According to a new report from Navigant Research, worldwide revenue from distributed generation is expected to grow from $97 billion in 2014 to more than $182 billion by 2023.
In recent years, billions of dollars of public and private investment in distributed generation technologies have yielded strong results in both cost reduction and technical capabilities. Public and private investment in distributed generation technologies has grown as new business models, such as third-party owned systems (specifically the solar lease and solar power purchase agreement), have been deployed.
“One of the most important issues for the energy industry is striking a balance between distributed generation growth and fairly compensating utilities for the ability to effectively use the existing electrical grid as a backup service for onsite power at higher concentrations in the future,” says Dexter Gauntlett, senior research analyst with Navigant Research. “Utilities that pro-actively engage with their customers to accommodate distributed generation — and even participate in the market themselves — limit their risk and stand to benefit the most.”
To date, distributed generation has been more disruptive in Western Europe than in any other region, according to the report. Utilities are losing hundreds of billions of dollars in market capitalization as distributed generation reaches higher levels of penetration in leading countries such as Germany, the United Kingdom and Italy. The prospect of similar losses by utilities in the United States is prompting a struggle among utilities, the distributed generation industry, and regulators over the future of distributed generation models.