Distributed generation refers to the production of electricity from multiple small power plants that are close to the end users they serve as compared to conventional centralized power generation. Distributed generation involves electricity generation at or near the point of consumption. This reduces the amount of energy lost during transmission and distribution. The major types of distributed energy resources are fuel cells, microturbines, photovoltaics, wind turbines, CHP systems, small hydro facilities, and energy storage systems. Distributed generation is considered as an alternative to large, centralized fossil fuel power plants with transmission and distribution systems over long distances. It provides flexibility in fuel source, generation technology and location of generators.
The global distributed generation market is estimated to be valued at US$ 270.46 billion in 2023 and is expected to exhibit a CAGR of 10% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
The expanding investment in renewable energy sources across the world is one of the major drivers fueling the growth of the distributed generation market. Renewable energy sources are abundant, naturally replenishing and environmental friendly. According to the International Energy Agency, cumulative global investment in renewable energy hit $279.8 billion in 2020, an increase of 9% over the previous year. This increasing investment is expected to drive the demand for distributed power generation units like solar PV panels, wind turbines and biomass power plants.
Another driver for the distributed generation market is rising need for continuous and reliable power supply. Uninterrupted power supply is a necessity in several industries such as healthcare, data centers, telecom towers etc. Distributed generation units with energy storage provide insurance against transmission glitches and power outages. This makes it preferable compared to centralized grid systems prone to outages resulting from faults, planned maintenance or natural disasters. Microgrids based on distributed renewable energy sources paired with batteries assure resilient and reliable electricity supply.
Distributed Generation Market can be segmented by technology into solar photovoltaic, reciprocating engines, turbines, fuel cells, microturbines and others. Among these, solar photovoltaic dominates the segment as it is one of the most efficient and renewable source of energy generation. The solar photovoltaic segment is expected grow at the highest rate during the forecast period owing to the increasing awareness regarding green energy along with falling price of solar panels.
Political: Governments across various countries are introducing favorable policies and regulatory framework to promote distributed generation sources. They are offering subsidies and tax rebates to boost adoption.
Economic: Transition to distributed generation sources help reduce dependency on grid and lower electricity bills for commercial and industrial consumers. It also generates local employment.
Social: Rising environmental concerns and awareness about climate change is driving consumers to opt for clean and green energy sources. Distributed generation seen as sustainable solution.
Technological: Advancements in energy storage systems and control technologies have enhanced efficiency of distributed generation systems. Technologies like vehicle-to-grid and demand response programs are supporting expansion.
The Global Distributed Generation Market Size is expected to witness high growth during the forecast period. Regional analysis shows that Asia Pacific dominates currently owing to strong government support especially in China and India for renewables. North America and Europe are other major markets.
Key players operating in the distributed generation market are Doosan Heavy Industries & Construction,Toyota Turbine and Systems Inc.,Ballard Power Systems Inc.,Mitsubishi Electric Corp. ,Suzlon Energy Ltd.,Vestas Wind Systems A/S,Rolls-Royce Plc,Capstone Turbine Corp.,Sharp Corp.,General Electric. Distributed generation provides an opportunity for these key players to diversify and expand presence across high growth regions.
The distributed generation market offers significant scope for captive solar installations by commercial and industrial facilities. It allows businesses to reduce power costs, enhance energy security as well as achieve sustainability targets. Technological advancements are also supporting optimization of distributed energy resources both on utility and consumer side through aggregation and control solutions. This is expected to further fuel the adoption of distributed energy systems globally.