The Future State: Growth of Distributed Energy Resources and Microgrids

If you’re involved in operating a distribution network, you know that there has never been a more challenging time for utility companies. The pace of change is only accelerating, driven by increased penetration of renewables, energy storage, distributed energy resources, and microgrids.

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Before we get into how these new technologies are faring and how they will ultimately affect your system, let’s make sure we’re on the same page by establishing some common terms:

Distributed Generation (DG): This refers to geographically dispersed generation, usually less that 10MW, within a distribution network. It includes controllable forms, such as generators and hydro, as well as non-controllable forms, like wind and solar.

Energy Storage (ES): This category includes battery banks, compressed air systems, and thermal storage systems.

Distributed Energy Resources (DER): This term refers to combinations of DG and ES, located in various places throughout a distribution network.

Microgrids: For the sake of a simplified definition, microgrids are DER serving local loads that can be optionally islanded, operating independently of the main grid.

Unprecedented growth

Experts expect each of these various technologies to grow significantly in coming years. Distributed generation is expected to see a CAGR of 12% between 2013 and 2019, with a cumulative installed capacity of 336 GW by that time, compared to 172 GW in 2012.1

ES growth projections are even more staggering. Global revenue for utility-scale battery applications was $221.8M in 2014 and is projected to rise to $17.8B (that’s a B) by 2023.2 Expectations for growth in their associated energy capacity are similar—from 412 MWh in 2014 to 51 GWh in 2023.2

By 2020, worldwide vendor revenue from microgrid is expected to grow from $4.3B in 2013 to almost $20B.3 Further, global microgrid installation capacity should practically quintuple from 866 MW in 2014 to over 4100 MW in 2020.3

Challenges, Benefits & Solutions

In a follow-up post, I’ll describe in detail the challenges presented by DG, ES, DER, and microgrids, the benefits they offer, and provide some solutions for optimizing these resources at your Smart Utility.

If you’re like me, and I know I am, and you’d rather not wait for the details, I suggest you view a recent webinar I delivered: Management of Distributed Energy Resources and Microgrids using Advanced DMS or you can read an article I wrote on this topic: Optimizing the Smart Utility.


  1. Penn Energy Research, May 2014
  2. Navigant Research, 1Q 2014
    A123 Systems
  3. Navigant Research, January 9, 2014
    Navigant Research, April10, 2014

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