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The distributed energy generation market size is forecast to increase by USD 252.1 billion at a CAGR of 13.63% between 2023 and 2028. The market is experiencing significant growth due to urbanization and the increasing adoption of sustainable energy sources. This shift is driven by the transition towards electric vehicles (EVs) and the penetration of renewable energy through solar panels and wind turbines. However, the market faces challenges, including high equipment and installation costs. Micro grids, which enable the distribution of electricity from renewable sources, are gaining popularity as a solution to these challenges. Micro turbines, which generate electricity from natural gas or biomass, are also being explored as an alternative to traditional combustion engines. The market is expected to continue growing as urban areas seek to reduce their carbon footprint and improve energy efficiency.
The electricity demand in the United States continues to grow, driven by industrialization, urbanization, and the increasing adoption of digital technologies. To meet this demand, the energy sector is exploring various options beyond traditional centralized power plants. Distributed energy generation (DEG) has emerged as a promising solution, offering numerous benefits such as efficiency, reliability, and environmental sustainability. DEG refers to the production of electricity at or near the point of consumption, using various renewable energy sources and technologies. Renewable energy sources, including wind, sun, biomass, and hydro, are increasingly being used for DEG due to their abundant availability and minimal environmental impact.
Moreover, wind and solar power are two leading renewable energy sources for DEG. Wind energy is generated using turbines, while solar energy is harnessed through solar panel installation. Microgrids, which are local power grids that can operate independently from the main grid, play a crucial role in integrating these renewable energy sources into the electricity system. Microgrids also enable the use of other DEG technologies such as reciprocating engines, turbines, fuel cell technology, and batteries. These technologies provide backup power during grid outages and ensure energy efficiency and reliability. Grid expansion is another critical aspect of DEG. The integration of DEG into the main power grid requires significant investment in microgrid infrastructure.
In addition, green transformers, which are designed to minimize environmental impact, are being used to facilitate this integration. Environmental concerns are a significant driver for DEG. Renewable energy sources offer a cleaner alternative to traditional fossil fuel-based power generation. DEG also enables energy efficiency by reducing the loss of electricity during transmission and distribution. Energy efficiency standards are being implemented to encourage the adoption of DEG and promote sustainable energy production. Microgrids and DEG technologies such as solar panels, wind turbines, micro turbines, combustion engines, and micro hydropower offer numerous benefits, including increased energy independence, improved grid resilience, and reduced carbon emissions. As the demand for electricity continues to grow, DEG is expected to play an increasingly important role in meeting this demand in a sustainable and efficient manner.
The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion" for the period 2024-2028, as well as historical data from 2018-2022 for the following segments.
The residential segment is estimated to witness significant growth during the forecast period. Distributed energy generation in the residential sector refers to the production of electricity or heat through small-scale energy systems installed in homes. This approach allows homeowners to generate their own power on-site, thereby decreasing their dependence on the conventional power grid and integrating renewable energy sources such as wind, sun, and reciprocating engines or turbines. The increasing consciousness towards climate change and the significance of eco-friendly living has motivated numerous homeowners to explore cleaner energy alternatives. Distributed energy generation empowers individuals to take a proactive stance in reducing their carbon footprint and aligning their energy usage with their values. Homeowners can reap several advantages from this energy generation method, including cost savings on electricity bills, enhanced energy autonomy, reduced greenhouse gas emissions, and heightened resilience during power interruptions.
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The residential segment accounted for USD 72.30 billion in 2018 and showed a gradual increase during the forecast period.
APAC is estimated to contribute 34% to the growth of the global market during the forecast period. Technavio's analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
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In the Asia-Pacific (APAC) region, distributed energy generation is becoming increasingly popular as countries focus on energy security, decreasing carbon emissions, and fostering sustainable development. The residential sector is growing more environmentally conscious and turning to distributed energy generation from renewable sources, such as solar and hydropower, as an alternative to traditional fossil fuel-based electricity generation. This shift allows homeowners to lessen their carbon footprint and contribute to combating climate change. Several APAC countries have implemented favorable policies and regulations to encourage the adoption of distributed energy generation. For example, China has instituted feed-in tariffs and subsidies to boost solar and wind power installations.
Furthermore, land use in off-grid places is being repurposed for renewable energy generation, particularly solar photovoltaic (PV) systems. The market in APAC is expected to expand significantly due to these supportive initiatives and the growing demand for clean, sustainable energy solutions.
Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Transition towards electric vehicles (EVs) is the key driver of the market. Distributed energy generation, comprised of technologies such as bioenergy, fuel cells, and semiconductor materials, is gaining significance in the context of the expanding Electric Vehicle (EV) market. With the increasing number of EVs on the road, there is a growing need for a reliable charging infrastructure, particularly at residential, commercial, and public locations. Distributed energy generation systems, including solar Photovoltaic (PV) systems and wind turbines coupled with battery storage, offer a solution to this challenge. These systems can generate and store clean, renewable energy for EV charging, thereby reducing dependence on the grid and promoting sustainable transportation. The escalating electricity demand from EV charging can put pressure on the grid, particularly during peak hours.
