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SMART GRID INSIGHTS
                                                                                                                  JULY 2012

                                                                                                        SMARTGRIDRESEARCH.ORG
                                                                                 INTELLIGENT RESEARCH FOR AN INTELLIGENT MARKETTM


                                                                                                              PREMIUM




                                                                 MICROGRIDS: THE BRICS
INTELLIGENCE BY ZPRYME | ZPRYME.COM
© 2012 ZPRYME RESEARCH & CONSULTING, LLC. ALL RIGHTS RESERVED.   OPPORTUNITY
Table of Contents

Executive Summary ................................................................. 2
Benefits of Microgrids .............................................................. 4
Global Market Value Forecasts.............................................. 6
Key Players ............................................................................... 7
Challenges & Barriers to the Microgrid Market ..................... 9
Key Microgrid Solutions ......................................................... 10
BRICS: The Microgrid Opportunity ........................................ 12
  BRICS Nations: Drivers........................................................... 12
  Major End-Use Industries for Microgrids ............................. 14
Brazil ........................................................................................ 16
  Brazil: Drivers .......................................................................... 16
  Brazil: Microgrid Market Forecast ....................................... 16
  Brazil: Projects ........................................................................ 17
Russia ...................................................................................... 19
  Russia: Drivers ........................................................................ 19
  Russia: Microgrid Market Forecast ..................................... 20
  Russia: Projects ...................................................................... 20
India ........................................................................................ 21
  India: Drivers .......................................................................... 21
  India: Microgrid Market Forecast ....................................... 22
  India: Projects ........................................................................ 22
China....................................................................................... 24      Special Thanks
  China: Drivers ........................................................................ 24
  China: Microgrid Market Forecast ..................................... 25
  China: Projects ...................................................................... 25               Thierry Godart
South Africa ............................................................................ 27              Siemens, President of Smart Grid Division, U.S.
  South Africa: Drivers ............................................................. 27                  www.siemens.com
  South Africa: Microgrid Market Forecast .......................... 28
                                                                                                          Jeff Lund
  South Africa: Projects ........................................................... 28
                                                                                                          Echelon, VP of Business Development
BRICS: Microgrid Outlook ...................................................... 29
                                                                                                          www.echelon.com
Q&A with Echelon .................................................................. 31
Q&A with Siemens ................................................................. 33


1 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                                            Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                                        www.zpryme.com | www.smartgridresearch.org
Executive Summary                                                                       Global Microgrids Market Value Forecast
                                                                                                      CAGR = 13%
                                                                                               2012 to 2020 (in US billions)
Many parts of the world are without grid-connected                                             (figure 1, source: Zpryme)
electrical power. As their population and standard of                     $15
                                                                                                                                                   $13.40
living increase, so will their demand for energy, and a                                                                                   $12.01
suitable system for providing that electricity to them. The               $12                                                    $10.82
current energy system is unable to offer connectivity to                                                                 $9.57
many of these remote locations for economic or logistical                 $9                                    $8.33
reasons. One solution to providing energy to these remote                                               $7.50
                                                                                                $6.90
locations is to install microgrids. Several large firms have                            $6.20
                                                                          $6
expanded operations into the microgrid marketplace,                             $4.95
while niche firms have developed customized programs
specific to the market.                                                   $3


        The global microgrids market is projected to reach               $0
         $4.95 billion in 2012. By 2020, the global microgrid                    2012   2013     2014    2015    2016    2017     2018     2019     2020
         market is projected to reach $13.40 billion. The
         market is projected to grow at a compound annual
         growth rate of 13% from 2012 to 2020.                                           BRICS Microgrids Market Value Forecast
                                                                                                       CAGR = 25%
                                                                                               2012 to 2020 (in US billions)
        In 2012, the combined microgrids market value for                                      (figure 2, source: Zpryme)
         BRICS (Brazil, Russia, India, China, and South Africa)           $5
                                                                                                                                                   $4.47
         nations is projected to reach $0.73 billion in 2012. By
         2020, the microgrids market among BRICS nations                  $4
                                                                                                                                          $3.39
         will reach $4.47 billion.
                                                                          $3                                                     $2.57
        The BRICS nations, as a whole, are projected to
         grow at a compound annual growth rate of 25%                                                                   $1.96
                                                                          $2
         from 2012 to 2020.                                                                                     $1.49
                                                                                                        $1.24
                                                                                                $1.04
        In 2012, BRICS nations are projected to account for              $1    $0.73 $0.87
         15% of the global microgrid market. By 2020, they will
         account for 33% of the global market.                            $0
                                                                                2012    2013    2014    2015    2016    2017     2018     2019     2020



2 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                          Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                     www.zpryme.com | www.smartgridresearch.org
$2,015                                                        How well do you
                                                                              know the BRICS
                                                                                   microgrid
                                                      $1,191                     ecosystem?
                                                                                            BRICS Market Value Forecast by Country - 2012, 2020
                                                                                                  (figure 3, source: Zpryme, in US millions)
                                                                                                                                       2012
                                                                                                                                       2020




                                                                                     $518
                                                                                                           $433
  $320                                                                                                                                            $312
                                                                          $149
                                        $115                                                     $99
                                                                                                                                   $50

           China                                 India                           Brazil                Russia                         South Africa
3 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                             Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                         www.zpryme.com | www.smartgridresearch.org
Microgrids incorporate renewable energy solutions, energy                 in India and South Africa that integrate distributed
storage, and energy management technology into an                         generation to compensate for disruptions in utility-supplied
integrated system that manages energy generation,                         power. Smart mini-grids are very useful for stand-alone
transmission, distribution, and usage on a small scale                    projects in villages and inaccessible areas. Microgrids not
compared to the current grid system, as it serves a smaller               only foster the effective inter-connection and utilization of
base of local residents. However, this small local nature                 multiple renewable energy resources, but also help in
offers significant benefits, such as reliability, flexibility, and        advancing access to energy to the last mile in the most
increased security. Key technology has been introduced                    optimum way by improving the efficiency of the overall
to allow widespread adoption of microgrids.                               system. The PRISMA project in the Amazon village of
                                                                          Cachoeira do Aruã, Brazil is a run-of-the-river micro-hydro
BRICS (Brazil, Russia, India, China, and South Africa) nations            facility that provides the community with power that is
are the fastest growing countries internationally and have                distributed via a mini-grid. The project establishes
large percentages of their population without power.                      community ownership and management of local
These five nations can benefit from microgrid installation,               infrastructure, such as power generating stations, while
thus allowing their rural citizens to experience reliable                 strengthening small local enterprises that then use the
power for the first time.                                                 infrastructure for productive uses which help them in
                                                                          earning an income.
In BRICS nations (Brazil, Russia, India, China, and South
Africa), the demand for energy, particularly electricity, is              Benefits of Microgrids
growing much more rapidly than the rate of expansion of
conventional electricity grids in the industrialized world.               The current electrical generation system, where energy
Microgrids are a cost-effective solution to help meet this                flows in one direction from the utility to consumers is
rising demand for more power, without increasing carbon                   becoming obsolete.          Outdated transmission lines,
emissions. The microgrid market across BRICS nations is                   inefficient equipment and antiquated software will require
being driven by the growing energy demand; the need for                   a tremendous expense to update, as well as present
reliable power; increasing focus on renewable energy;                     security and reliability problems. Microgrids provide one
requirement for electrification in rural and inaccessible                 solution to a more efficient energy system and offer many
areas; and government incentives provided for achieving                   benefits.
energy efficiency and renewable power generation.
                                                                          First, the smaller scale of microgrids offers several benefits
Several microgrid projects are coming up across the BRICS                 including increased efficiency because less energy is lost
countries to provide a more reliable power supply to                      during the transmission of energy. In a microgrid, energy
consumers. For example, recently, in early 2012, Echelon                  travels shorter distances from the energy source to the
Corporation, announced that it will set up two microgrids                 customer and serves fewer customers.            Thus, overall


4 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                   Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                               www.zpryme.com | www.smartgridresearch.org
demand on the transmission infrastructure decreases.
Further, the system becomes more reliable and is able to
respond more quickly to local demand.

In addition, distributed resources are locally controlled and
function as a single unit. Not only does this optimize
energy generation, but it also creates energy
independence and encourages the adoption of
renewable       technology     to   meet     clean     energy
requirements.

Flexibility is also a key benefit of microgrids. Microgrids are
arranged in a modular fashion. New components can be
added with minimal problems and the system can be
easily updated and maintained.               In addition, the
development of the microgrid is locally controlled, which
means local needs are considered when designing the
microgrid. Therefore, transformation of the grid is planned
to meet the needs of the local or regional area.

Lastly, microgrids utilizing distributed resources offer
improved security. The microgrid is able to island itself,
creating a separation from the main grid and decreasing
its vulnerability to outside attacks. This increases both the
cyber-security of the grid and its physical security. This is
especially important when valuable resources must be
maintained, such as in hospital or military installations. In
addition, islanding prevents the local area from being
affected due to widespread blackouts or other problems
occurring in the main electrical grid.




5 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                       Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.   www.zpryme.com | www.smartgridresearch.org
Global Market Value Forecasts

                                                   Global and BRICS Market Value Forecast, 2012 – 2020
                                                          (table 1, source: Zpryme, in US billions)

Market Value                                            2012        2013       2014     2015     2016        2017          2018            2019            2020         CAGR

Global Market                                           $4.95        $6.20      $6.90    $7.50    $8.33      $9.57      $10.82            $12.01          $13.40           13%
BRICS                                                   $0.73        $0.87      $1.04    $1.24    $1.49      $1.96         $2.57           $3.39           $4.47           25%
BRICS % of Global Market Europe                          15%          14%        15%      17%      18%        20%           24%              28%            33%


                                                   BRICS Market Value Forecast by Country, 2012 – 2020
                                                          (table 2, source: Zpryme, in US millions)

Market Value                                            2012        2013       2014     2015     2016        2017          2018            2019            2020         CAGR

Country
  Brazil                                                 $149        $166       $186     $209     $234       $285          $348             $424           $518            17%
  Russia                                                  $99        $112       $126     $143     $161       $207          $264             $339           $433            20%
  India                                                  $115        $150       $194     $253     $328       $453          $626             $863          $1,191           34%
  China                                                  $320        $384       $461     $553     $664       $876       $1,156            $1,526          $2,015           26%
  South Africa                                            $50         $59        $71      $86     $103       $135          $179             $236           $312            26%
Total                                                    $732        $871      $1,039   $1,243   $1,490   $1,956        $2,573            $3,388          $4,468           25%


                           BRICS Market Value by %, 2012                                                      BRICS Market Value by %, 2020
                              (figure 4, source: Zpryme)                                                         (figure 5, source: Zpryme)

                 China       India       Brazil     Russia      South Africa                         China      India        Brazil       Russia      South Africa

                                          7%                                                                                  7%
                                   13%                                                                                  10%
                                                      44%                                                                                     45%
                                                                                                                     11%
                                 20%

