Is the Asia Pacific Microgrid Market a Hot-bed for Investments?

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Is the Asia Pacific Microgrid Market a Hot-bed for Investments?

  1. 1. Is the Asia Pacific Microgrid Market a hot-bed for investments? Avanthika Satheesh Senior Research Analyst Energy & Environment 4th August 2014 © 2014 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  2. 2. Focus Points 1. Asia Pacific Microgrid market Road-map. 2. What factors influence the microgrid market in the Asia Pacific region? 3. What are the opportunities in the market until 2020? 4. What business models will gain significance in the market? 5. What is the future of microgrid in the region?
  3. 3. 2018-2020 “Rise of Off-grid micro grids” Market Expansion 2014-2015 “Micro grid pilots” Build track record in the AMR/ AMI pilot projects Island micro grids and rural electrifications to take strong foothold * Note: Design Build Own Operate Maintain 2016-2017 “Growth Phase” Time New RE sources such as Biomass to be integrated Community Micro grids in developed nations becomes self-sufficient and goes off-grid RE penetration in micro grids reaches 100% Develop feasible business models on DBOOM* Short Term Mid term Long Term Advance Controller features to integrate EV charging to microgrid Source: Frost and Sullivan Evaluating project scalability, improve energy efficiency R&D to solve technical challenges Developed nations focus on grid-connected micro grids Consolidations expected in the value chain Asia Pacific Microgrid Market Roadmap
  4. 4. Market Influencing Factors Source: Frost & Sullivan analysis. Factors influencing Micro grid market Government incentives and supportive regulations Rural electrification through Island- microgrid Commercial microgrid for reliable power and peak load shaving Reduction of T&D losses by encouraging distributed generation Reducing generation fuel cost by integrating RE sources Battery storage system and Solar PV panel price reduction
  5. 5. Market Opportunity Analysis Total Microgrid Market Revenue By Country, Asia Pacific, 2013 and 2020 Japan is the front runner in the region, with ample support from government bodies. Generation components revenue is the highest in 2013. But the expected reduction in price of ESS component will encourage its adoption by 2020. *Power Distribution and metering equipment Source: Frost & Sullivan 0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 2013 2020 Others* Microgrid Components ESS Components Generation Components $82.2 Million $824.5 Million Japan 27% South Korea 6% Malaysia 8% The Philippines 20% Indonesia 17% Australia 22% CAGR- 32.8% 2020
  6. 6. Market Opportunity Analysis Market Revenue LEAD/INFLUENCE HighLow GrowthRate Low High Malaysia The Philippines Japan South Korea Indonesia Australia
  7. 7. UK Text Source: Frost & Sullivan Regional Hotspots- Japan Japan • Leads in microgrid installations in the region • Supportive government policies -Microgrid demonstration project Fund, Solar PV Project Fund, Li-ion Battery Subsidy, FIT Policy Australia • Market is hesitant after the slash in ARENA budget. RE powered microgrid are installed in remotely located mines and communes. Indonesia • PLN to improve electrification ratio in 7 provinces by installing solar powered island microgrid. The Philippines • Placed in high revenue- high growth quadrant. • FIT Policy, National Renewable Energy Program, Rural Electrification fund (National Electrification Authority) are drivers.
  8. 8. Regional Regulatory Trends Source: Frost & Sullivan Key Types Of Regulations Australia Japan South Korea Indonesia The Philippines Malaysia Government budget for Microgrid projects Rural Electrification Assistance Feed-in Tariff Renewable Energy Target Micro grid test-bed projects Incentive Scheme for RE or ESS projects
  9. 9. Microgrid Business Models Microgrid
  10. 10. Financing Pattern In ESCO Model Energy Flow Money Flow Technology Transfer *Project specific. Source: Frost & Sullivan Key Takeaway: Government assistance is in the form of subsidy on RE components, and technical and financial assistance for surveys and subsidized electricity tariffs. 15% * 85%* Regulated Electricity tariff Microgrid Owner End-user/ Customer Technical and financial assistance from government for Surveys, feasibility study Government funds support CAPEX Subsidy on feasibility study Support from government to compensate the regulation in tariff
  11. 11. Future Microgrids ─Virtual Power Plants Electric Vehicles will charge and discharge electrons based on signal from the utilities, thus acting as virtual energy storage plants Millions of customers can monitor and control their power requirement s using smart devices and help utilities to manage peak power surges, thus obviating the need to build new fossil power plants. Thousands of these will be ‘Prosumers’ Each office, house and industrial facility will be a power plant, all linked by smart meters and real time communications Intermittent renewable energy sources can more effectively be integrated into the power system because of availability of real time information on demand & supply Utility of the future will focus on creating the platform, which will be the Internet of Energy, while the Prosumers will invest, co-create and participate in managing the system Source: Frost & Sullivan
  12. 12. The Last Word 3 With the increase in grid electricity tariff, renewable energy generation in residential sector will lead to the formation of community microgrid which will be capable of functioning in island-mode. 4 Power grid resiliency during natural disasters has a profound impact on microgrid investments. ‘Inter –microgrid-communication’ facilities will be developed which helps them share resources. 1 Rural and remote microgrids as grid substitute make perfect commercial sense. Source: Frost & Sullivan 5 ESCO based business model is the most suitable in urban and grid complementing systems. 2 Urban and grid complementing microgrids will be dependent on government support policies.
  13. 13. Next Steps Develop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community Join our GIL Community Newsletter Keep abreast of innovative growth opportunities Email: asiapacific@frost.com
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  16. 16. Today’s Presenter Over 5 years of experience in the Energy and Power Sector. Expertise includes market research and consulting experience for Major multinational companies in the Asia Pacific Power Market. Topics of interest includes Power Transmission & Distribution, Smart Grid technologies, and Energy Storage Systems. Avanthika Satheesh, Senior Research Analyst Frost & Sullivan Follow me on: @AvanthikaP in.linkedin.com/pub/avanthika-satheesh/12/9a2/136/

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