Seeking to integrate renewable energy sources, improve grid reliability, and reduce peak loads, a handful of innovative utilities are moving forward with microgrid projects despite significant institutional bias and regulatory obstacles. These early initiatives herald a future in which microgrids will become a more prevalent part of the distribution utility landscape. According to a recent report from Pike Research, a part of Navigant’s Energy Practice, annual vendor revenues from utility microgrids – including investor-owned utility, public power grid-tied, and remote microgrids – will reach nearly $1.4 billion in 2012. That number will grow to just under $3.3 billion in 2018, the study concludes.

“The new microgrid paradigm relies on IT advances, sophisticated software, and new islanding inverters for (mostly) cleaner renewable generation-to-network resources, so that they harmonize as a system,” says senior research analyst Peter Asmus. “Decades of utility resistance to the entire concept of a microgrid are starting to evaporate, and confidence in the microgrid model’s unique advantages is starting to bloom in some unlikely corners of the industry.”

During the next few years, the business case for microgrids should be bolstered, according to the report, as increasing numbers of plug-and-play components and control systems are validated in pilot projects and commercial installations. Since 2009, significant progress has been achieved on the security, safety, and engineering standards supporting commercial microgrid deployments, which should drive deployment cost decreases over the next six years. These milestones will set the stage for greater growth in the overall microgrid market in the later years of the forecast period – an exponential growth trend that will not be witnessed in the utility microgrid segment until after 2018.