                                                                                                                           27%
                                           16%

6 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                                                Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                                            www.zpryme.com | www.smartgridresearch.org
Key Players                                                               microgrid market, through its Adaptive Protective System
                                                                          architecture. ABB is also involved in utilizing microgrids to
In the microgrid market, two main types of key players are                provide ancillary services for utilities. In addition, ABB has
strengthening their position. First, large Smart Grid firms are           been very active in the Advanced Architecture Program
expanding their product lines to offer products specifically              for the European Consortium. ABB is a member of the
designed for the microgrid market. Small niche firms have                 steering committee, which develops functions and
also entered the marketplace with products uniquely                       schemes for microgrids. ABB has experienced success in
suited for microgrids. In addition, these two types of firms              installing a $16 million microgrid upgrade in Qatar, where it
have collaborated to provide solutions for specific                       was responsible for reengineering and reinforcing the
locations and projects.                                                   existing system to improve the availability and reliability of
                                                                          electricity. In addition, ABB has developed strategic
BPL Global was founded in 1983 and has expanded its                       partnerships with wind and solar manufacturers, as well as
operations to include member firms in 7 countries,                        acquiring Powercorp, an Australian firm specializing in
including Africa, China, Brazil and the Middle East. The BPL              renewable energy integration.
Africa branch offers Intelligent Power Smart Grid
Integrated Demand Response Software to design the most                    Siemens has expanded its position as an electrical
cost effective energy microgrid solution based on cost                    engineering and electronics leader to include global
and other grid conditions. BPL Africa is the only firm on the             energy management for microgrids.          Siemens views
continent to offer a turnkey solution to microgrid                        microgrids as a central component in the Smart Grid
deployment for the remote power market. The solution                      evolution. Siemens offers energy-efficiency technology for
provides the basic starting components and allows the                     a microgrid’s consumption, transmission and production
user to add modules as they need the additional capacity                  needs.     Siemens has been involved in a series of
and can afford the upgrades. BPL Africa has experienced                   partnerships. Recently, Siemens partnered with Boeing to
success in developing microgrid solutions for mining                      develop microgrid solutions for the Department of Defense
operations that were totally unconnected from the grid                    to be use in military installations. In addition, Siemens
and had no electricity. In addition, its turnkey solution has             partnered with BPL Global to combine demand response
been implemented in small villages, providing consistent                  solutions with distributed generation resources for homes
energy for the first time to the remote locations.        BPL             and businesses, creating a mini-grid. Siemens has also
Global has had several strategic partnerships that have                   worked with Viridity Energy and has several other
further developed its position in the field including its                 partnerships and projects underway to further develop its
acquisition of Serveron and a partnership with Siemens.                   microgrid position.

ABB has expanded its position as a transmission and
distribution Smart Grid leader to develop solutions for the


7 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                   Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                               www.zpryme.com | www.smartgridresearch.org
Echelon has expanded its position as a leader in network                  Science Foundation, and Red Hat to provide software
platforming to provide solutions for the microgrid market.                engineering for the utility, energy, and communications
Echelon’s microgrid software is able to outline the usage                 fields.
of power by source, delineating power from renewable
sources, from the grid, and from back-up power sources.                   Pareto Energy was founded in 2004 and began operations
This allows consumers to make choices about their energy                  focused on creating legislation to enable microgrid
consumption, in turn creating a more efficient system.                    development and deployment. Pareto’s Grid Link product
Echelon has announced two projects in India and South                     overcomes problems with interconnection between the
Africa. Echelon will supply each project with smart meters                microgrid and the utility. It solves momentary instability
for each residence or business to provide feedback on                     and energy loss problems experienced when switching to
energy consumption, and provide their software to                         island mode due to grid difficulty. The main grid is thus
provide energy management capabilities. In addition,                      shielded from inconsistent distributed generation, and
applications from Echelon’s partners will provide                         allows for upgrades and improvements to distributed
additional functionality for supply/demand management                     generation resources. Pareto currently has over $70 million
and automatically switch to backup power if Echelon’s                     committed to microgrid projects. In addition, Pareto has
Networked Energy System senses any irregularity. The                      installed over 20 microgrids, including systems at Howard
projects will not only provide greater efficiency, but also               University and for a pilot project in Stamford, Connecticut.
will also allow better pricing methods and serve as an
example of an entry-level microgrid market, where back-                   Lastly, Viridity Energy is a new firm that enables a microgrid
up generators support the electrical grid in times of need.               to achieve a shorter payback period on investments.
                                                                          Viridity’s software consolidates all of the microgrid’s assets
In addition to large Smart Grid firms expanding into the                  to allow for comprehensive decision-making. The VPower
microgrid market, several niche firms have also developed                 program allows a microgrid to not only balance supply
specialty products to serve microgrids. Green Energy                      and demand, but also maximize selling energy back to
Corporation has received numerous awards, including                       the grid. The program manages energy production,
being named one of the Top 50 Colorado Firms to Watch.                    storage, consumption, and distributed resources to avoid
Green Energy Corporation offers a Master Controller                       peak loads to not only minimize cost, but also maximize
program, allowing for monitoring of both energy storage                   profits. Viridity has worked with Siemens, Drexel University,
and distributed generation. Utilizing cutting edge cloud                  Penn State University, The University of Pennsylvania, PECO
computing on an open source format, the software                          Energy, San Diego Gas & Electric, University of San Diego,
combines new energy applications and legacy systems,                      Con Edison and other firms to maximize microgrid
allowing interoperation that is stable and secure. Green                  profitability.
Energy Corporation has partnered with such companies as
the National Rural Electric Cooperative, the National


8 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                   Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                               www.zpryme.com | www.smartgridresearch.org
Challenges & Barriers to the Microgrid Market                             Compressed Air Energy Storage (CAES) is not implemented
                                                                          as widespread as pumped hydro, but is very popular. It
Several factors have created barriers to successful                       requires either an underground storage space, such as a
microgrid deployment. First, the cost and integration of                  cavern, or an aboveground storage tank for storage.
energy storage has provided a barrier to microgrids.                      Excess energy is used to compress air and move it to the
Energy storage is absolutely essential to the successful                  storage space. When it is needed, the air is released and
integration of microgrids. Energy storage allows energy to                passes through a turbine, thus producing energy. Energy
be captured when excess energy is produced during non-                    efficiency for CAES systems is typically close to 40% due to
peak times and utilized during peak or inconsistent                       cooling, air compression, and turbine generation losses.
periods. Storage systems improve reliability and quality;                 Because of these losses, additional features are usually
however energy storage options are not cost effective in                  added to capture the lost energy and produce additional
most cases.      Because of the size and the scope                        energy from it. CAES systems are expensive to install, but
requirements of microgrids, it is difficult to choose the                 have a long life cycle, reducing its cost over time.
appropriate storage option for each installation. However,
recent developments have lowered the cost of some                         Battery     Energy    Storage    systems    have    different
storage options and small-scale applications of energy                    compositions, come in different sizes and can be used for
storage can be significantly less expensive than previously               different purposes. Batteries have been frequently used
available.                                                                for substation back-up systems and significant research is
                                                                          aimed at improving efficiency and making them more
Pumped hydro facilities are the most common storage                       cost effective. One key advantage is the portability of
solution worldwide, with over 127,000 MW installed                        batteries, as well as the fact that they can be immediately
worldwide. Two reservoirs at two different heights are                    connected and utilized without significant additional
utilized. Excess energy is used to pump water to the upper                installation costs. However, the lifetime of battery storage
reservoir to be stored until energy is needed. Then the                   is 2-10 years, after which they must be replaced and safely
water is released and gravity pulls it towards the lower                  discarded. They can also have high maintenance costs,
reservoir, and through a turbine, thus releasing the stored               but can operate at 90% efficiency.
energy. For it to be successful, the environment must be
able to provide for pumped hydro storage (water must be                   Solar energy integration has also produced significant
present, etc.). The system is able to come online quickly                 barriers to microgrid operation. One challenge of solar
and typically stores 5-6 hours of energy at capacity. In                  energy is its distribution nature. Many times solar panels
addition, it operates at 70-75% capacity and is expensive                 are spread out and produce small amounts of highly
to install, however its long life cycle makes it more                     variable power. The energy is then collected at a central
affordable over the long term.                                            source and then transmitted to energy customers. This
                                                                          process raises technical problems, such as inconsistent


9 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                  Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                              www.zpryme.com | www.smartgridresearch.org
voltage and frequency, grounding, protection and                          reducing the cost of wind turbines. Finally, not all regions
regulation, power quality, and variability caused by                      are well suited to wind energy production. Some areas
various weather conditions. Utilities and remote areas                    have inadequate wind flow for wind technology to be a
considering installing microgrids must be sure that their                 feasible option. Because of the expense, the feasibility of
systems are able to integrate the solar energy, even during               producing wind energy needs to be studied before the
fluctuations without compromising the grid itself. Research               technology is implemented.
has developed new technology to both protect the grid
from variability in production and integrate the distributed              Key Microgrid Solutions
resources. In addition, the price of solar photovoltaic
panels has decreased significantly, allowing them to be a                 Several key technological developments have enabled
more cost efficient option for microgrid use. One final                   microgrid deployment. GridLink by Pareto Energy provides
consideration for installing solar panels for use in a                    protection to the main electrical grid from any issues of the
microgrid setting is suitability.   A major challenge to                  microgrid, including variability experienced when
microgrids is to implement the right distributed generation               islanding, problems when upgrading distributed resources,
mix.     Not all areas are conducive to solar energy                      and local energy generation and loads. GridLink allows
production and installing the wrong mix can be very costly                the utility to be considered as an equal input with all other
and result in not only excess unused materials, but                       resources.      All inputs pass through inverters before
inefficient energy capacity as well.                                      connecting to the microgrid. This insures consistent power
                                                                          to the microgrid even during times of blackout on the
Wind integration has presented some similar barriers to                   main grid, while insuring no impact on the utility system
microgrid deployment. Like solar energy, wind energy                      itself. GridLink has been utilized at many large utilities, as
production is highly variable, producing intermittent                     well as Howard University with great success. GridLink has
power. Frequency and voltage are affected by weather                      proven its success in over 20 microgrid installations, and in
and wind conditions. The proper technology must be in                     overcoming         interconnection    problems      between
place to allow a microgrid to utilize wind energy, without                microgrids and the main utility system.
compromising the electrical system. The microgrid must
be able to balance the power the wind turbines generate,                  A second key technology in microgrid deployment is BPL
storing energy over its maximum capacity for later use,                   Global’s Power SG Integrated Distributed Energy
when wind production declines or load increases. Proper                   Resources Software (iDER). iDER is a turnkey microgrid
software programs are the key to effective energy                         solution that allows end-to-end energy management of all
management.       New wind technology has been                            resources. The software allows the main components of a
developed that has both increased efficiency and                          microgrid to be set up quickly and for the customer to add
lowered the costs for wind technology.          Increased                 components later, as necessary. BPL Global offers a
efficiency has improved reliability and safety, while                     ―unique combination of solutions for the continent in


10 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                  Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                               www.zpryme.com | www.smartgridresearch.org
energy efficiency and management, solar energy                            issues. In addition, energy management strategies can be
generation, renewable energy storage, electrification of                  tested to determine the most efficient plan before the
off-grid areas with energy islands, electrical network                    plans are undertaken in the actual system.         Power
optimization via MicroGrid, sustainable solutions to the                  Analytics’ Paladin program offers superb analytical data
economic realities‖, making it a key technological                        processing that predicts and prevents real time problems,
development.                                                              making it a key technology in the emerging microgrid
                                                                          market place.
HOMER is a microgrid modeling software that analyzes
different distributed energy possibilities to provide the
design for the most efficient microgrid possible, based on
a number of different factors, including weather, energy
usage, and environmental factors. HOMER stands for
Hybridization Optimization Model for Electric Renewables
and identifies the most cost effective options for
renewable energy and hybrid renewable microgrids. It
has been downloaded by 68,000 people in 193 countries
and is used in numerous microgrid projects. It helps utilities
avoid costly mistakes during renewable energy
deployments. HOMER was originally developed for off-
grid village power systems, but has been enhanced to
consider new technology options and changes in the
microgrid marketplace.

