4 September 2014: A report analyzing the global market for distributed power generation (DG) calls for utilities to proactively seek to accommodate DG. The report, by Navigant Research, describes finding a balance between growth in DG installation and fairly compensating utilities as a key issue for the energy industry. Over the next decade, the study forecasts global cumulative deployment of DG to total over 1.2 TW, led by diesel generator sets, solar PV and natural gas generator sets, respectively.

The report, titled ‘Global Distributed Generation Deployment Forecast,’ includes DG market forecasts for 2014-2023 by region and technology, with the latter including distributed solar PV (<1 MW), small wind turbines (<500 kW), stationary fuel cells, natural gas generator set, and diesel generator set capacity and revenue.

On key drivers of DG deployment, the report identifies innovation across policy, technology and capital. It characterizes policy as the single most important driver, with 138 countries currently having established renewable energy support policies, and 16 US states having set renewable portfolio standards (RPS) with solar and/or DG provisions. In Europe, DG is the primary target of policy, and China has set a distributed solar PV target.

On technology, the report notes that DG systems must increasingly be able to communicate both with the utility grid and other DG assets, particularly in microgrids. In terms of capital, public and private investment in DG technologies has grown significantly, supported by third-party owned systems, such as the solar lease and solar power purchase agreement.

Overall, the report predicts global revenue from DG to nearly double, from US$97 billion in 2014 to more than US$182 billion by 2023, resulting in a cumulative revenue of US$1,300 billion. Of the 1,213 GW of DG installed over this period, at least 321 GW are expected to substitute for new large-scale power plants, with diesel generator sets leading in deployment, followed by solar PV and natural gas generator sets. The report calculates the resulting potential cumulative lost utility revenue at US$223 billion.

With DG reaching higher levels of penetration in Germany, the UK and Italy, the study notes that utilities in Western Europe are already losing hundreds of billions of dollars in market capitalization. In the US, the prospect of losses is causing a ‘struggle’ among utilities, the DG industry and regulators. According to the report, a balance between DG growth and fair compensation to utilities would enable DG customers and utilities to take advantage of new revenue opportunities while enabling the use of the existing electrical grid as a backup service for onsite power.

According to the forecast, Asia-Pacific, Western Europe, and North America are expected to maintain their status as the largest regional markets for DG. [Navigant Research Press Release] [Publication Webpage] [Publication: Executive Summary: Global Distributed Generation Deployment Forecast]