This may be the key to massive microgrid growth (Hint: Financing)

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Quick Take:  So often, we think inflection points are about technology. And so often, they are really about distribution (how we get that technology to the market) or financing (easier ways to pay for it).

 

What's behind the rapid growth in solar? Falling prices are only half the story. The other half is companies such as Solar City that let homeowners lease the systems for little or no money up front.

 

As you'll read below, Lux Research recently published a report on microgrid as a Service (MaaS). I see MaaS as a way for communities around the world to tap into the value of microgrids without a huge capital investment. And without needing to hire a large staff to run it. It may take a few years to catch on, but when it does we may see hockey stick growth in this market just as we did in solar.

I don't think that Lux articulates the full potential of this emerging business model. But they do a good job of documenting the driving trends. Yes, we still need microgrid costs to come down. But when they do, we now have a winning financial model to accelerate growth.

 

Microgrid-as-a-Service Offers a Collaborative Model to the Conventional Macrogrid

Customer-owned microgrids will be the dominant ownership model in the near-term, while MaaS offers a completely new business model with flexible growth opportunities, says Lux Research

 

Self-contained "microgrids" are emerging as a viable power option for users from datacenters to telecom stations to single family homes. While customer-owned microgrids are standard today, a new business model, Microgrid-as-a-Service (MaaS) offers a flexible ownership structure and presents the best opportunity to capitalize on this growing market, according to Lux Research.

 

Lux Research utilized 15 different generation sources and cost/revenue inputs to build a bottom-up microgrid financial model giving the internal rate of return (IRR) and levelized cost of energy (LCOE) as metrics for given sector- and business-model-specific input assumptions.