Europe Microgrid Market: Current Analysis and Forecast (2024-2032)

The Europe Microgrid Market is growing at a steady rate of 17.3% in the forecast period due to the growing energy demand for clean energy in Europe. A rise in the demand for renewable energy owing to the rising concern of greenhouse gas emissions and government policies to increase the share of renewables in energy mixed coupled with reducing the cost is contributing to the growing demand for the microgrid. As per the IEA, amid the global pandemic, 278 gigawatts of renewable energy were added in 2020, and there was a 45% increase from the year before, the biggest increase in over 20 years. Furthermore, communities and businesses established clean energy goals to conserve energy and reduce the impact of power generation on the environment. Microgrids use various green power production technologies and equipment, such as microturbines, combustion turbines, hybrid systems, and wind systems. These technologies are integrated with microgrids to reduce the carbon footprint of electricity generation on the environment. Governments of several countries, such as Germany, the UK, France, and the rest of Europe, are taking initiatives to reduce their environmental carbon footprints. The EU has adopted targets to achieve a 20% share of renewable energy in energy consumption by 2020 and 42.5% by 2030. This has created the demand for microgrids in the forecast period.

Based on components, the European microgrid market is segmented into Software & Services, and Hardware. Amongst components, the hardware segment dominated the market in 2023. The demand for hardware such as protection relays, microgrid controllers, and controllers of solar inverters, battery inverters, diesel gensets, and other DERs is emerging on account of the mandates by the government for renewable energy in the power generation mix. The need to change old aging electricity infrastructure requires the new software and, the need for the services. Also, the demand for managed services is also witnessing a sharp rise across Europe.

Based on the type, the market is segmented into AC, DC, and Hybrid. The DC segment has the highest market share and is expected to maintain its position in the forecast period. DC Microgrids are being deployed in Europe as distributed energy, solar PV, energy storage, consumer electronics, and LED lights are inherently DC resources. As these devices comprise a large share of generation and demand, it is only natural to string them together on DC Microgrids. There are enormous opportunities for efficiency and system cost gains, as shown by research institutions, industrial facilities, and even DC homes. DC Microgrids DC Home Solar solutions are the primary means of rural electrification for the billion people who do not yet have grid electricity.

Based on connectivity, the Europe microgrid market is segmented into Grid Connected and Off Grid. Amongst connectivity, the grid-connected segment has the highest market in 2023 and is expected to dominate in the forecast period. Using off-grid microgrid systems is gaining popularity as its need for power outage in remote areas is growing. There is an increasing demand for power infrastructure in the rural areas due to which it is easiest to install off grid microgrids to enhance the already built-up infrastructures in these regions. Moreover, with the need to decentralize energy distribution and technologies and reduce grid reliability, the demand for off-grid connection is on the rise.

Based on power source, the Europe microgrid market is segmented into Diesel generators, Natural Gas, Solar PV, CHP, and Others. The natural gas segment generated revenue of USD 768.85 million in 2023 and is expected to grow at a CAGR of 18.1% during the forecast period to reach a market valuation of USD 3,227.69 million by 2032F. Government policies favor integrating efficient and sustainable power generation to boost the natural gas (NG) powered microgrid infrastructure. Shifting towards renewable power sources and lowering their carbon footprint is boosting the use of natural gas microgrids.

Based on storage, the European microgrid market is segmented into Lithium-ion, Lead Acid, Flow Batteries, Flywheels, and Others. Amongst storage devices, the lithium-ion segment of the Europe microgrid market was valued at USD 1,584.09 million in 2023 and is likely to reach USD 6,138.04 million by 2027 and is growing at a CAGR of 20.1% from 2024-2032. Batteries are an important part of the microgrid system as they improve the performance, generator efficiency, and system reliability. These storage devices can minimize fuel consumption. Until recently, lead-acid storage devices were considered the most economical and popular. Recently, lithium-ion storage devices have gained popularity.

Based on application, the Europe microgrid market is segmented into Healthcare, Educational Institutes, Military, Utility, Industrial/ Commercial, Remote, and Others. Amongst applications, the remote segment has dominated the market in 2023 and is expected to dominate in the forecast period owing to the focus on energy resilience and reliability in isolated areas. The growth of the remote segment is fueled by the rising adoption of renewable energy sources like solar and wind power in remote areas. Furthermore, favorable government policies and initiatives promote the deployment of microgrids in remote and off-grid areas to enhance energy security and resilience.

To better understand the market of the Europe microgrid market, the market is analyzed based on its country presence, such as Germany, The UK, France, Italy, Spain, and the Rest of Europe. The demand for microgrids in the UK has been steadily rising in recent years due to several key factors, including the need for enhanced energy resilience, the push towards decarbonization, and the integration of renewable energy sources. The UK has set ambitious targets to achieve net-zero greenhouse gas emissions by 2050, driving the transition towards cleaner energy sources. For instance, In 2022, Islington Council announced plans to develop a USD 130 million microgrid project, the Bunhill Heat and Power Network, to provide low-carbon heat and power to around 2,000 homes and businesses in the borough. With the increasing geopolitical tensions and potential disruptions to energy supply chains, microgrids offer a way to enhance energy independence by relying on locally generated and controlled energy sources. This is particularly important for critical infrastructure, such as hospitals, data centers, and military installations, where uninterrupted power supply is essential.

Some of the major players operating in the market include ABB, General Electric, Siemens AG, Eaton Corporation Inc., Schneider Electric SE, Honeywell International Inc., Caterpillar, Toshiba Corporation, Hitachi Energy Ltd, and General Microgrids.