Decentralized Energy System Market Report 2026

The decentralized energy system market size has grown rapidly in recent years. It will grow from $386.95 billion in 2025 to $440.34 billion in 2026 at a compound annual growth rate (CAGR) of 13.8%. The growth in the historic period can be attributed to expansion of renewable micro-installations, increasing energy access initiatives, early adoption of off-grid power solutions, demand for reliable local electricity supply, investments in distributed generation models.

The decentralized energy system market size is expected to see rapid growth in the next few years. It will grow to $730.04 billion in 2030 at a compound annual growth rate (CAGR) of 13.5%. The growth in the forecast period can be attributed to increasing climate resilience requirements, rising adoption of peer-to-peer energy trading, expansion of smart microgrid technologies, growing focus on decentralized energy autonomy, increasing deployment of hybrid renewable systems. Major trends in the forecast period include growing adoption of localized power generation systems, rising deployment of microgrids and community energy systems, increasing integration of energy storage solutions, expansion of smart energy management platforms, enhanced focus on grid resilience and energy security.

The rising demand for renewable energy is expected to boost the growth of the decentralized energy system market in the future. Renewable energy is produced from natural sources that are continuously replenished, including sunlight, wind, water, geothermal heat, and biomass, providing an environmentally friendly alternative that lowers greenhouse gas emissions. This demand is growing due to increasing environmental concerns and the necessity to reduce greenhouse gases, as renewable energy generates little to no emissions, making it a cleaner and more sustainable substitute for fossil fuels. Decentralized energy systems support renewable energy adoption by enabling local generation of power, which is especially useful in remote or off-grid locations. These systems improve energy resilience by integrating sources like solar and wind, enhancing efficiency, and lessening dependence on centralized grids. For example, in March 2025, the International Renewable Energy Agency (IRENA), a United Arab Emirates-based intergovernmental organization, reported that global renewable energy capacity increased from 3,862,881 megawatts (MW) in 2023 to 4,448,051 megawatts (MW) in 2024. Thus, the growing demand for renewable energy is driving the expansion of the decentralized energy system market.

Leading companies in the decentralized energy systems market are developing advanced technologies, including smart energy solutions, to improve energy efficiency, enable real-time monitoring, and optimize energy distribution within decentralized grids. Smart energy solutions are technology-driven systems that enhance the generation, distribution, and consumption of energy using advanced tools such as the Internet of Things (IoT), artificial intelligence (AI), and renewable energy integration to boost efficiency and sustainability. For instance, in February 2025, ENVIRIA Energy Holding GmbH, a Germany-based renewable energy firm, introduced PeakHive, a smart energy solution that integrates renewable energy sources, storage, and digital management to promote energy independence and sustainability. This solution offers lower energy costs, greater self-sufficiency, and potential revenue streams through innovative leasing models.

In August 2024, Deutz AG, a Germany-based engine manufacturer, acquired Blue Star Power Systems Inc. for an undisclosed sum. Through this acquisition, DEUTZ aims to evolve into a full-service provider of decentralized electricity generation solutions, expanding its footprint in the U.S. energy market and driving profitable growth. Blue Star Power Systems Inc. is a U.S.-based power generation company that delivers customized generator solutions supporting decentralized energy systems across multiple industries.

Major companies operating in the decentralized energy system market are ENGIE SA, Tesla Inc., Siemens AG, General Electric Company, Schneider Electric SE, Honeywell International Inc., ABB Ltd., Duke Energy Corporation, NextEra Energy Inc., Eaton Corporation plc, Vattenfall AB, SunPower Corporation, Enel X S.r.l, Enphase Energy, Bloom Energy Corporation, Ballard Power Systems Inc., EDF Group, Doosan Enerbility Co Ltd, Neoen Pty Ltd, Orsted A/S.

North America was the largest region in the decentralized energy system market in 2025. The regions covered in the decentralized energy system market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the decentralized energy system market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The decentralized energy system market consists of sales of solar panels, wind turbines, battery storage systems, inverters, microgrid controllers, smart meters, energy management software, and other related hardware used for local energy generation and distribution. Values in this market are ‘factory gate’ values, that is, the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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