|
Forecast
Period
|
2024-2028
|
|
Market
Size (2022)
|
USD
195.26 billion
|
|
CAGR
(2023-2028)
|
11.42%
|
|
Fastest
Growing Segment
|
On-Grid
|
|
Largest
Market
|
North
America
|
Market Overview
The Global Distributed Generation Market was valued
at USD 195.26 billion in 2022 and is growing at a CAGR of 11.42% during the
forecast period. The market is being
propelled by growing environmental consciousness, escalating government
regulations, and the need for GHG emission reduction. Furthermore, increased
R&D activities for technological advancements are expected to drive market
growth. Government schemes and incentives, such as feed-in tariffs in North
America and the Asia Pacific, are projected to stimulate demand for DEG
systems. Government initiatives aim to promote the installation of these
systems in industrial, residential, and commercial settings.
Key Market Drivers
Energy Resilience and Reliability
One of the key factors driving the growth of the
global distributed generation (DG) market is the rising demand for enhanced
energy resilience and reliability. Energy resilience refers to the ability of a
system to withstand and recover quickly from disruptions, including natural
disasters, cyberattacks, and grid failures. Distributed generation plays a
vital role in achieving these objectives by decentralizing energy production
and reducing dependence on centralized power plants and long-distance
transmission lines.
In regions prone to extreme weather events like
hurricanes, wildfires, or severe storms, conventional power infrastructure can
be susceptible to damage, resulting in widespread power outages. DG systems,
such as solar panels, wind turbines, and backup generators, provide locally
generated power that can continue operating even when the main grid is offline.
This ensures that critical facilities such as hospitals, emergency response
centers, and essential infrastructure remain functional during emergencies, thus
saving lives and minimizing economic losses.
Moreover, with the increasing frequency and
severity of climate-related disasters, governments, businesses, and homeowners
are investing in DG systems to strengthen their energy resilience. This driving
force has led to a significant surge in the adoption of DG technologies,
especially in disaster-prone regions.
Decentralized Energy Generation and Energy
Independence
The global DG market is driven by two key factors.
Firstly, there is a growing demand for decentralized energy generation and energy
independence. Unlike traditional energy systems that rely on centralized power
plants and extensive transmission networks, DG systems allow end-users to
produce electricity on-site. This reduces dependence on centralized utilities
and transmission grids, offering benefits such as lower energy costs, increased
energy security, and reduced carbon footprint. This shift towards energy
independence is particularly attractive to commercial, industrial, and
residential customers alike.
Secondly, the desire for energy independence aligns
with broader societal goals of sustainability and reduced environmental impact.
By enabling individuals to generate their own clean energy through technologies
like solar panels, small-scale wind turbines, and home battery storage systems,
the DG market supports a more self-sustaining energy ecosystem. This has led to
increased adoption of DG systems worldwide, driving growth in the market.
Overall, the demand for decentralized energy
generation and energy independence has become a significant driver in the DG
market, promoting sustainability and contributing to a more resilient and
efficient energy landscape.
Environmental Sustainability and Carbon Reduction
Goals
Environmental sustainability and the pursuit of
carbon reduction goals represent a significant driving force in the global
distributed generation market. Concerns regarding climate change, air quality,
and greenhouse gas emissions have prompted governments, businesses, and
individuals to seek cleaner and more sustainable energy sources.
Distributed generation (DG) technologies,
particularly those based on renewable energy sources like solar, wind, and
hydroelectric power, are considered crucial for reducing carbon emissions and
mitigating the effects of climate change. Electricity generation from renewable
sources results in minimal to no direct greenhouse gas emissions, making them a
responsible choice from an environmental standpoint.
Numerous countries and regions have set ambitious
targets for renewable energy adoption and carbon reduction. Consequently,
incentives, subsidies, and favorable policies have been implemented to
encourage the deployment of DG systems. These initiatives range from feed-in
tariffs for surplus electricity production to renewable energy certificates
that incentivize clean energy generation.
Businesses and corporations are also embracing
sustainability goals and increasingly integrating DG systems into their
operations. Large corporations are investing in renewable energy projects, such
as solar farms and wind installations, to power their facilities and reduce
their carbon footprint.
The alignment of DG technologies with environmental
sustainability objectives and carbon reduction goals has accelerated their
adoption in the global energy landscape. As the world continues to prioritize clean
energy and carbon neutrality, the DG market is expected to experience further
growth, driven by a shared commitment to a more sustainable and environmentally
friendly future.