In addition, integration of EV charging with distributed energy generation, coupled with smart charging and demand management systems, can effectively manage the grid load and optimize charging schedules. This approach can help reduce peak demand, maximize the utilization of renewable energy resources, and ensure a stable power supply for EV charging infrastructure.
Increasing renewable energy penetration is the upcoming trend in the market. The market is experiencing notable growth due to the increasing adoption of renewable energy sources, including combustion turbines, micro hydropower, and others, for residential, commercial, and industrial applications. Renewable energy installations are on the rise, fueled by decreasing costs, favorable policies, and heightened environmental consciousness. This trend is anticipated to persist as the energy sector shifts towards cleaner, more sustainable energy systems.
Furthermore, technological advancements are playing a pivotal role in market expansion, with solar photovoltaic (PV) panels, wind turbines, energy storage systems, and smart grid technologies witnessing significant improvements in efficiency, cost-effectiveness, and performance. The market is poised for continued growth as the world moves towards a more sustainable energy future.
High equipment and installation costs is a key challenge affecting the market growth. In the context of urbanization, the implementation of distributed energy generation systems, including solar panels and wind turbines, has gained significant traction. The initial investment for procuring and installing these energy sources can be substantial due to the expense of top-tier components, advanced technology, and skilled labor. Distributed energy systems necessitate additional infrastructure, such as power inverters, energy storage systems, and grid interconnection equipment, which further increases the overall cost. Solar Photovolvoltaic (PV) installations, in particular, demand a considerable upfront investment despite a decrease in material costs. The extensive space required for solar panels to generate a substantial electricity output is the primary reason for the elevated investment levels.
In summary, the integration of distributed energy generation systems into urban environments involves a substantial initial investment, driven by the cost of high-quality components, advanced technology, skilled labor, and necessary infrastructure.
The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.
Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Ansaldo Energia Spa - The company offers distributed power generation solutions such as electric generators for hydroelectric, geothermal and fossil fired plants for a full century.
The market research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The market is witnessing significant growth due to increasing electricity demand and the adoption of renewable energy sources. Renewable energy sources, such as wind, sun, biomass, and hydropower, are becoming increasingly popular as concerns over environmental issues and the depletion of fossil fuels grow. Solar panel installation and wind turbine usage are on the rise, with falling costs making these technologies more accessible to residential, commercial, and industrial consumers. Microgrids and battery storage systems are essential components of distributed energy generation, providing energy efficiency and stability to off-grid places and reducing reliance on traditional utilities. The integration of fuel cell technology and semiconductor materials in microgrids and energy infrastructure is further enhancing the efficiency of these systems.
In addition, grid expansion is necessary to accommodate the growing demand for renewable energy, but it comes with environmental concerns and land use issues. Microgrids and hybrid energy systems, including solar energy, wind turbines, and biomass, offer a solution to these challenges by providing localized power generation and reducing the need for long-distance energy transmission. Energy efficiency standards and green transformers are essential in ensuring the sustainability of distributed energy generation. Utilities are increasingly adopting these technologies to meet the demands of consumers and reduce their carbon footprint. The use of combustion engines, micro turbines, and combustion turbines is declining as renewables become more cost-effective and efficient.
Furthermore, the adoption of renewables and distributed energy generation is driven by environmental awareness and the desire to reduce air pollution. The transition to a more sustainable energy future is ongoing, with solar PV, wind turbines, and bioenergy leading the way. Hydropower and fuel cells are also gaining popularity as viable alternatives to traditional energy sources.
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Market Scope |
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Report Coverage |
Details |
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Page number |
178 |
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Base year |
2023 |
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Historic period |
2017-2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 13.63% |
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Market growth 2024-2028 |
USD 252.1 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
11.71 |
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Regional analysis |
APAC, Europe, North America, South America, and Middle East and Africa |
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Performing market contribution |
APAC at 34% |
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Key countries |
China, US, Germany, India, and UK |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Ansaldo Energia Spa, Bloom Energy Corp., Canadian Solar Inc., Capstone Green Energy Corp., Caterpillar Inc., Cummins Inc., Doosan Corp., ENERCON GmbH, First Solar Inc., FuelCell Energy Inc., General Electric Co., Mitsubishi Electric Corp., Nextera Energy Inc., Orsted AS, Rolls Royce Holdings Plc, Schneider Electric SE, Siemens AG, Sunverge Energy Inc., Toyota Motor Corp., and Vestas Wind Systems AS |
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Market dynamics |
Parent market analysis, market growth inducers and obstacles, market forecast, fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, market condition analysis for the forecast period |
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Customization purview |
If our market report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
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1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by End-user
7 Market Segmentation by Technology
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Opportunity/Restraints
11 Competitive Landscape
12 Competitive Analysis
13 Appendix
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