Paladin Live program, by Power Analytics, analyzes data
from the microgrid to predict possible problems with the
system. It uses data from the installation of the microgrid
as baseline data to compare present microgrid
performance. It offers users real time data about system
efficiency, and is able to show capacity, reliability, and
availability of the microgrid. This information is able to
identify potential problems and address them before they
affect the system. In addition, different plans can be
tested before they are implemented. Upgrades can be
simulated before they are made to assess unforeseen


11 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                               Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                            www.zpryme.com | www.smartgridresearch.org
BRICS: The Microgrid Opportunity                                                       BRICS Microgrids Market Value Forecast
                                                                                                     CAGR = 25%
Developing countries compose 80% of the world’s                                              2012 to 2020 (in US millions)
population, but only comprise 30% of the world’s energy                                       (figure 6, source: Zpryme)
                                                                          $5,000
consumption.      As the population increases, energy
demand will also increase. These developing countries                     $4,000
are improving their standard of living, thus requiring more
energy. However, many parts of the world are not                          $3,000
connected to a central grid, and rely on individual gas or
diesel generators, or biomass for their energy needs.                     $2,000

                                                                          $1,000
The electrical grid is centralized and it is either cost
prohibitive to connect these locations or the population is
                                                                             $0
too disbursed to allow for connectivity. Meeting the                               2012 2013 2014 2015 2016 2017 2018 2019 2020
energy needs for this segment of the population around
the world presents a huge opportunity. The BRICS nations                             Brazil   Russia   India      China        South Africa
(Brazil, Russia, India, China, and South Africa) are the five
fastest growing segments of this market.           The rural              BRICS Nations: Drivers
communities that are not connected to any electrical
system seek an alternative to the traditional energy                      Demand for energy, specifically electricity, in BRICS
system. They seek access to affordable, reliable energy.                  nations is growing much more rapidly than the rate of
Renewable energy utilized in microgrids can meet the                      expansion of conventional electricity grids in the
needs of these communities in a sustainable manner.                       industrialized world. Demand for energy in these countries
Renewables offer a more reliable option than traditional                  is expected to grow in tandem with projected increases in
connectivity, as well as providing access to water for                    human population and rising living standards among the
irrigation purposes. Thus, microgrids in BRICS will improve               chronically poor. Microgrids are ideally suited to help meet
the overall way of life for remote locations.                             this rising demand for more power, without increasing
                                                                          carbon emissions. The growing demand for energy;
In 2012, the combined microgrids market value for BRICS                   increasing focus on renewable energy; government
nations is projected to reach $0.73 billion in 2012. By 2020,             incentives provided for achieving energy efficiency and
the microgrids market among BRICS will reach $4.47 billion.               renewable power generation; unreliable power quality
The BRICS market is projected to grow at a compound                       and power shortages; and poor rural electrification
annual growth rate of 25% from 2012 to 2020.                              systems are driving the microgrid market across Brazil,
                                                                          Russia, India, China, and South Africa.


12 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                   Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                www.zpryme.com | www.smartgridresearch.org
providing many rural people access to both light and
Microgrids act as a cost-effective and viable option in the               power for the first time in their lives.2
developing world which is coping with an unreliable
power supply. Several microgrid projects are coming up                    Another microgrid project is being undertaken for insular
across the BRICS nations to provide consumers with a more                 and remote localities in the Asia-Pacific Economic
dependable power supply system. For example, recently,                    Cooperation (APEC) economies. Led by the Russian
in early 2012, Echelon Corporation (an American                           Federation, the objective of the project is to maximize the
company which designs control networks to connect                         economic and environmental effect of deployment of the
machines and other electronic devices, for the purposes                   Smart Grid technology in insular and remote localities as
of sensing, monitoring and control), announced that it will               these areas experience bigger challenges in securing
set up two microgrids in India and South Africa that                      reliable and efficient energy supply.3
integrate distributed generation to compensate for
disruptions in utility-supplied power. The model microgrid                Together with local partners, the local utility, and the local
deployments are at Palm Meadows in Hyderabad, India,                      community, Winrock International, a global nonprofit
and Clearwater Mall in Johannesburg, South Africa. Palm                   organization, in 2005 began the installation of the first
Meadows is an 86-acre integrated gated community with                     PRISMA project in the Amazon village of Cachoeira do
335 homes and residential services. Clearwater Mall in                    Aruã, Brazil. A run-of-river micro-hydro facility the project
Johannesburg is a retail building with more than 240                      provides the community with power that is distributed via
stores.1                                                                  a mini-grid – all governed under simplified contracts
                                                                          between the community and the electric utility. One of
Microgrids also help in providing electricity in de-electrified           the activities undertaken under this project is to promote
villages. Smart mini-grids are very useful for stand-alone                ecotourism, raising global awareness of the environmental
projects in villages and inaccessible areas. Microgrids not               challenges that this region faces each day.
only foster the effective inter-connection and utilization of
multiple renewable energy resources but also help in                      The PRISMA Cachoeira do Aruã project in Brazil establishes
advancing access to energy to the last mile in the most                   community ownership and management of local
optimum way by improving the efficiency of the overall                    infrastructure, such as power generating stations, while
system. In one of India’s poorest states, Uttar Pradesh, the              strengthening small local enterprises that then use the
founders of Mera Gao Micro Grid Power build and                           infrastructure for productive uses which help them in
operate solar-powered microgrids to provide low-cost                      earning an income.       In the case of electricity, the
lighting and mobile phone charging to village houses,                     community ―sells‖ the power to the local utility (which in
                                                                          Brazil holds a monopoly on power distribution) and

                                                                          2   Tree Hugger
1   Solar Feeds                                                           3   EGNRET



13 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                  Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                               www.zpryme.com | www.smartgridresearch.org
villagers manage the local mini-grid under a contract to                  Major End-Use Industries for Microgrids
the power company. The electric utility provides technical
support if required, so villagers are not completely on their             The microgrid system has a great potential in large
own.4                                                                     commercial and industrial complexes, hospitals, shopping
                                                                          malls/ complexes, apartments, residential complexes,
To supply electricity to those areas that have rare                       educational institutions, remote un-electrified as well as
population, inconvenient traffic and those that are unable                electrified locations to ensure maximum flexibility, reliability
to be covered by the main power grid, Beijing Huadian                     and safety.6
Tianren Power Control Technology Co., Ltd. (The
company’s business focuses on energy saving,                                            BRICS Microgrids Market Forecast by End-Use Industry
environmental protection, new energy and innovation                                                  All 5 Countries Combined
transformation of traditional industries.) started a wind-                                         2015 and 2020 (in US millions)
solar hybrid microgrid project in Jijiao Village, Chawu                                              (figure 7, source: Zpryme)
Townership, Lazi County, Rikaze, Tibet. On December 4,
2011, the project was formally put into production.5                                                                                                           $1,340
                                                                                      Institutional
                                                                                                                           $435
Government incentives for energy efficiency and
renewable power generation also stimulate investment in                   Community/Industrial
                                                                                                                                             $894
advanced energy infrastructure. Husk Power Systems, an                                                           $199

Indian firm, uses second-world-war-era diesel generators
                                                                                                                                           $849             2020
fitted with biomass gasifiers that can use rice husks, which                              Off-grid
                                                                                                            $149
are otherwise left to rot, as a feedstock. Wires are strung
                                                                                                                                                            2015
on cheap, easy-to-repair bamboo poles to provide power                                                                              $626
                                                                                Community/Utility
to around 600 families for each generator. By 2010, Husk                                                         $186
Power had established five mini-grids in Bihar, where rice is
a staple crop. Consumers pay door-to-door collectors                                      Military
                                                                                                                                 $536
                                                                                                             $174
upfront for power, and Husk collects a 30 percent
government subsidy for construction costs. Its pilot plants                                                       $223
were profitable within six months, so its model is                                          Other
                                                                                                           $99
sustainable.
                                                                                                      $0                  $500               $1,000              $1,500




4   Winrock
5   KJT                                                                   6   The Economic Times



14 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                                     Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                                  www.zpryme.com | www.smartgridresearch.org
Recently, in early 2012, China’s Xiamen University                        Systems, Saran Renewable Energy, Mera Gaon Micro Grid
partnered with leading multinational technology providers                 Power, and Naturetech Infra all operate microgrids on a
to build the country’s first direct current microgrid.                    commercial basis in India.
Significant changes brought by the new DC microgrid
include integrating renewable energy generation and                       Certain commercial and industrial environments have a
storage batteries with building electrical loads via mobile               critical need for a constant power supply and cannot
and web-based energy management and control                               afford brownouts or blackouts – research labs, data
applications; changing the way Chinese campuses and                       centers, semiconductor manufacturing, and infrastructure
building complexes manage, control and consume                            deemed critical to national security. Furthermore, as the
energy; and for reducing building energy consumption,                     reliance on modern communication technology increases
which could run up to 20% of 2020 global coal                             (wireless, cloud computing, etc.), power systems are also
consumption if left unchecked.7 Use of micro grids at mine                becoming vulnerable to cyber-attacks and hackers.
sites is also gaining popularity due to an expected
upswing in interest in shifting to more sustainable energy                In some specific customer segments, such as the military
strategies for mine sites controlled by large multinationals.             and research labs, there is significant value in a secure
Globally, nearly 75% of existing mines are remote                         network. Microgrid power can provide greater security for
operations, though very few deploy renewable energy                       ground army troops in remote areas. The technology
generation.8                                                              would work very much like a portable power plant,
                                                                          providing and storing enough energy to power smaller,
Microgrids have been specifically helpful to people                       mostly communications systems, in very remote locations
running small and medium enterprises, particularly in rural               where re-supplying fuel is difficult or dangerous. Hotels,
areas of the BRICS nations. For example, to further extend                one of the most intensive power users, can opt to develop
centralized grid electricity to remote rural areas and to                 microgrids that incorporate solar, wind, hydro, geothermal
address the increasing demand and supply gap in                           and other technologies to reduce the need for grid power
electrified rural areas, The Energy and Resources Institute               and for uninterrupted power supply. Hospitals are
(TERI), in India, has initiated a strategy to set up solar                particularly well suited for smart microgrids as they often
microgrids that can cater to a segment of households or                   have a multi-building campus lay-out and require reliable
small enterprises (shops) in a village. Upscaling and                     and constant power supply.
promoting this endeavor would serve two purposes: i) to
provide access to quality lighting in rural areas, and ii) to
enhance the income of both the entrepreneurs and end-
users.9 Organizations such as Desi Power, Husk Power
7  Engerati
8 The Smart Grid Observer
9 SEI International




