofiring and combined heat and power systems, among others. Few of the advantages of DG include lower CAPEX as it eliminates the need for long-distance transmission and distribution lines; reduced electricity losses along transmission and distribution lines; being small-scale electricity generation plants they are cost effective and easy to establish; increased ability to integrate renewable energy sources; help increase the reliability and performance of renewable energy; fulfills the role of backup power when the utility grid is down; features a flexible modular structure; and environmentally sustainable as it reduces the emissions while increasing power quality and reliability.
Given that localized renewables as compared to centralized generation of utility scale thermal power is the only way to decarbonize our energy systems, DG offers an attractive way to integrate increasing volumes of renewable energy into the energy mix. This is primarily because centralized, top-down power grid with its one-way flow of power is unsuited for generating and managing renewable energy. Decentralized system of power generation and ownership will be the energy structure of tomorrow, while 20th century paradigm of always-on, baseload power from fossil fuel will gradually fade. Recent advancements in developing interconnection standards and grid codes are helping boost DG. The rise of microgrids will emerge as a disruptive force breaking the once centralized electricity infrastructure into a more distributed system. Microgrids are localized groups of small, self-contained electricity grids with their own electricity source primarily renewables such as solar or wind. With deregulation of the electricity sector gaining momentum worldwide, alternatives to centrally planned power grids are emerging as attractive investments for private investors. An example is the growing interest in private microgrid implementation. Private deployment of microgrids is growing with companies building their own microgrids as power interruptions and blackouts become increasingly common and frequent as a result of extreme weather conditions compounded by aging energy infrastructure. Distributed energy has the potential to become consistently cheaper as compared to conventional power which is saddled by fixed costs of the massive centralized infrastructure. The price differentials, in the coming years, will result in increasing number of consumers migrating to alternative grids, leaving centralized utility grids to collapse under their own weight. The United States, China and Europe represent large markets worldwide with a combined share of 70.1% of the market. China also ranks as the fastest growing market with a CAGR of 11% over the analysis period as the country opens its electricity markets to competition and increased DR investments.
Competitors identified in this market include, among others, ABB Limited, AES Distributed Energy, Ameresco Inc., Ansaldo Energia S.p.A., Bergey WindPower Company, Canadian Solar Inc., Capstone Turbine Corporation, Clarke Energy, Cummins Inc., E.ON SE, FuelCell Energy Inc., GE Power, Huawei Technologies Co. Ltd., Mitsubishi Heavy Industries Ltd., Schneider Electric, Siemens AG, SMA Solar Technology AG, Vestas Wind Systems A/S, Wartsila Corporation, XZERES Wind Corp.