S06.9 · Energy, Power & Climate
On-site generation and backup power at customer premises, with no agreed market size and a new split around gigawatt-scale datacenter campuses.
Distributed and behind-the-meter energy — on-site generation and backup power at customer premises — has no single defensible market size, and the spread is the honest answer: estimates run from $6-10B on a narrow behind-the-meter storage definition (SNS Insider) to over $500B on a broad distributed-energy-resource scope (Grand View Research), reflecting how differently the segment can be drawn rather than any single wrong estimate. Most sub-segments are growing at a double-digit pace, accelerated by datacenter demand for on-site and backup generation. That demand is doing something more interesting than adding volume — a new boundary is forming between traditional residential and commercial-and-industrial behind-the-meter systems and gigawatt-scale, off-grid datacenter power campuses.
The US and Europe lead residential solar-plus-storage adoption, while datacenter-driven behind-the-meter gas and storage concentrates in grid-constrained US regions, particularly where interconnection queues for new grid-scale generation run longest. The segment is fragmented: residential installers such as Sunrun and the SolarEdge ecosystem, and backup-generator makers such as Generac, each hold meaningful but non-dominant shares.
Distributed energy both competes with and complements utility grid supply, sourcing equipment from solar, storage and generator manufacturers. The capital is customer-financed — loans, leases or power-purchase agreements — priced against avoided utility cost, with net-metering and interconnection policy gating that varies sharply by jurisdiction. Because the customer rather than the installer typically carries the financing, growth is more exposed to interest-rate and financing-availability swings than to equipment cost alone. That distinction matters more here than in utility-scale generation, where the developer holds the capital structure.
The main adjacency is aggregation into virtual power plants: pooling many small rooftop solar, storage and backup-generator installations and bidding their combined output or flexibility into grid markets as if they were a single power plant — monetizing fleets of small assets as grid resources.
As elsewhere in the sector, AI's effect arrives through demand rather than through automation of the segment's own operations. Behind-the-meter gas and storage has become a primary datacenter power strategy, and the resulting demand is creating a boundary that never previously needed drawing: traditional residential and C&I behind-the-meter systems on one side, gigawatt-scale off-grid datacenter power campuses on the other. The two sub-markets now have different buyers, different financing structures and different equipment specifications, even though both sit under the same broad "behind-the-meter" label. That, more than anything, is why a single market-size figure for this segment is not meaningful.