15 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                             www.zpryme.com | www.smartgridresearch.org
Brazil                                                                    ranching. To stop deforestation, residents must have a stake
                                                                          in remaining in their villages, generating income through
Brazil has a population of approximately 195 million people               environmentally sustainable livelihoods. Therefore, providing
and is the fastest growing country on the planet.                         the area with electricity is significant. Off-grid solutions are
However, the Northern Amazonian Para region only has                      the only practical way to bring power to remote areas in
0.8% of citizens with access to power. Isolated grids exist in            the Amazon.10
the Amazon that use diesel powered generators for
energy production; however energy production is limited                   Brazil: Microgrid Market Forecast
due to the cost of fuel. In addition, the overall grid is
unable to meet the country’s needs, as 91 large blackouts                 From 2012 to 2020, the Brazil market is projected to grow
were experienced in 2011. The largest blackout left 50                    from $149 million to $518 million with a compound annual
million people in 8 states without power overnight. Brazil is             growth rate of 17%.
particularly suited to PV arrays.       In addition, many
locations are close to the Amazon River, making                                               Brazil Microgrids Market Value Forecast
hydropower incorporation an attractive option. Several                                                       CAGR = 17%
projects have successfully tested microgrids in the Amazon                                           2012 to 2020 (in US millions)
                                                                                                      (figure 8, source: Zpryme)
region. In Coelba, the Sao Paulo Research Foundation                      $600
installed 10,133 Photovoltaic systems for free to its                                                                                                  $518
residents, who only had to pay for energy consumption                     $500
                                                                                                                                              $424
after installation. Ilha de Ferradura installed PV for 6
fishermen’s homes successfully in demonstrating Brazil’s                  $400                                                       $348
microgrid potential, in both large and small installations.                                                                  $285
                                                                          $300
                                                                                                                    $234
                                                                                                            $209
Brazil: Drivers                                                                                      $186
                                                                          $200                $166
                                                                                       $149
Due to vast sparsely populated areas, Brazil faces                        $100
particular difficulty in providing universal access to
electricity, as required by law. In Brazil, about 23 million                    $0
people do not have access to electricity. The highest                                  2012   2013   2014   2015    2016     2017    2018     2019     2020
concentrations are in the Amazon, which makes up 45% of
the area of the nation, but only 3% of the population. If
modern energy services cannot be provided in the Amazon
region, the local population will continue to abandon the
forest for nearby cities, leaving vast areas to predatory
                                                                          10   SolarServer



16 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                            Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                       www.zpryme.com | www.smartgridresearch.org
Brazil: Projects                                                          To pay for the program, Brazil established three funds: The
                                                                          Energy Development Fund (Conta de Desenvolvimento
Light for All                                                             de Energia, CDE); the Global Reversion Reserve (Reserva
                                                                          Global de Reversao, RGR), and the Fuel Consumption
In 2003, the Government of Brazil (GOB) launched the                      Fund (Conta de Consumo de Combustivel, CCC) into
program Luz Para Todos (LPT) or ―Light for All‖ to subsidize              which tax revenues are designated. These funds provide
universal access to electricity by:                                       the subsidies for both implementation and operation of
                                                                          the program, and to offset the costs of individual electrical
        Extending and establishing connections to the                    consumption in the most remote regions.
         national electrical grid.
                                                                          Overall, LPT was estimated to cost R$20 billion, of which
        Establishing a small number of off-grid distributed              R$14.3 was to be provided by the federal government. The
         energy pilot systems, including photovoltaic solar               rest was to be funded by state governments (R$2.3 billion)
         and wind power systems; and hybrid systems of                    and by power companies (R$3.4 billion). By 2010, the
         solar, wind and diesel.                                          government had R$13.5 billion in contracts, funded by the
                                                                          CDE and RGR. State governments had spent R$2.081
The program was implemented in 2004, extended in 2008,                    billion and power companies, R$3.164 billion.
and again in 2010. By May 2009, electrical services were
being provided to 10 million people through 2 million new                 The second phase of LPT, extended in March 2010 to end
connections to the national electrical grid.                              in 2014, foresees a total investment of R$5.5 billion, and the
                                                                          government is likely to extend the RGR, set to expire in
A total of 883,000 km of new electric cable had been                      2010 and which has R$7 billion available, to cover the next
strung over 4.6 million new poles to bring transmission lines             phase.
and power switches to rural communities. Considered a
success by the government, the program was extended in                    Program costs per installed electrical connection rose over
2010 to 2011, to add 310,000 new households, and is                       time as more distant areas were connected to the grid.
expected to be extended until 2014 to add an additional                   The average cost per connection in 2004 was R$4,300. By
495,000 households. In total, the objective of this phase of              2010, connection costs had risen to between R$7,000 to
the program is to bring energy services to approximately                  R$9,000 per connection.11
810,000 new households in the remotest areas of the
country, including the greater Amazon rainforest in
Brazilian territory.

                                                                          11www.actionaidusa.org/assets/pdfs/climate_change/Access_to_Energy_for_the_Poor_2011.p

                                                                          df



17 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                             Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                         www.zpryme.com | www.smartgridresearch.org
CEMIG’s Microgrid Project                                                                  Other partners are expected to be incorporated to the
                                                                                           project depending on the choice of the location for the
CISB approved a microgrid project to distribute electric                                   implementation of the infrastructure. They could be local
energy for CEMIG in an urban area of Belo Horizonte.12 This                                providers of infrastructure, telecommunications and gas.
project will be implemented in three phases.                                               Also, other companies from the CEMIG group might join,
                                                                                           such as CEMIG TELECOM and GASMIG.14
The first phase involves FAPEMIG and CEMIG together with
the Federal University of Minas Geris (UFMG) and KTH Royal
Institute of Technology, who have proposed to study
decentralized energy production and distribution
architecture.13 The initiative is considered strategic and will
be funded directly by Cemig.

A second group of partners, formed by the companies
GAS ENERGY and CONCERT, will have the task of installing
a distributed generation plant. This plant will serve to study
the co-generation of energy from the binomial natural gas
and sunlight. The plant should be initially sized to satisfy the
study of co-generation and generation necessary for the
existence of a ―microgrid‖, but it should be designed in a
way that will allow modular expansion, in order to
correspond to the suggested business models that will also
be studied.

The third group is formed by the research institute LACTEC
and the companies HITACHI and CONCERT. They will be
responsible for the technical implementation of the
distributed generation grid and for all the issues related to
the engineering tasks.



12 www.kth.se/en/studies/why/focus-regions/brazil/additional-collaborations-with-brazil-
1.296141
13 www.kth.se/en/studies/why/focus-regions/brazil/additional-collaborations-with-brazil-

1.296141                                                                                   14Microfoundations   of Open Innovation (Sao Paulo, 2012)



18 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                                                  Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                                               www.zpryme.com | www.smartgridresearch.org
Russia                                                                    shortfall in funding for the renovation of the electric power
                                                                          sector assets for about 10-15 years in the early 90s, Russia is
In Russia, over 10 million people are not connected to the                now seeing critical wear of the substation equipment fleet.
grid and are using diesel or gas powered generators to                    The guideline equipment life (25 years) has ended for
meet their energy needs. Fifty percent of these generators                54.7% of these assets and total excess life (35 years) has
are not working due to either fuel costs or delivery issues.              been surpassed for 22.2% of equipment.
The areas least connected are Siberia, the Northern and
Far Eastern areas of Russia. Because of the size of Russia                Considering the longer lifetime for HV power lines, on
and its diverse resources, renewable energies are                         average 40 years, the wear of power transmission line
particularly attractive and cost effective. In addition,                  equipment comprises the following – guideline life (40
Russia’s energy strategy until 2020 includes realizing                    years) has ended for 29.2%, total excess life (50 years) has
sustainable development.         Several small-scale wind                 been surpassed for 8.9% of equipment.16 However, Russia
projects using wind-diesel hybridization have saved 40-80%                possesses favorable conditions for the development of
of total energy cost with a 3-4 year payback period.                      renewable energy sources, largely due to its size and
Hydropower has been successfully utilized in areas located                range of geographic features.
by rivers. Solar also offers potential, especially in Southern
areas.     The very strong renewable energy potential,                    Russia has huge potential markets for off-grid electricity
combined with the huge number of isolated areas lacking                   systems based on renewable energy. The renewable
grid power create a tremendous microgrid opportunity in                   potential is especially applicable in some of the more
Russia.                                                                   remote parts of Russia that are not connected to the grid.
                                                                          In many isolated settlements, renewables can be the most
Russia: Drivers                                                           economic, and perhaps even the only way to provide
                                                                          electricity and heat to consumers. Geothermal resources
It is estimated that approximately five million farms and ten             in the Far East or North Caucasus, or hydro from the many
million people in Russia are not connected to the                         watersheds, or other renewables such as wind and solar
electricity grid. Furthermore, an estimated 45 percent of all             energy could potentially serve remote populations.17
energy in Russia is lost in production, transport, transmission
or inefficient consumption—much of this due to artificially
low prices which reduce incentives to improve efficiency.

According to several estimates, Russia could save around
half of the energy it currently uses.15 Furthermore, due to a

                                                                          16   PowerTec
15   MDPI                                                                 17   EBRD



19 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                  Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                               www.zpryme.com | www.smartgridresearch.org
Russia: Microgrid Market Forecast                                                   build a self-contained diesel-solar power unit, the first of its
                                                                                    kind in Russia. The companies plan to build the pilot hybrid
From 2012 to 2020, the Russian market is projected to grow                          power station with a capacity of over 100 KW, 70% of
from $99 million to $433 million with a compound annual                             which is to come from solar generation, it said in a
growth rate of 20%.                                                                 statement. The company did not provide a timeframe for
                                                                                    the work to be completed. Use of solar technology is
                  Russia Microgrids Market Value Forecast
                                                                                    limited in Russia, which mainly develops conventional
                                 CAGR = 20%                                         energy resources. But the companies believe that
                         2012 to 2020 (in US millions)                              development of diesel-solar power generation "is a
$500
                          (figure 9, source: Zpryme)                                technically and economically viable solution for Russian
                                                                             $433   regions with high levels of solar radiation," said Michael
                                                                                    Lifshitz, CEO of Rosnano's subsidiary Rotek.
$400
                                                                      $339
                                                                                    In particular, he mentioned southern regions of Russia,
$300                                                         $264                   southeastern Siberia, the east Siberian Republic of Sakha
                                                     $207                           (Yakutia) and far eastern regions, where diesel generation
$200                                        $161                                    costs Rb30-40 kWh (around $1/kWh).18
                                   $143
                           $126
          $99     $112
$100                                                                                Russia: Solar Power Station

                                                                                    In 2010, Russia's high-tech companies Rusnano and
   $0
         2012     2013     2014    2015     2016     2017    2018     2019   2020
                                                                                    Renova announced plans to build the country's first
                                                                                    industrial solar power station near the Black Sea. The 12.3
                                                                                    megawatt station will be built in the spa resort of Kislovodsk
Russia: Projects
                                                                                    by the companies' joint venture Khevel. "This is a
                                                                                    breakthrough into a different dimension," Rusnano CEO
Russia has included microgrids in the Energy Smart
                                                                                    Anatoly Chubais told an innovation forum in Moscow. The
Communities Initiative Smart Grid pillar. The plan, which will
                                                                                    $97 million deal was sealed by Khevel CEO Yevgeny
be implemented in 2012, will pilot smart/micro grid projects
                                                                                    Zagorodny and Stavropol region Governor Valery
for insular and remote localities in APEC economies.
                                                                                    Gayevsky. Swiss-made thin-film solar panels will be used in
                                                                                    the construction. The station may start operating as soon
Renova and Rosnano Project
                                                                                    as 2012, Zagorodny said.19
Russia's Renova holding company and state-run
nanotechnology company Rosnano plan to develop and                                  18   www.renova.ru/en/press-center/publications/15/1964/
                                                                                    19   ww.solardaily.com/reports/Russia_To_Build_Its_First_Industrial_Solar_Power_Station_999.html



