Distributed generation involves power generation near the point of consumption using renewable sources like solar, wind etc. It helps generate electricity locally and reduces dependence on the central grid. Distributed generation systems have several advantages like easy installation, environmental benefits and lower delivery cost of electricity as no transmission is required. With growing concerns around climate change, many countries and organizations are exploring distributed energy resources to meet their needs in a sustainable manner.
The global Distributed Generation Market is estimated to be valued at US$ 270.46 Bn in 2023 and is expected to exhibit a CAGR of 10% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
Reducing grid dependency through distributed generation presents a major market opportunity. As power outages have increased in frequency due to aging grid infrastructure and extreme weather events, distributed systems can help boost reliability of supply. They allow critical facilities like hospitals and data centers to function uninterrupted during grid failures. Governments across regions are offering incentives for local power projects to enhance energy security as well as meet renewable goals. This rising focus on building microgrids separate from the main grid is expected to drive significant growth of the distributed generation market over the forecast period.
Porter's Analysis
Threat of new entrants: The threat of new entrants is moderate as initial capital investments and infrastructure are substantial barriers. However, technological improvements are lowering entry barriers over time.
Bargaining power of buyers: The bargaining power of buyers is high as distributed generation solutions provide energy independence and fuel cost savings to customers. Buyers can negotiate on price and customize solutions.
Bargaining power of suppliers: The bargaining power of suppliers is moderate to high due to differentiated and patented component technologies. However, a number of alternative suppliers exist globally.
Threat of new substitutes: The threat of new substitutes is high with ongoing innovation in energy storage and renewable technologies. Hybrid energy systems pose a threat.
Competitive rivalry: Competitive rivalry is high amongst diversified technology vendors and new sector entrants given the attractive growth prospects.
SWOT Analysis
Strength: Distributed generation provides reliable decentralized power supply to remote areas not connected to centralized grids. The distributed model is robust and avoids single point failures.
Weakness: Initial high capital costs and operating expenditures are barriers for widespread adoption. Intermittent renewable sources require energy storage and back-up.
Opportunity: Increasing electricity demand, power blackouts, and climate change concerns drive the need for clean distributed energy. Government incentives and regulatory push accelerate commercialization.
Threats: Centralized utilities resist disruptions to their dominant business model. Stricter emissions norms make older fossil fuel plants less viable over time.
Key Takeaways
The Global Distributed Generation Market Size is expected to witness high growth over the forecast period driven by rising energy demand, grid infrastructure challenges, and environmental regulations. The distributed model enables locally produced power from renewable sources like solar, wind, biomass along with natural gas and fuel cells to meet customer needs independently or as grid supplements.
Regional analysis indicates North America currently dominates accounting for over 35% market share led by the United States. However, Asia Pacific is emerging as the fastest growing region supported by initiatives and investments across countries to expand electricity access through off-grid and micro-grid solutions particularly in rural areas.
Key players operating in the distributed generation market are Doosan Heavy Industries & Construction, Toyota Turbine and Systems Inc., Ballard Power Systems Inc., Mitsubishi Electric Corp., Suzlon Energy Ltd., Vestas Wind Systems A/S, Rolls-Royce Plc, Capstone Turbine Corp., Sharp Corp., and General Electric. Leading players are investing in innovative technologies and forming partnerships to strengthen product portfolios and gain larger market share.
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