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Key Market Challenges
Integration into Existing Grids and Grid Stability
One of the key challenges confronting the global
distributed generation (DG) market is the seamless integration of DG sources
into existing electrical grids, ensuring grid stability. DG systems,
encompassing solar panels, wind turbines, and combined heat and power (CHP)
units, generate electricity at or near the point of consumption. While this
distributed approach offers numerous advantages, it also presents challenges
for grid operators.
An important issue is the intermittent nature of
many DG sources, such as solar and wind. Their output varies with weather
conditions and time of day, posing difficulties in balancing supply and demand
on the grid. Grid stability can be compromised if there is an oversupply of
electricity from DG sources during periods of low demand or an undersupply
during peak demand. This challenge becomes more pronounced as the proportion of
DG in the energy mix increases.
To tackle this challenge, grid operators need to
invest in advanced grid management systems, energy storage solutions, and
demand response programs. Energy storage, in particular, plays a critical role
in mitigating the variability of DG sources by storing surplus energy when
available and releasing it when needed. However, the deployment of such
technologies necessitates substantial investments and regulatory adjustments to
incentivize measures that promote grid stability.
Moreover, the integration of DG sources into the
grid entails intricate technical and regulatory considerations, including grid
interconnection standards, voltage regulation, and grid protection.
Collaboration between grid operators and policymakers is crucial in developing
clear guidelines and standards to facilitate the seamless integration of DG
systems while upholding grid reliability.
Regulatory and Policy Barriers
One of the major challenges in the global
distributed generation market is the intricate regulatory and policy landscape.
Regulations and policies vary significantly across regions and countries, and
they can either facilitate or impede the growth of DG systems.
For example, some regions have favorable net
metering policies that enable DG system owners to receive credits or
compensation for surplus electricity supplied to the grid. These policies
incentivize the adoption of DG systems and promote renewable energy generation.
However, in other areas, regulatory barriers like restrictive permitting
processes, grid access fees, or low feed-in tariffs can discourage investment
in DG technologies.
Furthermore, regulatory uncertainty and frequent
policy changes can pose challenges for DG system developers and investors.
Long-term planning and investment in DG projects become riskier when
regulations are subject to frequent alterations or political shifts.
To address these challenges, policymakers need to
establish clear and stable regulatory frameworks that encourage the deployment
of DG technologies. This includes designing policies that provide fair
compensation for DG system owners, streamline permitting processes, and remove
barriers to grid interconnection. International cooperation and the sharing of
best practices can also help align policies and regulatory approaches to
support the global growth of distributed generation.
Financing and Cost-Effectiveness
Financing and cost-effectiveness are significant
challenges for the global distributed generation market. While the costs of
renewable energy technologies like solar panels and wind turbines have
considerably decreased in recent years, the upfront capital investment required
for DG systems can still be a barrier for many potential adopters.
Accessing affordable financing options can be
particularly challenging for residential and small-scale commercial customers.
Financing models like power purchase agreements (PPAs) and leasing arrangements
have helped mitigate this challenge by allowing customers to install DG systems
with little or no upfront cost. However, expanding access to such financing
options and tailoring them to local market conditions remains a challenge in
many regions.
Moreover, the cost-effectiveness of DG systems can
vary depending on factors such as the local energy market, energy prices, and
available incentives. DG technologies must compete with traditional centralized
power generation sources, and their cost-effectiveness can be influenced by
subsidies, tax incentives, and electricity rates.
To address these challenges, governments and
financial institutions can play a crucial role by offering incentives,
subsidies, or low-interest loans to encourage the adoption of DG systems.
Additionally, fostering competition among DG system providers and supporting
research and development efforts to further reduce the cost of these
technologies can enhance their cost-effectiveness and make them more accessible
to a broader range of customers.
In conclusion, the global distributed generation
market presents significant potential to transform the energy landscape by
promoting renewable energy sources and enhancing energy resilience. However,
addressing integration challenges, navigating complex regulatory environments,
and improving financing options are critical steps in realizing the full
benefits of distributed generation. Policymakers, grid operators, and industry
stakeholders must collaborate to overcome these challenges and unlock the growth
potential of distributed generation worldwide.
Key Market Trends
Increasing Adoption of Renewable Energy Sources in
Distributed Generation
One of the notable trends in the global distributed
generation market is the growing adoption of renewable energy sources.
Distributed generation has become synonymous with renewable energy technologies
like solar photovoltaic (PV) panels, wind turbines, and small-scale hydropower
systems. This trend is driven by several factors that contribute to the global
shift towards cleaner and more sustainable energy generation.
Firstly, the declining costs of renewable energy
technologies have made distributed generation solutions economically appealing.
Solar and wind power, in particular, have witnessed significant cost reductions
in recent years, making them competitive with or even cheaper than conventional
fossil fuel-based electricity generation in many regions.