20 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                                              Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                                          www.zpryme.com | www.smartgridresearch.org
India                                                                     Moreover, approximately 30 percent of India’s generated
                                                                          power is lost in transmission.
About 115 million households in rural areas lack grid
access while 250,000 villages connected to the grid have                  Distribution is the weakest link of India’s power supply
frequent connectivity issues. That is over 60% of the total               chain as it faces substantial technical losses (because of
population. Rural electrification has been identified as a                overloading of transformers and conductors, for instance)
priority by the Indian government. Where the grid cannot                  and commercial losses of electricity (because of low
be connected, the government has authorized distributed                   metering efficiency, poor billing and collection, large-
networks to be established. Solar energy offers tremendous                scale theft of power). Furthermore, lack of transmission
market potential for India. Several projects have shown                   and distribution of power to less densely populated areas
the potential of the market.                                              which are located far away from the power generating
                                                                          stations is the major reason for not being able to achieve
The New Energy and Industrial Technology Development                      100 percent electrification in the country.
Organization of Japan installed 6 MW PV solar arrays at
the Neemrana Industrial Park to demonstrate efficiency of                 In India, about 70% of the population lives in rural areas. In
control technology and benefits of clean energy.                          2010, it was estimated that 48 percent of rural households
Greenpeace India has also released a report proposing                     were un-electrified nationally leaving approximately 400
clusters of microgrids be installed to support the electrical             million people without electricity. Hence it is necessary to
grid. Bihur is used as an example of how an area with a                   use energy sources which can be decentralized to supply
substantial energy deficit can be an area of energy                       power to these households. Thus, India can leverage their
surplus through microgrid deployment. Thus the microgrid                  abundant renewable energy sources such as wind, solar,
market in India holds tremendous potential for future                     geothermal energy, and biomass to deploy microgrids to
development.                                                              meet their pressing energy needs.20

India: Drivers

Electricity consumption in India was about 543 KWh/capita
in 2009, among the lowest in the world. Although India has
considerably improved its generating capacity, it still has
difficulty in meeting demand and there are persistent
power shortages which constrain India’s economic
growth. With the development of the industrial and
commercial sectors as well as the wider use of electrical
equipment, electricity demand keeps increasing.
                                                                          20   TERI



21 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                  Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                               www.zpryme.com | www.smartgridresearch.org
India: Microgrid Market Forecast                                                          distributes power through a micro grid, approximately 0.75
                                                                                          to 1 km in length. An electronics company, DD Solar 23
From 2012 to 2020, India’s market is projected to grow from                               India Pvt. Ltd (which works under the banner of the Bergen
$115 million to $1,191 million with a compound annual                                     Group) has provided the technical know-how for this
growth rate of 34%.                                                                       project.

                   India Microgrids Market Value Forecast
                                                                                          There are 60 solar panels in the plant, each one producing
                                 CAGR = 34%                                               145 watts of power. A battery bank consisting of 24 cells of
                         2012 to 2020 (in US millions)                                    two volts each provides the power back up for 4 to 5
$1,400
                         (figure 10, source: Zpryme)                                      cloudy or rainy days, when there is no sun.21
                                                                                 $1,191
$1,200                                                                                    The project was conceived, managed and financed by
                                                                                          Scatec Solar at the cost of Rs 5 million (US$1=Rs 46.6).
$1,000
                                                                          $863            Delhi-based NGO, Development Alternatives (DA), was
  $800                                                                                    engaged to identify the beneficiary villages.22
                                                               $626
  $600                                                                                    Azure Power to Asses Solar Powered Microgrids (Int'l)
                                                      $453
  $400                                        $328
                                     $253                                                 India-based independent power producer Azure Power
                            $194
  $200     $115     $150                                                                  has been awarded a grant from the U.S. Trade and
                                                                                          Development Agency (USTDA) to assess the development
     $0
           2012     2013    2014     2015     2016    2017     2018       2019    2020
                                                                                          and accelerate adoption of solar power in rural India. The
                                                                                          $476,670 grant will fund a feasibility study on two 500 kW
                                                                                          microgrid solar photovoltaic power generation pilot
India: Projects
                                                                                          projects in the states of Gujarat and Chhattisgarh. Having
                                                                                          spearheaded the national initiative of grid-connected
Northern India
                                                                                          solar power projects that are over 1 MW in capacity, Azure
                                                                                          Power will, with this study, open up the potential of
Norway-based company Scatec Solar decided to set up
                                                                                          electrifying rural India through solar powered microgrids.
an 8.7 kilowatt power plant in Rampura. Assisted by
                                                                                          Following the study, Azure aims to set up over 100
Development Alternatives, an NGO working locally, the
                                                                                          microgrid solar systems, with each system covering an
community in this village was mobilized to take charge of
                                                                                          average of 2-3 acres of rural land which would generate
perhaps India’s first community-managed solar power
plant. As a result, since January 26, 2009, this village has                              21www.actionaidusa.org/assets/pdfs/climate_change/Access_to_Energy_for_the_Poor_2011.p

not been without power for a single day. The plant                                        df
                                                                                          22   www.smeworld.org/story/features-108/solar-power-at-everyones-doorstep-234.php



22 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                                                 Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                                             www.zpryme.com | www.smartgridresearch.org
sufficient power to electrify approximately 800-1,000
villages with little or no connectivity to existing electrical                  The Skynet software interfaces with the NES system
grids.                                                                          software and creates a bill for the customer that reflects
                                                                                the customers' actual use of lower cost grid power and
The USTDA India mission aims to further development of                          more expensive locally generated power. Customers have
projects that have a positive economic, social and                              the option of reducing usage at times when the more
environmental impact while promoting exports of US to                           expensive energy is being supplied. The Palm Meadows
India. The grants provided by USTDA support the initiation                      micro grid is providing reliable service even during
of such projects and bring them close to realization. In this                   frequent utility grid outages and enabling the customer to
light, the benefits of solar power are obvious and                              make intelligent trade-offs between comfort and cost.25
imperative. USTDA helps companies create US jobs
through the export of US goods and services for priority
development projects in emerging economies. Azure
Power is claiming to be India's first independent solar
service provider offers clean and affordable solar energy
to its customers with minimum upfront cost and ongoing
operational expenses.23

Southern India

Echelon Corporation has successfully deployed micro grid
installations in an 86-acre integrated gated community
with 335 homes and residential services at Palm Meadows
in Hyderabad. Palm Meadows runs diesel generators and
seeks to incorporate solar power in the future to its micro
grid.24 Echelon's has equipped the residences with smart
meters that connect into data concentrators at
distribution transformers and feed near real-time
information into the company's Networked Energy Systems
(NES) software. Grene Robotics' Skynet management
application automatically turns on local generation if
utility-delivered power is inadequate.

23   epoverviews.com/articles/visitor.php?keyword=Micro-Grid                     www.pv-magazine.com/news/details/beitrag/a-growing-global-smart-grid-
                                                                                25
24   www.echelon.com/company/news-room/2012/microgrids-india-south-africa.htm   market_100006258/#axzz1xsuXXnV6



23 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                                  Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                               www.zpryme.com | www.smartgridresearch.org
China                                                                     eight million.26 The massive size of the country in terms of
                                                                          population means that still a large number of individuals,
In China, remote regions experience power supply issues                   equal to the total population of countries such as Sweden
where the grid cannot be extended due to the expense                      or Austria, do not have access to electricity.
of extending the electrical grid. Energy consumption was
18% in 2005 in rural areas, especially in central and western             As of 2012, some five million Chinese people living in
areas.     China is dedicated to renewable energy                         remote villages in mountainous or border areas are
expansion and has 8 completed pilot projects, with many                   currently without electricity, and the government has
more underway. One such project was completed in                          vowed to extend electricity services to such groups by the
Zuo’anmen at Beijing City, where 50 kWp PV, 30 kW                         end of 2015. According to the annual social responsibility
microturbines, 72 kWh energy storage was installed. Other                 report of the State Grid Corporation of China (SGCC), the
microgrids were installed in the Henan Province, in Tiajin                country's largest power supplier, China's urban residents
City, Mongolia, Foshan City, and Foshan Island. These                     endured an average of 6.92 hours of blackouts, while rural
projects have had tremendous success and focused                          households experienced an average of 29.35 hours of
mainly on PV and wind energy, as well as storage. China                   blackouts in 2011. SGCC has pledged to shorten the
realizes that microgrids are an important part of the                     periods of electricity cut-offs to 5.71 hours for urban citizens
country’s Smart Grid and is also related to national                      and 23.7 hours for rural residents through grid upgrades
development strategies, further highlighting the microgrid                and renovations.27
opportunity presented in China.                 In addition,
governmental support for microgrid development may                        Additionally, energy consumption efficiency is very low in
provide additional incentives to develop microgrids in                    China, i.e. the amount of energy consumed per unit of
remote regions, thus extending reliable energy to its                     economic output is considerably higher than the world
citizens.                                                                 average.28 Microgrid systems thus offer tremendous
                                                                          opportunities to develop the power system in China with
China: Drivers                                                            investments focused on increasing capacity, reliability,
                                                                          efficiency, and integration of renewable energy.
Being the largest country in East Asia and the most
populous in the world, China’s rapidly growing economy                    State level projects have already been initiated in China
created a significant increase in energy consumption, as                  to encourage and support universities and institutions that
well as a rise in harmful emissions and power shortages                   conduct research on the use of microgrid systems.
over a very short period of 60 years. The number of people                Furthermore, microgrid systems may represent the best
lacking access to electricity in China in 2009 was around                 solution to provide electricity to those rural areas,
                                                                          26 China Europe International Business School
                                                                          27 China.Org.cn
                                                                          28 National University of Singapore




24 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                                   Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                             www.zpryme.com | www.smartgridresearch.org
especially in the Western regions, where the grid extension                               China: Projects
is not feasible and off-grid applications are required. This is
the sector where the new renewable energies such as                                       Xiamen Direct-Current Microgrid
wind and solar are expected to play a key role by
becoming the most appropriate solution in order to                                        The Haixi International New Energy Industry Expo and
achieve the Central government’s goal of a full rural                                     Forum, Xiamen University, Nextek Power Systems, People
electrification before 2020.                                                              Power Company, Canadian Solar, Intel Corporation and
                                                                                          Lawrence Berkeley National Laboratory (LBNL) announced
China: Microgrid Market Forecast                                                          a ground-breaking alliance to construct and manage
                                                                                          direct-current microgrids at the School of Energy Research
From 2012 to 2020, China’s market is projected to grow                                    in Xiamen University (SER-XMU). This microgrid will become
from $320 million to $2,015 million with a compound                                       operational this year and will make Xiamen University
annual growth rate of 26%.                                                                China's first direct-current powered commercial building,
                                                                                          and will serve as a global showcase for distributed direct-
                  China Microgrids Market Value Forecast
                                                                                          current microgrid innovation and commercialization.
                                CAGR = 26%
                        2012 to 2020 (in US millions)                                     The Xiamen University's direct-current microgrid could
$2,500
                        (figure 11, source: Zpryme)                                       change the way Chinese campuses and building
                                                                                          complexes manage, control and consume energy by
                                                                                 $2,015   directly integrating renewable energy generation and
$2,000
                                                                                          storage batteries with building electrical loads through
                                                                       $1,526             one-touch mobile and web-based energy management
$1,500                                                                                    and control applications. This change is significant
                                                              $1,156
                                                                                          because of Chinese building energy consumption.
$1,000                                                $876
                                              $664                                        Nextek Power Systems will introduce the first Direct
                                     $553
                            $461                                                          Coupling(R) microgrid in mainland China that will manage
  $500     $320     $384
                                                                                          and support diverse energy loads, such as direct-current
                                                                                          lighting, air conditioning, data centers, electrical vehicle
     $0
           2012     2013    2014     2015     2016    2017     2018       2019    2020
                                                                                          charging and building plug loads. People Power
                                                                                          Company will provide its award-winning, cloud-based
                                                                                          energy management, control and behavioral analytics
                                                                                          applications that will enable building managers to control
                                                                                          and manage buildings loads. LBNL will develop methods


