Woodmac Research Spotlight

1. Trusted Intelligence woodmac.com
The state of the microgrid market
A six-word memoir
Isaac Maze-Rothstein

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Source: The New York Times, 26 November 2020

3. What is the six-word memoir for the microgrid market?

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*DERs that cannot run in parallel with the grid do not qualify as microgrids under our definition.
Microgrids are a set of distributed energy resources (DER) with unique capabilities
They have three core differentiators:
1. Able to provide power and energy services within a
geographic perimeter either isolated from the electric grid
or in both grid-connected and island mode*
2. Able to support loads totaling more than 100 kW in a single
or multiple buildings for at least 24 hours
3. Able to control distributed energy resources as a single
entity
Distributed Energy Resources (DER)
Control
Islanding
Scale
> 100kw
Micro-
grids

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But growth isn’t in the microgrid market broadly, but small systems specifically
Technical standardization is one of the trends enabling this deployment
0
400
800
1995
1996
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2018
2019
2020
Annualcapacityinstalled(MW)
<5 MW 5-25 MW >25 MW
Modular
Custom
Microgrid installed capacity 2017 - 2019Microgrid installed capacity prior to 2017
1.4 GW4 GW

6. What is the six-word memoir for the microgrid market?
Small systems scale

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Microgrid value proposition:
Sustainability
ResilienceEconomics
Micro-
grids
Value of
resilience?

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Source: Wood Mackenzie Grid Edge Service, NOAA
Extreme weather events causing over a billion dollars in damages are rising
Average in 2000’s was 5.9 events per year, in 2010’s 11.9 events
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Numberofbilliondollarextremeweather
events
Weather event
Hurricane Sandy
Hurricane Harvey
Hurricane Irma
Hurricane Maria
California wildfires
Hurricane Florence
Hurricane Michael
Is microgrid development correlated with extreme weather events?

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Significant capacity additions correlated with multiple extreme weather events
This drove deployment in some of the largest state markets
Hurricanes Irma & Maria
Hurricane Irma & Michael
Hurricane Michael
Hurricane Harvey
California Wildfires (‘18, ’19)
Hurricane Sandy
Hurricane Florence
Hurricane Sandy & Florence
California
Florida
Texas
Alaska
New York
Hawaii
Arizona
Maryland
Puerto Rico
North Carolina
Capacity installed (MW)
Installed 2012-2020 Under construction
Planned/Study Phase

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Microgrid value proposition:
Value of resilience increases for customers when ongoing outages become the new normal
Sustainability
ResilienceEconomics
Micro-
grids
Value of
resilience?

11. What is the six-word memoir for the microgrid market?
Small systems scale, while resilience rises

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Insights about deployment and motivation is critical for informing our outlook
By region
0%
10%
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100%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E 2025E
Percentofcapacityinstalledbyregion
Southeast Northeast Southwest West Coast Alaska Hawaii Midwest Puerto Rico Undisclosed

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Or by customer segment
2018 2019 2020E 2021E 2022E 2023E 2024E 2025E
Forecastedanuallyinstalledcapacity
(MW)
City/Community Commercial Island
Military Installation Public Institution Remote Community
University/Research Facility

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Q&A
Q&A

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