Secondly, the increasing environmental awareness
and concerns about climate change have resulted in a strong preference for
clean energy sources. Governments, businesses, and individuals are increasingly
motivated to reduce their carbon footprint and mitigate the effects of global
warming. Distributed generation enables them to actively participate in the
transition to clean energy by generating their own electricity from renewable
sources.
Furthermore, supportive policies and incentives
such as feed-in tariffs, tax credits, and renewable energy certificates
encourage the deployment of renewable distributed generation systems.
Governments worldwide recognize the significance of distributed renewable
energy as a means to achieve sustainability and carbon reduction goals, thereby
driving further growth in this trend.
As the renewable energy sector continues to expand
and innovation in distributed generation technologies advances, this trend is
expected to persist. Distributed generation is poised to play a pivotal role in
the global effort to transition towards a more sustainable and low-carbon
energy landscape.
Energy Storage Integration for Grid Resilience and
Flexibility
Another significant trend in the global distributed
generation market is the integration of energy storage solutions. Energy
storage, in the form of batteries and other storage technologies, is
increasingly vital for enhancing grid resilience, managing intermittent
renewable energy generation, and optimizing distributed generation systems.
Energy storage provides a means to capture excess
electricity generated by distributed sources during periods of low demand and
release it when demand is high. This capability helps mitigate the variability
of renewable energy sources like solar and wind, making the electricity supply
more reliable and predictable.
One of the key drivers of this trend is the growing
recognition of the importance of grid resilience. Combined with energy storage
systems, distributed energy resources can provide backup power during grid
outages, natural disasters, and emergencies. This capability is crucial for
critical facilities such as hospitals, data centers, and emergency response
centers.
Moreover, declining costs of energy storage
technologies, coupled with advancements in battery chemistry and manufacturing,
are making energy storage more accessible and cost-effective. This has led to
increased deployment of residential, commercial, and industrial energy storage
systems, further driving the trend.
In addition, grid operators are acknowledging the
value of distributed generation and energy storage for grid stability and peak
demand management. Utilities are increasingly implementing demand response
programs and virtual power plants that aggregate distributed generation
resources and energy storage to optimize grid operations.
As energy storage technology continues to evolve
and costs continue to decrease, the integration of energy storage with
distributed generation systems is expected to be a defining trend in the global
energy landscape.
Segmental Insights
Technology Insights
The Solar PV Cells segment
holds a significant market share in the Global Distributed Generation Market. The
solar photovoltaic (PV) cells segment represents a significant and rapidly
expanding portion of the global distributed generation market. Distributed
generation with solar PV cells involves the decentralized production of
electricity from sunlight using solar panels installed on rooftops, in
residential and commercial areas, and in utility-scale solar farms.
One of the most notable
trends in the solar PV cells segment is the continuous decrease in the cost of
solar panels and the ongoing technological advancements. The declining cost of
solar PV modules has made distributed solar generation increasingly affordable
and appealing to homeowners, businesses, and utilities. Technological
innovations, such as higher efficiency solar cells and improved manufacturing
processes, contribute to enhanced energy production and system durability,
making solar PV an even more competitive choice.
Distributed generation with
solar PV cells has witnessed strong adoption in residential and commercial
sectors. Homeowners and businesses are increasingly opting for solar panels to
reduce energy expenses, achieve energy independence, and minimize their carbon
footprint. The distributed nature of these installations allows energy to be
generated where it is most needed, thereby reducing transmission and
distribution losses.
Apart from residential and
commercial installations, utility-scale solar PV projects play a significant
role in the distributed generation market. These large-scale solar farms
generate electricity that is directly supplied to the grid. They play a crucial
role in meeting renewable energy targets and curbing greenhouse gas emissions.
Many utilities are investing in utility-scale solar projects to diversify their
energy portfolios and transition to cleaner energy sources.
Application Insights
The On-Grid segment holds a
significant market share in the Global Distributed Generation Market. This
segment is characterized by distributed generation systems that primarily
generate electricity for grid consumption but may also allow for the export of
excess power to the grid. Solar photovoltaic (PV) systems are a dominant force
within the on-grid distributed generation segment. The decreasing cost of solar
panels, advancements in PV technology, and favorable policies, such as net
metering, have driven the widespread adoption of rooftop solar systems for
residential, commercial, and industrial applications. Solar PV continues to be
a prominent choice for on-grid distributed generation, contributing to the
growth of this segment.
