Analysis by Connectivity (Grid Connected, and Off-Grid Connected); by Offering (Hardware, and Software & Services); by Application (Institutional Sites, Commercial Facilities, Remote Off-Grid Communities, and Others) – Global Supply & Demand Analysis & Opportunity Outlook 2023-2035
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The global microgrid market size is estimated to reach ~USD 27 Billion by the end of 2035 by growing at a CAGR of ~13% over the forecast period, i.e., 2023 – 2035. In addition to this, in the year 2022, the market size of microgrid was ~USD 8 Billion. The growing energy consumption throughout the world has played a significant role in the growth of the market. It was observed that there was an increase in energy consumption in 2021 in most countries, +1.3% in China, +4.7% in India, +4.7% in the United States, +9% in Russia, and +4.5% in the European Union. With the increasing demand for energy and the rising focus on renewable energy sources, microgrids are becoming an attractive solution for many businesses and organizations. They provide more reliable, affordable and sustainable energy, while reducing the environmental impact of energy production at the same time. In addition, microgrids are also seen as an efficient way to manage energy demand and storage, as well as providing ancillary services to the grid.
In addition to these, factors that are believed to fuel the market growth of microgrid include the rising demand for backup power sources, the introduction of various technological advancements, and the increasing investments in the development of microgrid solutions are some of the other factors that are expected to contribute to the growth of the market. Moreover, the emergence of multiple microgrid companies and government initiatives to promote microgrid implementation, such as SPIDERS (Smart Power Infrastructure Demonstration for Energy Reliability and Security), is expected to drive market growth. These companies and programs are focused on providing reliable, secure, and cost-effective energy solutions. By leveraging new technologies and creating partnerships between government, industry, and academic institutions, they are creating a more sustainable energy landscape.
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Base Year |
2022 |
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Forecast Year |
2023-2035 |
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CAGR |
~13% |
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Base Year Market Size (2022) |
~ USD 8 Billion |
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Forecast Year Market Size (2035) |
~ USD 27 Billion |
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Regional Scope |
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Growth Drivers
Challenges
The global microgrid market is segmented and analyzed for demand and supply by connectivity into grid connected, off-grid connected. Out of these, the grid connected segment is estimated to gain the largest market share of about ~68% in the year 2035. The growth of the segment can be attributed to the increased use and isntallations of renewable energy sources such as offshore wind. It was observed that offshore wind installations worldwide in 2020 passed 6.1GW, making it the second biggest year since COVID was disrupted. Grid connected microgrids can help to distribute wind energy produced offshore more efficiently and reliably. Additionally, the grid connected microgrids allow for better integration of renewable energy sources, as well as increased resilience against outages and disruptions. Furthermore, grid connected microgrids are able to provide backup power during outages and disruptions, which makes them highly desirable for businesses, governments, and other organizations.
The global microgrid market is segmented and analyzed for demand and supply by offering into hardware and software & services Out of these, the hardware segment is estimated to gain the significant market share of about ~59% in the year 2035. The growth of the segment can be attributed to the increasing investment in renewable energy sources and development of smart grids, which require hardware components like inverters, energy storage, and power converters. Moreover, the segment is also expected to be driven by the increasing need for reliable and efficient energy storage solutions, as well as innovations in energy storage technologies, such as the development of advanced battery systems and other energy storage solutions. For instance, in April 2022, a Coimbatore-based startup, Cellex Battery Systems, has launched its cutting edge energy storage solutions for a variety of sectors in India, including renewable energy storage.
Our in-depth analysis of the global microgrid market includes the following segments:
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By Connectivity |
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By Offering |
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By Application |
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The market share of microgrid in North America, amongst the market in all the other regions, is projected to be the largest with a share of about ~38% by the end of 2035. The growth of the market can be attributed majorly to the increasing need for reliable and uninterrupted power supply, especially in remote and rural areas, and the increasing popularity of renewable energy sources such as solar and wind energy. Additionally, the government's supportive initiatives and incentives towards the development of smart grids in the region is also driving the regional market growth. It is estimated that approximately 9,000 electric generating units with a combined generating capacity of more than 1 million megawatts connect to more than 600,000 miles of transmission lines through the U.S. electric grid. Moreover, the increasing number of microgrid projects, and the growing emphasis of governments to build a clean future and support the natural resources sectors in the region is projected to drive regional market growth in the coming years.
