Europe Microgrid Market: A Boon In Renewable Energy Sources

Europe microgrid market is in its nascent stage, wherein the European commission has initiated numerous policy frameworks and directives.
Published: Thu 06 Sep 2018
A blog entry by Divya Chainani

Contributed by:

Divya Chainani
Senior Research Associate - CMFE
Grand View Research

Divya Chainani's Blog

The European microgrid market was valued at USD 488.3 million in 2017 and is expected to foresee growth at a revenue-based CAGR of 15.8% from 2018 to 2025 according to a report by Grand View Research, Inc. Microgrid allows to generate electricity from multiple small energy sources. It’s an alternate approach to assimilate small scale distributed energy resources (DERs). The drill of using Microgrid is known as dispersed or distributed generation, or embedded energy production. The microgrid proves to be an efficient solution for power storage where it acts as a novel distribution network with local consumption, generation, and process control. These power systems offer noticeable benefits:

  • Enhanced resilience and reliability
  • Improvement in power quality
  • Reducing greenhouse emissions

Growth and drivers of the Europe Microgrid Industry

  • Clean Energy for All Europeans, was a new measure taken by European commission in 2016, aimed to achieve the two main goals for EU energy sector such as

    1. Driving energy efficiency at primarily stage;
    2. Aim to achieve global leadership in renewable technologies
  • The increasing demand for smart meter’s application on account of growing power generation activities, through Microgrid is expected to be a long-term requisition for a more sustainable environment. Smart meters are electronic measurement devices used by utilities to operate electrical systems and communicate information of billing to consumers.

ABB, Siemens, General Electric, and Hitachi are some of the vertically integrated companies that are engaged in the manufacturing and distribution of microgrid globally.

The ability of a microgrid to provide energy to support a significant proportion of load on a non-emergency basis represents a paradigm shift toward more centralized and distributed generation for energy efficiency and environment-friendly operations in cities, campuses, and communities.

Microgrid composition includes the use of inverters, smart meters, and cloud-based applied solutions to attain more flexibility as well as the efficiency of energy markets. The availability of solar panels, smart meters, and natural gas on account of its low cost and demand over environmental benefits, are expected to facilitate the growth of microgrid over the projected period. Continuing further, the virtual microgrid is a concept for distributing energy resources and receiving power facilities in a particular way to balance the supply and demand for a certain period. The use of renewables can be maximized, and output fluctuation on commercial grids can be minimized to a more significant extent through the construction of virtual microgrid.

The microgrid is attaining importance on account of its operation and the trouble-free plug and play of distributed energy resources, both from fossil fuel power and renewable energy (RE) sources, into the bigger electrical distribution system. This microgrid may either be operated in combination with or islanded from the utility power grid plus are utilized in a variety of settings comprising commercial applications, military installations, off-grid microgrid, institutional power systems, and utility deployment, that gives electricity to remote villages and other places.

Microgrid Directives and Policies Regulations

European Commission initiated directives such as 2001/77/EC; 2013/347/EC; 2009/28/EC; 2013/347/EC; 2006/32/EC; 2004/8/EC; and 2009/72/EC, and framework plans including FP5, FP6, & FP7 on account of developing the microgrids as well as increasing the penetration of renewable energy in Europe. In 2009, the EC also formed a “Smart Grids Task Force” with the following recommendations and standardization roadmaps in the microgrid market:

  • 2013/347/EC—Trans-European Energy Infrastructure
  • 2009/28/EC—Renewable Energy Directive
  • 2001/77/EC—Renewable Energy Sources in the Internal Electricity
  • 2006/32/EC—Energy Efficiency and Energy Service
  • 2009/72/EC—Rules for Electricity Market

Presence of a number of companies results in a highly competitive market

As per Grand View Research study, major companies have combined the abundant availability of offshore wind, hydro, and solar, aided with innovative technologies, to develop renewable derived energy in order to facilitate the expanding demand for uninterrupted electricity. The microgrids available in the present markets are an essential retrofit. Majority of the new projects being greenfield, they rely on distributed power generations and efficient energy storage options.

Continuing forward, the extreme weather condition is one of the key drivers for the growth of microgrids over the forecast period. Rising demand for microgrids in the form of renewable, natural gas, and diesel as a source of energy is expected to fuel the market growth. Emerging regional players or new entrants, especially in developing countries, are likely to gain opportunities to enter the market.

Europe Research & Development Activities

Various research and development projects within Europe have been initiated by the European Commission under Horizon2020 and FP7 frameworks. Some of the recent projects in the pipeline on microgrids includes:

  • CoSSMic - Collaborating Smart Solar-powered Micro-grids in (2013-2016):

    Recent Development of ICT (Information and Communication Technology) tools for smart sharing of distributed generation, storage and renewable within neighborhoods

  • DCNextEve - LV DC microgrids for evolved energy communities (2016-2018):

    Formation and analysis of models for control and management of several building scale DC microgrids functioning on a particular area.

  • RDC2MT - Demonstration, and Commercialization of DC Microgrid Technologies (2017-2021):

    Investigation on, control systems, technology, modelling, commercialization and demonstration of DC microgrids such as and DC distribution networks and DC powered dwellings. Coordinated in United Kingdom the project includes partners from China and Canada.

Europe Microgrid market revenue, 2014-2025 (USD Million)

Refer the main image. The robust growth in Europe's microgrids is expected to increase on account of the falling cost of renewables and energy storage. With increased penetration of DERs into power systems, Europe microgrid has exhibit great benefits of allowing reliable and efficient operation of distribution grids with high robustness and flexibilities. The commercial application is expected to witness strong growth on account of extensive requirements of power supply for ensuring lighting, heat ventilation air conditioning (HVAC) and operating electronic goods in hospitals, corporate offices and retail outlets.

Under the European Commission framework plans including FP5, FP6, and FP7, approximately 80 microgrid projects were funded by various regional governments of different European countries such as Germany, UK, and France. The demand for microgrid network is likely to exhibit a high growth in the region on account of continuous programs led by the European Union to enhance the European energy grids by the means of integration of renewable sources of energy. European Union’s USD 77 million flagship initiative - Horizon 2020 - supports and fosters research and development programs in the field of modernizing the Europe’s energy grid. Aligned to this, Innovation and Networks Executive Agency (INEA) sanctioned over 14 projects with USD 135 Million under the guidance of EU’s aforementioned program.