Microgrid Market Maturity a Good Sign for Solid Growth

You might feel differently, but from my perspective it’s been good to see the microgrid market consolidating during the last few years. That’s a sign of a market heading toward maturity that lends itself to better decision-making by utilities and others as they decide who to work with for their microgrid integration, design, and construction—not to mention their financing.

History has shown how consolidation and maturity have helped build solid markets. For an example, you can look at petroleum. In the beginning, a guy found some black liquid in his backyard, put up an oil rig, and he became an oilman. Do you see any of those people in oil anymore? No, their operations now are all owned by large multinational corporations and, in some cases, by nations.

Similar things are now happening with wind. If you look at the wind market, I couldn’t even tell you who produced the first wind turbine, but I can tell you who the players are now. There used to be 30-40 different wind turbine manufacturers, and the market has consolidated to just a few key players.

The same is now occurring with solar. During a recent large solar industry event, a relatively well know figure in the industry mentioned it wasn’t that long ago when just 18 people were sitting around a table in shorts and polo shirts discussing how to grow the market. Now, the same guy is up on stage in a suit, and over 1,000 people are in attendance at the very same conference. The market has grown into something really huge. At the same time, the number of players in the market has started to shrink—the number of people who provide racking systems, inverters, and panels, and even the number people who develop the solar farms is getting smaller even as the companies get larger.

Solar has not as consolidated as much as the wind market yet, but you can see it trending in that direction as various players either get acquired, file for bankruptcy, simply leave the market, or form joint ventures or merge. That’s what happens as markets mature, and it actually bodes well for the market.

We are at the beginning of this process with microgrids. What’s happening with microgrids is the same paradigm we’ve seen before. It means that we’re slowly growing up. It’s a real industry. The larger fish are coming in and eating up the smaller fish. There are benefits to this process if we look at the trends in the other industries I mentioned. The players get more dependable and projects are more repeatable. Costs also go down, capabilities increase because of scale, you get better investments, and you get plugged in to better R&D groups that have more resources available to them.

I don’t know about you, but I like where we headed. It gives me a great feeling about the future of microgrids.

I’d be interested in learning your thoughts on the state of the microgrid industry in the Comments section below.