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

The India Microgrid Market is growing at a steady rate of 26.3% in the forecast period due to the country's Increasing demand for clean energy. The rising demand for clean energy in India is driving the growth of the Indian microgrid market at an unprecedented pace, particularly after 2023. Microgrids, localized energy generation and distribution systems, are emerging as a viable solution to address the country's growing energy needs while promoting sustainable and renewable sources.

The Indian government has set ambitious targets for renewable energy adoption, aiming to achieve 500 GW of non-fossil fuel-based installed capacity by 2030. To support this goal, the government has launched several initiatives, such as the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme, which promotes the installation of off-grid solar pumps and microgrids in rural areas. As of February 2023, the scheme had facilitated the installation of over 2.8 lakh off-grid solar pumps. Several microgrid projects have also been implemented to provide access to reliable and clean energy in rural and remote areas. For instance, in December 2022, the Indian Institute of Technology Madras (IIT-M) inaugurated a solar-powered microgrid system in a remote village in Thiruvallur district, Tamil Nadu. This microgrid aims to provide an uninterrupted power supply to the village, demonstrating the potential of microgrids in electrifying off-grid communities. Therefore, the country's growing demand for clean energy drives the microgrid market.

Based on components, the India 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 new software and services. Also, the demand for managed services is witnessing a sharp rise across India.

Based on the type, the market is segmented into AC, DC, and Hybrid. The DC segment has the highest market share in 2023 and is expected to maintain its position in the forecast period. DC Microgrids are being deployed globally 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. The proliferation of consumer electronics and LED lighting, which operate on DC power, further contributes to the dominance of DC microgrids. The demand for DC-based energy solutions increases as these devices become more prevalent in homes, businesses, and industries.

Based on connectivity, the India 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. Off-grid microgrid systems are gaining popularity as the need for power outages in remote areas grows. There is an increasing demand for power infrastructure in rural areas, so installing off-grid microgrids to enhance the already built-up infrastructures in these regions is easiest. Moreover, the demand for off-grid connections is rising with the need to decentralize energy distribution and technologies and reduce grid reliability.

Based on power sources, the India microgrid market is segmented into diesel generators, natural gas, solar PV, CHP, and others. 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 segment.

Based on storage, the India microgrid market is segmented into Lithium-ion, Lead Acid, Flow Battery, Flywheels, and Others. Batteries are an important part of the microgrid system as they improve 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. Lithium-ion-based Battery Energy Storage Systems (BESS) play an important role in solving power supply problems in micro-grids due to their performance characteristics such as high power, high efficiency, low self-discharge, and long lifespan. Lithium-ion (Li-ion) batteries are expensive, posing a major hurdle for their use in remote microgrids. These batteries require special packaging and overcharge protection circuits, bringing the Li-ion battery cost to over USD 600/kWh. However, the decreasing price of lithium-ion batteries in the last few years has made its adoption possible and propels the microgrid market's growth. For instance, in 2023, according to Bloomberg NEF, in 2013, the price of a lithium-ion battery pack was USD 780/kWh, which has decreased to USD 139/kWh in 2023. Lithium-ion batteries have many advantages, such as high efficiency (around 95%) and short discharge time (from seconds to weeks), which makes their use very flexible.

Based on application, the India 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. It 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.

For a better understanding of the market of the India microgrid market, the market is analyzed based on its region presence such as North India, South India, East India, and West India. The microgrid market in North India is poised for significant growth, driven by government initiatives, investments, and new facilities. As the region grapples with energy access challenges, microgrids are emerging as a viable solution, offering millions of people a reliable, sustainable, and decentralized energy source. For instance, in 2024, The Uttar Pradesh government aims to meet 40% of its energy demand through solar and other alternate clean energy sources in the coming years. In January 2024, the state announced plans to invest ₹1 lakh crore in 125 clean energy projects. Moreover, the Ministry of New and Renewable Energy (MNRE) has launched the "Decentralized Renewable Energy (DRE) Scheme," which aims to promote off-grid renewable energy systems, including microgrids. The government has also set a target of electrifying 1,000 villages through off-grid renewable energy solutions. Therefore, the growing government initiatives drive the microgrid market.

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.