Market Definition
Microgrid refers to a small-scale self-sufficient power grid designed to provide reliable & resilient power supply to a specific area, including industrial units, hospital complexes, etc. It can operate independently or in connection with centralized grids. It uses distributed energy renewable (solar, wind, etc.) and non-renewable resources (diesel & gas powered generators, etc.) as well as contain energy storage systems & backup generators. The support provided by these grids to main grids during high energy demand and in case of power outages is popularizing their use in different industries.
Market Insights & Analysis: Latin America Microgrid Market (2023-28)
The Latin America Microgrid Market is projected to grow at a CAGR of around 8.69% during the forecast period, i.e., 2023-28, owing to the high rate of demand & supply electricity gaps on account of the poor condition of the grid infrastructure in the region. According to United Nations, in 2022, around 17 million people in the Latin American region do not have access to electricity. This combined with the large presence of remote & isolated regions in countries such as Chile, Peru, etc., is necessitating the development of alternate sources of energy in Latin America.
The flexibility of separation of microgrids from the main grid & acting as an independent power unit is raising the usage of these grids for facilitating decentralized & dispersed energy production & distribution. In addition, the role of these grids in facilitating the economic development of rural communities by powering residential, healthcare, educational, and commercial sectors of rural areas is increasing their usage.
| Report Coverage | Details |
|---|---|
| Study Period | Historical Data: 2018-21 |
| Base Year: 2022 | |
| Forecast Period: 2023-28 | |
| CAGR (2023-2028) | 8.69% |
| Country Covered | Mexico, Brazil, Argentina, Chile, Peru, Columbia, Rest of Latin America |
| Key Companies Profiled | ABB Ltd., GE Grid Solutions, Eaton, Siemens, Caterpillar, Honeywell, Hitachi Energy, Emerson, SINOSOAR, Cummins, Others |
| Unit Denominations | USD Million |
Moreover, Latin American countries are very rich in renewable energy resources such as solar, wind, hydro, etc., and fulfill around 25% of their energy needs from renewables. The benefits of low cost & reduced carbon emissions generated by the integration of renewable energy sources with microgrids are enhancing the Latin America Microgrid Market growth. Further, the development of energy storage systems & smart grid technologies, such as IoT, AI, etc., is enhancing the efficiency of microgrids. Key companies involved in battery energy storage, such as Quartux & WEG, are announcing investments in the energy storage sector of the region in response to the favorable government policies in this sector. For instance:
Hence, the development of renewable energy infrastructure combined with governments’ efforts to raise the share of electrification of their countries, technological advancements, and increasing adoption of microgrids by both government and industries to reduce carbon emissions would facilitate the growth of the microgrid market of Latin America in the ensuing years. For instance,
In 2022, the government of Chile passed an energy storage bill for promoting investment in energy storage & electromobility to lessen power transmission congestion & to facilitate the closure of its coal plants by the early 2030s. Hence, the development of renewable energy infrastructure combined with governments’ efforts to raise the share of electrification of their countries, technological advancements, and increasing adoption of microgrids by both government & industries to reduce carbon emissions would aid in enhancing the Latin America Microgrid Market size in the ensuing years.
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Latin America Microgrid Market Driver:
Development of Reliable Energy Infrastructure in Remote Areas – Latin America is one of the most diversified regions in the world in terms of its topography containing a huge range of mountains, forests, rivers, etc. These characteristics of the region create geographical barriers, such as rugged terrain & isolated locations in setting up transmission lines to extend grid connections in remote areas. Thus, the government has been fulfilling the electricity demand of remote communities in countries such as Chile, Columbia, and others by establishing microgrid systems in recent years.
The emergence of renewable energy technologies & energy storage is helping in shifting from traditional centralized systems to distributed energy systems by reducing the overall cost of operations. Thus, companies & governmental authorities are raising the integration of microgrids with renewable energy sources.
Also, the high rate of development of renewable energy in Latin America on account of the vast presence of resources such as solar radiation, wind, etc., is building a huge potential for the adoption of renewable energy-based microgrids in the region, which would contribute to the Latin America Microgrid Market growth in the upcoming years.
Latin America Microgrid Market Challenge:
Lack of Competent & Technical Labor in the Region – The involvement of numerous systems, such as hardware, software, etc., and the mandatory requirement of grid management & system optimization for establishing & running a microgrid successfully requires technical expertise. The shortage of labor with the required expertise thus creates a barrier to the Microgrid Market growth. According to Manpower Group, in 2022, countries such as Argentina, Costa Rica, Columbia, etc., faced the problem of a shortage of skilled labor of around 50%.