25 [PREMIUM] ZPRYME SMART GRID INSIGHTS                                                                                 Microgrids: The BRICS Opportunity | July 2012

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved.                                              www.zpryme.com | www.smartgridresearch.org
[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights
[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights
[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights
[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights
[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights
[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights
[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights
[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights
[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights
[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights

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[Smart Grid Market Research] Microgrids: The BRICS Opportunity - Zpryme Smart Grid Insights

  • 1. SMART GRID INSIGHTS JULY 2012 SMARTGRIDRESEARCH.ORG INTELLIGENT RESEARCH FOR AN INTELLIGENT MARKETTM PREMIUM MICROGRIDS: THE BRICS INTELLIGENCE BY ZPRYME | ZPRYME.COM © 2012 ZPRYME RESEARCH & CONSULTING, LLC. ALL RIGHTS RESERVED. OPPORTUNITY
  • 2. Table of Contents Executive Summary ................................................................. 2 Benefits of Microgrids .............................................................. 4 Global Market Value Forecasts.............................................. 6 Key Players ............................................................................... 7 Challenges & Barriers to the Microgrid Market ..................... 9 Key Microgrid Solutions ......................................................... 10 BRICS: The Microgrid Opportunity ........................................ 12 BRICS Nations: Drivers........................................................... 12 Major End-Use Industries for Microgrids ............................. 14 Brazil ........................................................................................ 16 Brazil: Drivers .......................................................................... 16 Brazil: Microgrid Market Forecast ....................................... 16 Brazil: Projects ........................................................................ 17 Russia ...................................................................................... 19 Russia: Drivers ........................................................................ 19 Russia: Microgrid Market Forecast ..................................... 20 Russia: Projects ...................................................................... 20 India ........................................................................................ 21 India: Drivers .......................................................................... 21 India: Microgrid Market Forecast ....................................... 22 India: Projects ........................................................................ 22 China....................................................................................... 24 Special Thanks China: Drivers ........................................................................ 24 China: Microgrid Market Forecast ..................................... 25 China: Projects ...................................................................... 25 Thierry Godart South Africa ............................................................................ 27 Siemens, President of Smart Grid Division, U.S. South Africa: Drivers ............................................................. 27 www.siemens.com South Africa: Microgrid Market Forecast .......................... 28 Jeff Lund South Africa: Projects ........................................................... 28 Echelon, VP of Business Development BRICS: Microgrid Outlook ...................................................... 29 www.echelon.com Q&A with Echelon .................................................................. 31 Q&A with Siemens ................................................................. 33 1 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 3. Executive Summary Global Microgrids Market Value Forecast CAGR = 13% 2012 to 2020 (in US billions) Many parts of the world are without grid-connected (figure 1, source: Zpryme) electrical power. As their population and standard of $15 $13.40 living increase, so will their demand for energy, and a $12.01 suitable system for providing that electricity to them. The $12 $10.82 current energy system is unable to offer connectivity to $9.57 many of these remote locations for economic or logistical $9 $8.33 reasons. One solution to providing energy to these remote $7.50 $6.90 locations is to install microgrids. Several large firms have $6.20 $6 expanded operations into the microgrid marketplace, $4.95 while niche firms have developed customized programs specific to the market. $3  The global microgrids market is projected to reach $0 $4.95 billion in 2012. By 2020, the global microgrid 2012 2013 2014 2015 2016 2017 2018 2019 2020 market is projected to reach $13.40 billion. The market is projected to grow at a compound annual growth rate of 13% from 2012 to 2020. BRICS Microgrids Market Value Forecast CAGR = 25% 2012 to 2020 (in US billions)  In 2012, the combined microgrids market value for (figure 2, source: Zpryme) BRICS (Brazil, Russia, India, China, and South Africa) $5 $4.47 nations is projected to reach $0.73 billion in 2012. By 2020, the microgrids market among BRICS nations $4 $3.39 will reach $4.47 billion. $3 $2.57  The BRICS nations, as a whole, are projected to grow at a compound annual growth rate of 25% $1.96 $2 from 2012 to 2020. $1.49 $1.24 $1.04  In 2012, BRICS nations are projected to account for $1 $0.73 $0.87 15% of the global microgrid market. By 2020, they will account for 33% of the global market. $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 4. $2,015 How well do you know the BRICS microgrid $1,191 ecosystem? BRICS Market Value Forecast by Country - 2012, 2020 (figure 3, source: Zpryme, in US millions) 2012 2020 $518 $433 $320 $312 $149 $115 $99 $50 China India Brazil Russia South Africa 3 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 5. Microgrids incorporate renewable energy solutions, energy in India and South Africa that integrate distributed storage, and energy management technology into an generation to compensate for disruptions in utility-supplied integrated system that manages energy generation, power. Smart mini-grids are very useful for stand-alone transmission, distribution, and usage on a small scale projects in villages and inaccessible areas. Microgrids not compared to the current grid system, as it serves a smaller only foster the effective inter-connection and utilization of base of local residents. However, this small local nature multiple renewable energy resources, but also help in offers significant benefits, such as reliability, flexibility, and advancing access to energy to the last mile in the most increased security. Key technology has been introduced optimum way by improving the efficiency of the overall to allow widespread adoption of microgrids. system. The PRISMA project in the Amazon village of Cachoeira do Aruã, Brazil is a run-of-the-river micro-hydro BRICS (Brazil, Russia, India, China, and South Africa) nations facility that provides the community with power that is are the fastest growing countries internationally and have distributed via a mini-grid. The project establishes large percentages of their population without power. community ownership and management of local These five nations can benefit from microgrid installation, infrastructure, such as power generating stations, while thus allowing their rural citizens to experience reliable strengthening small local enterprises that then use the power for the first time. infrastructure for productive uses which help them in earning an income. In BRICS nations (Brazil, Russia, India, China, and South Africa), the demand for energy, particularly electricity, is Benefits of Microgrids growing much more rapidly than the rate of expansion of conventional electricity grids in the industrialized world. The current electrical generation system, where energy Microgrids are a cost-effective solution to help meet this flows in one direction from the utility to consumers is rising demand for more power, without increasing carbon becoming obsolete. Outdated transmission lines, emissions. The microgrid market across BRICS nations is inefficient equipment and antiquated software will require being driven by the growing energy demand; the need for a tremendous expense to update, as well as present reliable power; increasing focus on renewable energy; security and reliability problems. Microgrids provide one requirement for electrification in rural and inaccessible solution to a more efficient energy system and offer many areas; and government incentives provided for achieving benefits. energy efficiency and renewable power generation. First, the smaller scale of microgrids offers several benefits Several microgrid projects are coming up across the BRICS including increased efficiency because less energy is lost countries to provide a more reliable power supply to during the transmission of energy. In a microgrid, energy consumers. For example, recently, in early 2012, Echelon travels shorter distances from the energy source to the Corporation, announced that it will set up two microgrids customer and serves fewer customers. Thus, overall 4 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 6. demand on the transmission infrastructure decreases. Further, the system becomes more reliable and is able to respond more quickly to local demand. In addition, distributed resources are locally controlled and function as a single unit. Not only does this optimize energy generation, but it also creates energy independence and encourages the adoption of renewable technology to meet clean energy requirements. Flexibility is also a key benefit of microgrids. Microgrids are arranged in a modular fashion. New components can be added with minimal problems and the system can be easily updated and maintained. In addition, the development of the microgrid is locally controlled, which means local needs are considered when designing the microgrid. Therefore, transformation of the grid is planned to meet the needs of the local or regional area. Lastly, microgrids utilizing distributed resources offer improved security. The microgrid is able to island itself, creating a separation from the main grid and decreasing its vulnerability to outside attacks. This increases both the cyber-security of the grid and its physical security. This is especially important when valuable resources must be maintained, such as in hospital or military installations. In addition, islanding prevents the local area from being affected due to widespread blackouts or other problems occurring in the main electrical grid. 5 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 7. Global Market Value Forecasts Global and BRICS Market Value Forecast, 2012 – 2020 (table 1, source: Zpryme, in US billions) Market Value 2012 2013 2014 2015 2016 2017 2018 2019 2020 CAGR Global Market $4.95 $6.20 $6.90 $7.50 $8.33 $9.57 $10.82 $12.01 $13.40 13% BRICS $0.73 $0.87 $1.04 $1.24 $1.49 $1.96 $2.57 $3.39 $4.47 25% BRICS % of Global Market Europe 15% 14% 15% 17% 18% 20% 24% 28% 33% BRICS Market Value Forecast by Country, 2012 – 2020 (table 2, source: Zpryme, in US millions) Market Value 2012 2013 2014 2015 2016 2017 2018 2019 2020 CAGR Country Brazil $149 $166 $186 $209 $234 $285 $348 $424 $518 17% Russia $99 $112 $126 $143 $161 $207 $264 $339 $433 20% India $115 $150 $194 $253 $328 $453 $626 $863 $1,191 34% China $320 $384 $461 $553 $664 $876 $1,156 $1,526 $2,015 26% South Africa $50 $59 $71 $86 $103 $135 $179 $236 $312 26% Total $732 $871 $1,039 $1,243 $1,490 $1,956 $2,573 $3,388 $4,468 25% BRICS Market Value by %, 2012 BRICS Market Value by %, 2020 (figure 4, source: Zpryme) (figure 5, source: Zpryme) China India Brazil Russia South Africa China India Brazil Russia South Africa 7% 7% 13% 10% 44% 45% 11% 20% 27% 16% 6 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 8. Key Players microgrid market, through its Adaptive Protective System architecture. ABB is also involved in utilizing microgrids to In the microgrid market, two main types of key players are provide ancillary services for utilities. In addition, ABB has strengthening their position. First, large Smart Grid firms are been very active in the Advanced Architecture Program expanding their product lines to offer products specifically for the European Consortium. ABB is a member of the designed for the microgrid market. Small niche firms have steering committee, which develops functions and also entered the marketplace with products uniquely schemes for microgrids. ABB has experienced success in suited for microgrids. In addition, these two types of firms installing a $16 million microgrid upgrade in Qatar, where it have collaborated to provide solutions for specific was responsible for reengineering and reinforcing the locations and projects. existing system to improve the availability and reliability of electricity. In addition, ABB has developed strategic BPL Global was founded in 1983 and has expanded its partnerships with wind and solar manufacturers, as well as operations to include member firms in 7 countries, acquiring Powercorp, an Australian firm specializing in including Africa, China, Brazil and the Middle East. The BPL renewable energy integration. Africa branch offers Intelligent Power Smart Grid Integrated Demand Response Software to design the most Siemens has expanded its position as an electrical cost effective energy microgrid solution based on cost engineering and electronics leader to include global and other grid conditions. BPL Africa is the only firm on the energy management for microgrids. Siemens views continent to offer a turnkey solution to microgrid microgrids as a central component in the Smart Grid deployment for the remote power market. The solution evolution. Siemens offers energy-efficiency technology for provides the basic starting components and allows the a microgrid’s consumption, transmission and production user to add modules as they need the additional capacity needs. Siemens has been involved in a series of and can afford the upgrades. BPL