The Asia Pacific microgrid market is estimated to be the second largest, registering a share of about ~31% by the end of 2035. The growth of the market can be attributed majorly to the rapid electrification of rural areas in several Asian countries, namely India, Malaysia, and the Philippines, and rising development activities to improve the electricity infrastructure. For instance, Maharashtra Energy Development Agency issued a tender for a 29.4 KW microgrid project for Maharashtra, India in 2019. The worth of the project is evaluated to exceed INR 6,140,000 and provide electricity to more than three villages in that region. Further, the high demand for power in rural areas is anticipated to drive the microgrid market in the region. An average of 39 kWh of electricity is consumed by rural households in India each month, according to a survey. Rural areas often lack access to reliable power grids, which makes them prime candidates for microgrid systems. Compared to centralized power grids, microgrids are more dependable, cost-efficient, and enable rural communities to generate and store their own energy.
Further, the microgrid market in the Europe, amongst the market in all the other regions, is projected to hold a majority of the share by the end of 2035. The increasing focus of the governments of the European countries on the development of smart grids and the rising demand for power from both, the residential and commercial sectors are the primary factors that are fueling growth in the microgrid market in Europe. Also, in November 2021, the United Kingdom earned a microgrid project to serve the people and businesses of Grove Park in Lewisham East, incorporating a 500kW renewable energy system and energy storage system, as well as smart grid management. Additionally, the high rates of energy losses experienced in the traditional power systems are encouraging the adoption of microgrids, as these systems can help reduce the energy losses and provide a more efficient power supply. This, in turn, is further propelling the growth of the microgrid market in Europe.
Siemens AG created a grid software suite to manage the complexity of grid systems. An open, modular software suite has been developed by Siemens Smart Infrastructure. This suite includes a number of tools to simulate, analyze, monitor, and control the power grid. This makes it easier for utilities to optimize their systems, reduce costs, and increase reliability.
An innovative microgrid control Lab has been opened at the University of Central Florida (UCF) by Florida Power & Light Company (FPL) and GE Digital. This lab will serve as a research facility to explore new technologies and approaches to improving grid reliability and resiliency.
In 2023, market players might incur losses due to huge gap in currency translation followed by contracting revenues, shrinking profit margins & cost pressure on logistics and supply chain.
Controlling Inflation has become the first priority for global economies from last quarter of 2022 and to be followed in 2023. With skewed economic situations, rise in interest rate by governments to control spending and inflation, spiked oil and gas prices, high inflation, geo-political issues including U.S. & China trade war, Russia-Ukraine conflict to intensify the global economic issues.
The interest rates in the U.S. may be less sensitive in 2023 as compared to 2022; sigh of relief for businesses. Positive business sentiments, healthy business balance sheets, growth in construction spending (private construction value in 2022 stood at $1,429.2 billion, 11.7 percent (±1.0 percent) above the $1,279.5 billion spent in 2021, Residential construction in 2022 was $899.1 billion, up by 13.3 percent (±2.1 percent) from $793.7 billion in 2021, non-residential construction touched $530.1 billion, 9.1 percent (±1.0 percent) above the $485.8 billion in 2021.) showcases minimal impact of recession in the country.
Similarly, spiked spending in the European and major Asia economics including, India, China & Japan to showcase less impact on the global demand.
Ans: Increasing focus on reducing carbon emissions and the need for reliable and secure power supply along with increasing energy production are the major factors driving the market growth.
Ans: The market size of microgrid is anticipated to attain a CAGR of ~13% over the forecast period, i.e., 2023 – 2035.
Ans: High installation costs and lack of awareness among end-users are estimated to be the growth hindering factors for the market expansion.
Ans: Asia Pacific will provide more business opportunities owing to the rapid rate of rural electrification in several Asian countries, namely India, Malaysia, and the Philippines.
Ans: The market in the North America region is projected to hold the largest market share by the end of 2035 and provide more business opportunities in the future.
Ans: The company profiles are selected based on the revenues generated from the product segment, geographical presence of the company which determine the revenue generating capacity as well as the new products being launched into the market by the company.
Ans: The market is segmented by connectivity, offering, application and by region.
Ans: The grid connected segment is anticipated to garner the largest market size by the end of 2035 and display significant growth opportunities.
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