The U.S. microgrid market is rising, with a document 546 microgrids put in throughout 2019. Most of these tasks had been beneath 5 megawatts. It is a continuation of the pattern beginning in 2017: smaller, extra modular tasks constantly grew every year.
Because the market has grown, it has additionally attracted more and more numerous financiers, in accordance with a brand new Wooden Mackenzie report.
As prices have gone down, investor curiosity has gone up
Growing system standardization and reducing prices of vitality sources has lowered growth prices and boosted small microgrid development.
Standardized methods take away the necessity for custom-builds, and fewer time is required for building. That’s additionally made it simpler for financiers to judge a number of tasks: There’s much less due diligence prices on a portfolio of places that run related applied sciences and have the identical enterprise mannequin than a number of personalized methods with numerous enterprise fashions.
The investor panorama is numerous, and can proceed to broaden
Various teams of financiers with affected person capital are investing in U.S. microgrids, starting from investor-owned utilities to non-public fairness teams. Within the subsequent two years, we predict that extra personal fairness gamers will enter the market, particularly these with expertise in infrastructure and oil & fuel. Many of those corporations are in search of above-market returns with comparable stability of historic infrastructure investments.
As well as, extra utilities will need to leverage their unregulated enterprise arms to personal and function microgrids. These corporations are excited by supporting clients as they search resilience for his or her operations and electrify heating and transportation.
The oil majors, in addition to multinational companies like Siemens, are additionally excited by turning into one of many distributors to assist clients navigate this transition.
Resilience is a key incentive
Hurricanes Isiasas and Laura hit the U.S. Gulf Coast and Northeast in August, leaving over 1.5 million individuals with out energy. Confronted with excessive climate occasions like these, it’s no shock that 84 % of third-party traders are primarily motivated by resilience and reliability.
The central worth proposition for a lot of third-party-owned microgrids is saving on the prices of the standard backup diesel mills, leases or uninterruptable energy provide methods which can be usually required within the occasion of a blackout. Competing with conventional backup options has been enabled by offering financing choices that require no or restricted upfront capital. This financing permits clients to get the advantages of a microgrid with out a big, upfront value.
With unlucky occasions just like the latest blackouts in California, Wooden Mackenzie sees the demand for modular microgrids utilizing third-party financing solely growing.
Isaac Maze-Rothstein is Wooden Mackenzie’s microgrid analyst and a part of the grid edge workforce. He’s the creator of ‘Microgrid finance 2020: The emergence of the Power-as-a-Service enterprise mannequin’