Microgrid Scope and Definitions

In this study, we target the micro-grid market, which is part of of the small scale decentralised energy generation segment of the decentralised (distributed) energy generation market. Although micro-grids have distinctive features, they can be easily confused with other small scale solutions. To avoid confusions and set migro-grids into the context of power generation industry, the following definitions are provided. Total Electricity Generation
Generation of electrical power from other sources of primary energy. Includes centralised and decentralised patterns of power production. Production of electricity (and sometimes electricity combined with thermal power) from different sources located closer to areas of consumption. Section of decentralised electricity generation, which consists of on-site generation units with generating capacity of less than 1 MW A localised GROUPING of small-scale generating units, energy storage, and loads that normally operates connected to a traditional centralised grid BUT is capable of self-islanding and working in autonomous regime.

Decentralised Electricity Generation Small Scale Decentralised Generation

Micro-Grids

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What is Micro Grid and What is NOT a Micro Grid

Micro-grids should be set aside within the small scale decentralised (distributed) energy market. Most of distributed sources act only as generation units and never act as loads on the grid. On the contrary, micro-grids are by definition integrated systems consisting of distributed energy resources AND multiple electrical loads operating as a single, autonomous grid. Within a micro-grid, distributed energy resources are tied together on their own feeder, which is linked to the larger grid at a single point of common coupling. Another property of a standard micro-grid is the ability of working either in parallel to or islanded from the existing power grid. This makes microgrids essential in power disruption management. Like any other small scale solutions, micro-greed does not necessarily need to be associated with only with renewable distributed generation resources only. Indeed, 100%-renewable microgrids are still a minority, whereas mixed fossilrenewable projects dominate.

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Micro Grid Market Size: Volume Indicators

World Micro-Grid Capacity (GW), 2012 World Micro-Grid Generation (TWh), 2012

Source: BSRIA

Source: BSRIA

N.B. In this study, the micro-grids market size is defined both in volume and value terms. Volume terms include as follows: Micro-grid capacity the installed capacity of distributed generation units integrated into micro-grids as of the end of indicated period. Micro-grid generation cumulative generation of electricity ONLY (no heat) by distributed generation units integrated into micro-grids as of the end of indicated period.

According to BSRIA estimates, in 2012 the world installed capacity of micro-grid networks reached 3.5 GW, an impressive 75% growth compared to the previous year. As a result, within a single year the share of micro-grid capacity increased from 4% to 5% of The Worlds total small scale decentralised capacity (>1MW according to BSRIAs methodology). At the same time, micro-grid annual electricity generation reached almost 20 TWh, almost 6% of the worlds total small scale decentralised electricity generation. 3 3

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Summary: Micro-Grids are still a niche market

Micro-Grid in the Context of World Power Industry Micro-Grid Capacity as Part of

Total Electricity Capacity: 5,500 GW

Decentralised Capacity: 660 GW

Small Scale Decentralised Capacity: 66 GW

Micro-Grid Capacity: 3.5 GW

Source: EIA, BSRIA estimates

Source: EIA, BSRIA estimates

As the analysis shows, micro-grids are still a negligibly small niche in the electricity generation market, accounting for 0.1% of total electricity generation. Even within the segment of small-scale decentralised generation it looks rather marginal, standing at only 5% of small scale decentralised capacity. Despite showing impressive growth rates, the micro-grid market is not set to join the main stream of power industry in the medium term. Within the long-term, however, one could expect the break-through from this niche position. Micro-grid concept fits perfectly within both energy supply security and decentralisation of power generation, for which reason micro-grids seem to be crucially reconceptualised in the long term. 4

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Probability Tree: Technology Survival Pattern

As the micro-grid market is still nascent, we cannot predict how it is going to develop technologically in the long term perspective. However, our conclusion is that in order to expand, micro-grids need to develop towards the market of competing standardised solutions rather than that of sundry isolated pilot projects. At this very stage, the selection of the most adaptable solutions in the segment has not yet finished. The chart below shows one of the scenarios of the selection of the fittest in a technology market. The clear message here is that the development of any technology is subject to unexpected and unpredictable intrusions that are potent enough to change the whole course of events. In our future studies, we shall use this conceptual framework for more detailed analysis of specific cases, including those in the field of distributed generation.

Source: BSRIA