On-grid distributed
generation systems play a crucial role in enhancing grid stability and energy
resilience. They can act as a buffer during peak demand periods, reducing
strain on the central grid and preventing blackouts. Additionally, in regions
prone to extreme weather events or grid disruptions, on-grid distributed
generation can provide backup power to critical facilities, ensuring
uninterrupted operations during outages.
On-grid distributed
generation systems are increasingly integrated into demand response programs
and grid optimization efforts. Smart grid technologies enable grid operators to
communicate with distributed resources, such as solar PV systems and controllable
loads, to balance supply and demand in real-time. This integration helps
optimize grid operations, reduce energy costs, and enhance overall grid
efficiency.
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Regional Insights
The North America region is expected to dominate
the market during the forecast period. North America plays a critical role in
the global distributed generation market, characterized by a diverse energy
landscape, significant renewable energy potential, and an increasing focus on
sustainability. Solar photovoltaic (PV) technology holds a dominant position in
North America's distributed generation market. The decreasing cost of solar
panels, along with federal and state incentives, and favorable net metering
policies, have driven widespread adoption. Both residential and commercial
customers are investing in rooftop solar installations, contributing to the
growth of the solar PV segment.
Energy storage, particularly battery technology, is
being increasingly integrated with distributed generation systems in North
America. Homeowners, businesses, and utilities are deploying battery storage to
optimize energy usage, reduce peak demand charges, and enhance grid resilience.
This trend is supported by declining battery costs and the imperative for grid
stability.
North American utilities are investing in grid
modernization to accommodate distributed generation. This presents
opportunities for technology providers, including smart metering, grid
management, and demand response solution providers, to support these initiatives.
The energy storage market in North America is
experiencing rapid expansion. Battery manufacturers, energy management system
developers, and project integrators have significant opportunities to offer
solutions for residential, commercial, and utility-scale energy storage
projects.
Various policies, such as net metering, renewable
portfolio standards, and incentive programs, have been implemented by states in
North America to support distributed generation. These policies create a
diverse range of opportunities and challenges.
Recent Developments
- In November 2022, Siemens
introduced its generator circuit-breaker portfolio, featuring the new
HB1-Compact (HB1-C) in a compact version. This versatile and highly
customizable solution incorporates maintenance-free vacuum switching
technology, effectively addressing even the most challenging constraints. The
HB1-C is available in L-shape and I-shape designs, offering the flexibility of
vertical or horizontal mounting and can be easily adjusted to align with
existing busbar connection points. Furthermore, the generator circuit-breaker,
along with its integrated main disconnector, can be equipped with earthing
switches on both the generator and transformer sides, providing enhanced
flexibility.
Key Market
Players
- Siemens AG
- General Electric Company
- Mitsubishi Heavy Industries Ltd
- Schneider Electric SE
- Fuel Cell Energy Inc
- Caterpillar Inc.
- Vestas Wind Systems A/S
- Rolls-Royce Power Systems AG
- Toyota Turbine and Systems Inc.
- Capstone Turbine Corporation
|
By Technology
|
By Application
|
By End-User
|
By Region
|
- Reciprocating Engines
- Fuel Cells
- Solar PV Cells
- Wind Turbines
|
|
- Residential
- Industrial
- Commercial
|
- North America
- Europe
- South
America
- Middle East & Africa
- Asia Pacific
|
Report Scope:
In this report, the Global Distributed Generation
Market has been segmented into the following categories, in addition to the
industry trends which have also been detailed below:
- Global
Distributed Generation Market, By Technology:
o
Reciprocating
Engines
o
Fuel
Cells
o
Solar PV
Cells
o
Wind
Turbines
- Global
Distributed Generation Market, By Application:
o
On-Grid
o
Off-Grid
- Global Distributed Generation Market, By End-User:
o Residential
o
Industrial
o
Commercial
- Global Distributed Generation Market, By
Region:
o North America
§ United States
§ Canada
§ Mexico
o Europe
§ France
§ United Kingdom
§ Italy
§ Germany
§ Spain
o Asia-Pacific
§ China
§ India
§ Japan
§ Australia
§ South Korea
o South America
§ Brazil
§ Argentina
§ Colombia
o Middle East & Africa
§ South Africa
§ Saudi Arabia
§ UAE
Competitive Landscape
Company Profiles: Detailed analysis of the major companies present in the Global Distributed
Generation Market.
Available Customizations:
Global Distributed Generation Market report with
the given market data, Tech Sci Research offers customizations according to a
company's specific needs. The following customization options are available for
the report:
Company Information
- Detailed analysis and profiling of additional
market players (up to five).
Global Distributed Generation Market is an upcoming
report to be released soon. If you wish an early delivery of this report or
want to confirm the date of release, please contact us at [email protected]