Coronavirus Slows US Microgrid Market Despite Growing Need for Resilience

The coronavirus pandemic has thrown a wrench into U.S. microgrid
development, and may delay project origination and timelines over
the next year, according to Wood Mackenzie’s latest�review
and forecast

The first half of 2020 was the slowest for the U.S. microgrid
market since 2016, with only 58 megawatts of projects on the books,
according to WoodMac’s survey of projects of at least 100
kilowatts in size. That’s a steep drop from the 291 megawatts of
project installed in the first half of 2019. 

The slowdown is driven by shelter-in-place and stay-at-home
orders that have forced microgrid projects to delay permitting,
construction and interconnection processes amid the country’s
COVID-19 pandemic, microgrid analyst Isaac Maze-Rothstein
wrote. 

That’s similar to the delays that have hurt U.S. distributed
solar
 and energy
storage
 deployments, which rely far more on being able to
access buildings and work with local authorities to complete their
work than do utility-scale projects

Meanwhile, “some developers have expressed concerns around
originating new deals as some customers wait to see how the
pandemic and recession impact their core business,â€
Maze-Rothstein wrote. 

Financial uncertainty is expected to combine with ongoing delays
in developing projects and lags in equipment supply chains to
reduce the U.S. microgrid outlook through 2022. Larger-scale
projects greater than 50 megawatts could see project development
timelines extended by a year, while smaller-scale projects can
expect an average of three months of delays. 

These disruptions will begin to ease in late 2021, as the
pandemic comes under control and project developers and customers
seek to take advantage of expiring federal investment tax credits
for solar PV systems that are becoming more prevalent in microgrid
projects. 

All told, the pandemic will play a significant part in slowing
down a market that’s otherwise seeing growing demand from
customers and critical facilities seeking resiliency against grid
outages caused by wildfires, storms and other extreme weather
events. 

The market is led by commercial customers such as hospitals,
factories or cold storage facilities that are particularly
vulnerable to extended blackouts such as those imposed in Northern
California during fire-prevention blackouts, or those caused by
hurricanes across the Southeast U.S. and Eastern seaboard. 

Third-party financing from modular microgrid providers like
Southern Company’s PowerSecure,
Texas-based Enchanted
Rock
, Massachusetts-based Tecogen or
California-based Bloom
Energy
, and financing options from more complex, larger-scale
microgrid developers like
Engie
and
Schneider Electric
, are likely to gain increased interest from
this class of customers in the face of coronavirus impacts and the
resulting economic recession, Maze-Rothstein said. 

These commercial systems rely on fossil fueled generation or
combined heat and power systems, which are still more
cost-effective
 for long-term power supplies than clean
alternatives such as solar and batteries. But solar power and
batteries are expected to take an increasing share of the market in
years to come, largely as part of broader systems built around
natural gas powered generation. 

Source: FS – GreenTech Media
Coronavirus Slows US Microgrid Market Despite Growing Need
for Resilience