Resilience to drive US microgrid growth

The US microgrid industry may find opportunities for substantial future growth in geographical areas that are repeatedly affected by power outages, as customers seek out resilient solutions, new research from Wood Mackenzie found.

A single natural disaster does not lead to major growth in the microgrid pipeline within an individual state, the analysis showed. This differs from the conventional wisdom that customers are only motivated to secure resilient energy solutions shortly after a severe weather event.

Wood Mackenzie found that only 14% of microgrid capacity developed in the US since 2012 was built in geographies affected by the seven most costly natural disasters within the first three years following these events.

Isaac Maze-Rothstein, an analyst with Wood Mackenzie Power and Renewables, said: “Simply chasing disasters as a primary growth strategy will not enable developers to become leaders in the market, because the majority of microgrid installations are not built after disasters.

"Only a limited number of installers can thrive in those geographies.

“This does not mean that microgrid developers should stop targeting impacted geographies after natural disasters.

"Rather, developers need to recognise the microgrid market is not significantly impacted by these individual crises, even if some systems are installed.

“Developers whose microgrids pitch primarily leads with resiliency will find opportunities following these events.”

Future opportunities could lie in states like North Carolina, which has only installed 9.8 megawatts (MW) of microgrid capacity since 2010 despite being hit by hurricanes Sandy, Matthew and Florence during that period.

The market for microgrid solutions is becoming more active, as customers in the state have brought on two more microgrid systems since Hurricane Florence in September 2018.

The historic capacity installed following Hurricane Sandy, multiple extreme weather events in the region, and relatively few operational systems installed following Hurricane Florence, all point to an opportunity for resilience-focused microgrids in North Carolina.

In wildfire-stricken California, ongoing public safety power shut-offs authorised by the California Public Utilities Commission are increasingly being considered normal.

The unprecedented length of these shutdowns has pushed hospitals, fire stations, technology companies and communities to explore or develop microgrids.