Africa has experienced partnerships. Recently, Siemens partnered with Boeing to success in developing microgrid solutions for mining develop microgrid solutions for the Department of Defense operations that were totally unconnected from the grid to be use in military installations. In addition, Siemens and had no electricity. In addition, its turnkey solution has partnered with BPL Global to combine demand response been implemented in small villages, providing consistent solutions with distributed generation resources for homes energy for the first time to the remote locations. BPL and businesses, creating a mini-grid. Siemens has also Global has had several strategic partnerships that have worked with Viridity Energy and has several other further developed its position in the field including its partnerships and projects underway to further develop its acquisition of Serveron and a partnership with Siemens. microgrid position. ABB has expanded its position as a transmission and distribution Smart Grid leader to develop solutions for the 7 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 9. Echelon has expanded its position as a leader in network Science Foundation, and Red Hat to provide software platforming to provide solutions for the microgrid market. engineering for the utility, energy, and communications Echelon’s microgrid software is able to outline the usage fields. of power by source, delineating power from renewable sources, from the grid, and from back-up power sources. Pareto Energy was founded in 2004 and began operations This allows consumers to make choices about their energy focused on creating legislation to enable microgrid consumption, in turn creating a more efficient system. development and deployment. Pareto’s Grid Link product Echelon has announced two projects in India and South overcomes problems with interconnection between the Africa. Echelon will supply each project with smart meters microgrid and the utility. It solves momentary instability for each residence or business to provide feedback on and energy loss problems experienced when switching to energy consumption, and provide their software to island mode due to grid difficulty. The main grid is thus provide energy management capabilities. In addition, shielded from inconsistent distributed generation, and applications from Echelon’s partners will provide allows for upgrades and improvements to distributed additional functionality for supply/demand management generation resources. Pareto currently has over $70 million and automatically switch to backup power if Echelon’s committed to microgrid projects. In addition, Pareto has Networked Energy System senses any irregularity. The installed over 20 microgrids, including systems at Howard projects will not only provide greater efficiency, but also University and for a pilot project in Stamford, Connecticut. will also allow better pricing methods and serve as an example of an entry-level microgrid market, where back- Lastly, Viridity Energy is a new firm that enables a microgrid up generators support the electrical grid in times of need. to achieve a shorter payback period on investments. Viridity’s software consolidates all of the microgrid’s assets In addition to large Smart Grid firms expanding into the to allow for comprehensive decision-making. The VPower microgrid market, several niche firms have also developed program allows a microgrid to not only balance supply specialty products to serve microgrids. Green Energy and demand, but also maximize selling energy back to Corporation has received numerous awards, including the grid. The program manages energy production, being named one of the Top 50 Colorado Firms to Watch. storage, consumption, and distributed resources to avoid Green Energy Corporation offers a Master Controller peak loads to not only minimize cost, but also maximize program, allowing for monitoring of both energy storage profits. Viridity has worked with Siemens, Drexel University, and distributed generation. Utilizing cutting edge cloud Penn State University, The University of Pennsylvania, PECO computing on an open source format, the software Energy, San Diego Gas & Electric, University of San Diego, combines new energy applications and legacy systems, Con Edison and other firms to maximize microgrid allowing interoperation that is stable and secure. Green profitability. Energy Corporation has partnered with such companies as the National Rural Electric Cooperative, the National 8 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 10. Challenges & Barriers to the Microgrid Market Compressed Air Energy Storage (CAES) is not implemented as widespread as pumped hydro, but is very popular. It Several factors have created barriers to successful requires either an underground storage space, such as a microgrid deployment. First, the cost and integration of cavern, or an aboveground storage tank for storage. energy storage has provided a barrier to microgrids. Excess energy is used to compress air and move it to the Energy storage is absolutely essential to the successful storage space. When it is needed, the air is released and integration of microgrids. Energy storage allows energy to passes through a turbine, thus producing energy. Energy be captured when excess energy is produced during non- efficiency for CAES systems is typically close to 40% due to peak times and utilized during peak or inconsistent cooling, air compression, and turbine generation losses. periods. Storage systems improve reliability and quality; Because of these losses, additional features are usually however energy storage options are not cost effective in added to capture the lost energy and produce additional most cases. Because of the size and the scope energy from it. CAES systems are expensive to install, but requirements of microgrids, it is difficult to choose the have a long life cycle, reducing its cost over time. appropriate storage option for each installation. However, recent developments have lowered the cost of some Battery Energy Storage systems have different storage options and small-scale applications of energy compositions, come in different sizes and can be used for storage can be significantly less expensive than previously different purposes. Batteries have been frequently used available. for substation back-up systems and significant research is aimed at improving efficiency and making them more Pumped hydro facilities are the most common storage cost effective. One key advantage is the portability of solution worldwide, with over 127,000 MW installed batteries, as well as the fact that they can be immediately worldwide. Two reservoirs at two different heights are connected and utilized without significant additional utilized. Excess energy is used to pump water to the upper installation costs. However, the lifetime of battery storage reservoir to be stored until energy is needed. Then the is 2-10 years, after which they must be replaced and safely water is released and gravity pulls it towards the lower discarded. They can also have high maintenance costs, reservoir, and through a turbine, thus releasing the stored but can operate at 90% efficiency. energy. For it to be successful, the environment must be able to provide for pumped hydro storage (water must be Solar energy integration has also produced significant present, etc.). The system is able to come online quickly barriers to microgrid operation. One challenge of solar and typically stores 5-6 hours of energy at capacity. In energy is its distribution nature. Many times solar panels addition, it operates at 70-75% capacity and is expensive are spread out and produce small amounts of highly to install, however its long life cycle makes it more variable power. The energy is then collected at a central affordable over the long term. source and then transmitted to energy customers. This process raises technical problems, such as inconsistent 9 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 11. voltage and frequency, grounding, protection and reducing the cost of wind turbines. Finally, not all regions regulation, power quality, and variability caused by are well suited to wind energy production. Some areas various weather conditions. Utilities and remote areas have inadequate wind flow for wind technology to be a considering installing microgrids must be sure that their feasible option. Because of the expense, the feasibility of systems are able to integrate the solar energy, even during producing wind energy needs to be studied before the fluctuations without compromising the grid itself. Research technology is implemented. has developed new technology to both protect the grid from variability in production and integrate the distributed Key Microgrid Solutions resources. In addition, the price of solar photovoltaic panels has decreased significantly, allowing them to be a Several key technological developments have enabled more cost efficient option for microgrid use. One final microgrid deployment. GridLink by Pareto Energy provides consideration for installing solar panels for use in a protection to the main electrical grid from any issues of the microgrid setting is suitability. A major challenge to microgrid, including variability experienced when microgrids is to implement the right distributed generation islanding, problems when upgrading distributed resources, mix. Not all areas are conducive to solar energy and local energy generation and loads. GridLink allows production and installing the wrong mix can be very costly the utility to be considered as an equal input with all other and result in not only excess unused materials, but resources. All inputs pass through inverters before inefficient energy capacity as well. connecting to the microgrid. This insures consistent power to the microgrid even during times of blackout on the Wind integration has presented some similar barriers to main grid, while insuring no impact on the utility system microgrid deployment. Like solar energy, wind energy itself. GridLink has been utilized at many large utilities, as production is highly variable, producing intermittent well as Howard University with great success. GridLink has power. Frequency and voltage are affected by weather proven its success in over 20 microgrid installations, and in and wind conditions. The proper technology must be in overcoming interconnection problems between place to allow a microgrid to utilize wind energy, without microgrids and the main utility system. compromising the electrical system. The microgrid must be able to balance the power the wind turbines generate, A second key technology in microgrid deployment is BPL storing energy over its maximum capacity for later use, Global’s Power SG Integrated Distributed Energy when wind production declines or load increases. Proper Resources Software (iDER). iDER is a turnkey microgrid software programs are the key to effective energy solution that allows end-to-end energy management of all management. New wind technology has been resources. The software allows the main components of a developed that has both increased efficiency and microgrid to be set up quickly and for the customer to add lowered the costs for wind technology. Increased components later, as necessary. BPL Global offers a efficiency has improved reliability and safety, while ―unique combination of solutions for the continent in 10 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 12. energy efficiency and management, solar energy issues. In addition, energy management strategies can be generation, renewable energy storage, electrification of tested to determine the most efficient plan before the off-grid areas with energy islands, electrical network plans are undertaken in the actual system. Power optimization via MicroGrid, sustainable solutions to the Analytics’ Paladin program offers superb analytical data economic realities‖, making it a key technological processing that predicts and prevents real time problems, development. making it a key technology in the emerging microgrid market place. HOMER is a microgrid modeling software that analyzes different distributed energy possibilities to provide the design for the most efficient microgrid possible, based on a number of different factors, including weather, energy usage, and environmental factors. HOMER stands for Hybridization Optimization Model for Electric Renewables and identifies the most cost effective options for renewable energy and hybrid renewable microgrids. It has been downloaded by 68,000 people in 193 countries and is used in numerous microgrid projects. It helps utilities avoid costly mistakes during renewable energy deployments. HOMER was originally developed for off- grid village power systems, but has been enhanced to consider new technology options and changes in the microgrid marketplace. Paladin Live program, by Power Analytics, analyzes data from the microgrid to predict possible problems with the system. It uses data from the installation of the microgrid as baseline data to compare present microgrid performance. It offers users real time data about system efficiency, and is able to show capacity, reliability, and availability of the microgrid. This information is able to identify potential problems and address them before they affect the system. In addition, different plans can be tested before they are implemented. Upgrades can be simulated before they are made to assess unforeseen 11 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 13. BRICS: The Microgrid Opportunity BRICS Microgrids Market Value Forecast CAGR = 25% Developing countries compose 80% of the world’s 2012 to 2020 (in US millions) population, but only comprise 30% of the world’s energy (figure 6, source: Zpryme) $5,000 consumption. As the population increases, energy demand will also increase. These developing countries $4,000 are improving their standard of living, thus requiring more energy. However, many parts of the world are not $3,000 connected to a central grid, and rely on individual gas or diesel generators, or biomass for their energy needs. $2,000 $1,000 The electrical grid is centralized and it is either cost prohibitive to connect these locations or the population is $0 too disbursed to allow for connectivity. Meeting the 2012 2013 2014 2015 2016 2017 2018 2019 2020 energy needs for this segment of the population around the world presents a huge opportunity. The BRICS nations Brazil Russia India China South Africa (Brazil, Russia, India, China, and South Africa) are the five fastest growing segments of this market. The rural BRICS Nations: Drivers communities that are not connected to any electrical system seek an alternative to the traditional energy Demand for energy, specifically electricity, in BRICS system. They seek access to affordable, reliable energy. nations is growing much more rapidly than the rate of Renewable energy utilized in microgrids can meet the expansion of conventional electricity grids in the needs of these communities in a sustainable manner. industrialized world. Demand for energy in these countries Renewables offer a more reliable option than traditional is expected to grow in tandem with projected increases in connectivity, as well as providing access to water for human population and rising living standards among the irrigation purposes. Thus, microgrids in BRICS will improve chronically poor. Microgrids are ideally suited to help meet the overall way of life for remote locations. this rising demand for more power, without increasing carbon emissions. The growing demand for energy; In 2012, the combined microgrids market value for BRICS increasing focus on renewable energy; government nations is projected to reach $0.73 billion in 2012. By 2020, incentives provided for achieving energy efficiency and the microgrids market among BRICS will reach $4.47 billion. renewable power generation; unreliable power quality The BRICS market is projected to grow at a compound and power shortages; and poor rural electrification annual growth rate of 25% from 2012 to 2020. systems are driving the microgrid market across Brazil, Russia, India, China, and South Africa. 