This is creating problems for sectors such as manufacturing & industrial, among others, including the energy industry. Further, the designing & implementation of efficient energy conversion, power conditioning, etc., required to maximize the utilization of renewable energy raises the level of technicality of the job, hence hindering the development of the Latin America Microgrid Market.
Latin America Microgrid Market Trends:
Upsurge in the Usage of Microgrids to Reduce the Carbon Footprints – The development of renewable energy sources, including solar, wind, and hydro, across Latin American countries ranging from Brazil to Peru in recent years is building the integration rate of microgrids with renewable sources. The role of such resources in providing an alternate power source in case of outages & disruptions while reducing the overall cost of operations has been making renewable energy-based microgrids a prime choice of governmental authorities.
Reduced carbon footprints due to the deployment of clean energy resources are becoming another reason for the adoption of microgrids. Thus, high carbon-intensive industries, such as transportation, mining, etc., have also started building infrastructure for renewable-based microgrids to cut carbon emissions, further contributing to the Latin America Microgrid Market positively. For instance:
These systems were expected to add nearly 39 megawatt hours of on-site battery storage capacity to these airports & reduce carbon emissions by around 46 metric tons. Such installation of microgrids by different sectors would further supplement a rising focus toward the adoption of clean & green technologies to become sustainable & environmentally friendly, hence raising the demand for microgrid infrastructure in the region.
Latin America Microgrid Market (2023-28): Segmentation Analysis
Latin America Microgrid Market study of MarkNtel Advisors evaluates & highlights the major trends & influencing factors in each segment & includes predictions for the period 2023–2028 at the regional & national levels. Based on the analysis, the market has been further classified as:
Based on Connectivity:
The Off-grid segment is witnessing a substantial increase in demand in the Microgrid Market of Latin America owing to the high rate of lack of electrification in Latin America. The crucial role of off-grid microgrids in fulfilling the energy requirement of isolated islands & remote industrial sites where grid extension has remained economically unfeasible & challenging has been supporting the market for independent microgrids. Further, the potential of these grids in building the resiliency of local communities by ensuring the operations of economic sectors such as agriculture, food-processing, retail, etc., at the time of unforeseen weather events is surging their establishment.
In addition, the high reliance of these systems on renewable energy sources for power generation, combined with the abundance of these resources in Latin American countries such as Brazil, Chile, Argentina, etc., would assist in raising the Microgrid Market share in the region during the forecast period.
Latin America Microgrid Market Regional Projections:
Geographically, the Latin America Microgrid Market expands across:
Chile is experiencing an upsurge in demand for microgrid infrastructure owing to the presence of favorable renewable energy policies adopted by the government of the country, in line with the high presence of a pro-environment population & ideal conditions for traditional clean energy deployment. For instance, the government has set up a target of fulfilling 70% energy requirement of its population through renewable power by 2030. The high involvement of microgrids in generating clean energy is thus making these grids a focus area of the government.
Also, the presence of a long coastline & large desert area makes the country home to an abundance of wind, solar, and other renewable resources, making Chile a perfect location to develop microgrid systems. Thus, the government is using its renewable energy sources such as wind, hydroelectric, and other power to fulfill the energy requirement of its various sectors, ranging from commercial to environmental.
Further, the vast presence of the mining industry in Chile & the high requirement of off-grid microgrids for facilitating the power requirement of mining activities located in remote areas are contributing to the high development of the Microgrid Market in Chile in the Latin American region.
Latin America Microgrid Industry Recent Development:
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Frequently Asked Questions
A. The Latin America Microgrid Market is projected to grow at a CAGR of around 8.69% during 2023-28.
A. The development of reliable energy infrastructure in remote areas is expected to drive the Latin America Microgrid Market during the forecast period, 2023-2028.
A. ABB Ltd., GE Grid Solutions, Eaton, Siemens, Caterpillar, Honeywell, Hitachi Energy, Emerson, SINOSOAR, Cummins, and others are the top players in the Latin America Microgrid Market during 2023-28.
A. Off-grid is the leading connectivity in the Latin America Microgrid Market during 2023-28.
A. Chile with the substantial share would present growth prospects in the Latin America Microgrid Market during 2023-28.
A. The increasing use of microgrids to reduce carbon footprints is the key trend shaping the growth of the Latin America Microgrid Market.
A. Commercial & Industrial, Government & Transportation, Utilities, Healthcare, Military & Defense, and Others (Educational Institutes, Data Centers, etc.) sectors are the industry's potential end-user.
A. The lack of competent & technical labor is the possible restraint affecting the growth of the Latin America Microgrid Market during 2023-28.
Latin America Microgrid Market Research Report (2023-2028) - Table of Contents