12 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 14. providing many rural people access to both light and Microgrids act as a cost-effective and viable option in the power for the first time in their lives.2 developing world which is coping with an unreliable power supply. Several microgrid projects are coming up Another microgrid project is being undertaken for insular across the BRICS nations to provide consumers with a more and remote localities in the Asia-Pacific Economic dependable power supply system. For example, recently, Cooperation (APEC) economies. Led by the Russian in early 2012, Echelon Corporation (an American Federation, the objective of the project is to maximize the company which designs control networks to connect economic and environmental effect of deployment of the machines and other electronic devices, for the purposes Smart Grid technology in insular and remote localities as of sensing, monitoring and control), announced that it will these areas experience bigger challenges in securing set up two microgrids in India and South Africa that reliable and efficient energy supply.3 integrate distributed generation to compensate for disruptions in utility-supplied power. The model microgrid Together with local partners, the local utility, and the local deployments are at Palm Meadows in Hyderabad, India, community, Winrock International, a global nonprofit and Clearwater Mall in Johannesburg, South Africa. Palm organization, in 2005 began the installation of the first Meadows is an 86-acre integrated gated community with PRISMA project in the Amazon village of Cachoeira do 335 homes and residential services. Clearwater Mall in Aruã, Brazil. A run-of-river micro-hydro facility the project Johannesburg is a retail building with more than 240 provides the community with power that is distributed via stores.1 a mini-grid – all governed under simplified contracts between the community and the electric utility. One of Microgrids also help in providing electricity in de-electrified the activities undertaken under this project is to promote villages. Smart mini-grids are very useful for stand-alone ecotourism, raising global awareness of the environmental projects in villages and inaccessible areas. Microgrids not challenges that this region faces each day. only foster the effective inter-connection and utilization of multiple renewable energy resources but also help in The PRISMA Cachoeira do Aruã project in Brazil establishes advancing access to energy to the last mile in the most community ownership and management of local optimum way by improving the efficiency of the overall infrastructure, such as power generating stations, while system. In one of India’s poorest states, Uttar Pradesh, the strengthening small local enterprises that then use the founders of Mera Gao Micro Grid Power build and infrastructure for productive uses which help them in operate solar-powered microgrids to provide low-cost earning an income. In the case of electricity, the lighting and mobile phone charging to village houses, community ―sells‖ the power to the local utility (which in Brazil holds a monopoly on power distribution) and 2 Tree Hugger 1 Solar Feeds 3 EGNRET 13 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 15. villagers manage the local mini-grid under a contract to Major End-Use Industries for Microgrids the power company. The electric utility provides technical support if required, so villagers are not completely on their The microgrid system has a great potential in large own.4 commercial and industrial complexes, hospitals, shopping malls/ complexes, apartments, residential complexes, To supply electricity to those areas that have rare educational institutions, remote un-electrified as well as population, inconvenient traffic and those that are unable electrified locations to ensure maximum flexibility, reliability to be covered by the main power grid, Beijing Huadian and safety.6 Tianren Power Control Technology Co., Ltd. (The company’s business focuses on energy saving, BRICS Microgrids Market Forecast by End-Use Industry environmental protection, new energy and innovation All 5 Countries Combined transformation of traditional industries.) started a wind- 2015 and 2020 (in US millions) solar hybrid microgrid project in Jijiao Village, Chawu (figure 7, source: Zpryme) Townership, Lazi County, Rikaze, Tibet. On December 4, 2011, the project was formally put into production.5 $1,340 Institutional $435 Government incentives for energy efficiency and renewable power generation also stimulate investment in Community/Industrial $894 advanced energy infrastructure. Husk Power Systems, an $199 Indian firm, uses second-world-war-era diesel generators $849 2020 fitted with biomass gasifiers that can use rice husks, which Off-grid $149 are otherwise left to rot, as a feedstock. Wires are strung 2015 on cheap, easy-to-repair bamboo poles to provide power $626 Community/Utility to around 600 families for each generator. By 2010, Husk $186 Power had established five mini-grids in Bihar, where rice is a staple crop. Consumers pay door-to-door collectors Military $536 $174 upfront for power, and Husk collects a 30 percent government subsidy for construction costs. Its pilot plants $223 were profitable within six months, so its model is Other $99 sustainable. $0 $500 $1,000 $1,500 4 Winrock 5 KJT 6 The Economic Times 14 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 16. Recently, in early 2012, China’s Xiamen University Systems, Saran Renewable Energy, Mera Gaon Micro Grid partnered with leading multinational technology providers Power, and Naturetech Infra all operate microgrids on a to build the country’s first direct current microgrid. commercial basis in India. Significant changes brought by the new DC microgrid include integrating renewable energy generation and Certain commercial and industrial environments have a storage batteries with building electrical loads via mobile critical need for a constant power supply and cannot and web-based energy management and control afford brownouts or blackouts – research labs, data applications; changing the way Chinese campuses and centers, semiconductor manufacturing, and infrastructure building complexes manage, control and consume deemed critical to national security. Furthermore, as the energy; and for reducing building energy consumption, reliance on modern communication technology increases which could run up to 20% of 2020 global coal (wireless, cloud computing, etc.), power systems are also consumption if left unchecked.7 Use of micro grids at mine becoming vulnerable to cyber-attacks and hackers. sites is also gaining popularity due to an expected upswing in interest in shifting to more sustainable energy In some specific customer segments, such as the military strategies for mine sites controlled by large multinationals. and research labs, there is significant value in a secure Globally, nearly 75% of existing mines are remote network. Microgrid power can provide greater security for operations, though very few deploy renewable energy ground army troops in remote areas. The technology generation.8 would work very much like a portable power plant, providing and storing enough energy to power smaller, Microgrids have been specifically helpful to people mostly communications systems, in very remote locations running small and medium enterprises, particularly in rural where re-supplying fuel is difficult or dangerous. Hotels, areas of the BRICS nations. For example, to further extend one of the most intensive power users, can opt to develop centralized grid electricity to remote rural areas and to microgrids that incorporate solar, wind, hydro, geothermal address the increasing demand and supply gap in and other technologies to reduce the need for grid power electrified rural areas, The Energy and Resources Institute and for uninterrupted power supply. Hospitals are (TERI), in India, has initiated a strategy to set up solar particularly well suited for smart microgrids as they often microgrids that can cater to a segment of households or have a multi-building campus lay-out and require reliable small enterprises (shops) in a village. Upscaling and and constant power supply. promoting this endeavor would serve two purposes: i) to provide access to quality lighting in rural areas, and ii) to enhance the income of both the entrepreneurs and end- users.9 Organizations such as Desi Power, Husk Power 7 Engerati 8 The Smart Grid Observer 9 SEI International 15 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 17. Brazil ranching. To stop deforestation, residents must have a stake in remaining in their villages, generating income through Brazil has a population of approximately 195 million people environmentally sustainable livelihoods. Therefore, providing and is the fastest growing country on the planet. the area with electricity is significant. Off-grid solutions are However, the Northern Amazonian Para region only has the only practical way to bring power to remote areas in 0.8% of citizens with access to power. Isolated grids exist in the Amazon.10 the Amazon that use diesel powered generators for energy production; however energy production is limited Brazil: Microgrid Market Forecast due to the cost of fuel. In addition, the overall grid is unable to meet the country’s needs, as 91 large blackouts From 2012 to 2020, the Brazil market is projected to grow were experienced in 2011. The largest blackout left 50 from $149 million to $518 million with a compound annual million people in 8 states without power overnight. Brazil is growth rate of 17%. particularly suited to PV arrays. In addition, many locations are close to the Amazon River, making Brazil Microgrids Market Value Forecast hydropower incorporation an attractive option. Several CAGR = 17% projects have successfully tested microgrids in the Amazon 2012 to 2020 (in US millions) (figure 8, source: Zpryme) region. In Coelba, the Sao Paulo Research Foundation $600 installed 10,133 Photovoltaic systems for free to its $518 residents, who only had to pay for energy consumption $500 $424 after installation. Ilha de Ferradura installed PV for 6 fishermen’s homes successfully in demonstrating Brazil’s $400 $348 microgrid potential, in both large and small installations. $285 $300 $234 $209 Brazil: Drivers $186 $200 $166 $149 Due to vast sparsely populated areas, Brazil faces $100 particular difficulty in providing universal access to electricity, as required by law. In Brazil, about 23 million $0 people do not have access to electricity. The highest 2012 2013 2014 2015 2016 2017 2018 2019 2020 concentrations are in the Amazon, which makes up 45% of the area of the nation, but only 3% of the population. If modern energy services cannot be provided in the Amazon region, the local population will continue to abandon the forest for nearby cities, leaving vast areas to predatory 10 SolarServer 16 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 18. Brazil: Projects To pay for the program, Brazil established three funds: The Energy Development Fund (Conta de Desenvolvimento Light for All de Energia, CDE); the Global Reversion Reserve (Reserva Global de Reversao, RGR), and the Fuel Consumption In 2003, the Government of Brazil (GOB) launched the Fund (Conta de Consumo de Combustivel, CCC) into program Luz Para Todos (LPT) or ―Light for All‖ to subsidize which tax revenues are designated. These funds provide universal access to electricity by: the subsidies for both implementation and operation of the program, and to offset the costs of individual electrical  Extending and establishing connections to the consumption in the most remote regions. national electrical grid. Overall, LPT was estimated to cost R$20 billion, of which  Establishing a small number of off-grid distributed R$14.3 was to be provided by the federal government. The energy pilot systems, including photovoltaic solar rest was to be funded by state governments (R$2.3 billion) and wind power systems; and hybrid systems of and by power companies (R$3.4 billion). By 2010, the solar, wind and diesel. government had R$13.5 billion in contracts, funded by the CDE and RGR. State governments had spent R$2.081 The program was implemented in 2004, extended in 2008, billion and power companies, R$3.164 billion. and again in 2010. By May 2009, electrical services were being provided to 10 million people through 2 million new The second phase of LPT, extended in March 2010 to end connections to the national electrical grid. in 2014, foresees a total investment of R$5.5 billion, and the government is likely to extend the RGR, set to expire in A total of 883,000 km of new electric cable had been 2010 and which has R$7 billion available, to cover the next strung over 4.6 million new poles to bring transmission lines phase. and power switches to rural communities. Considered a success by the government, the program was extended in Program costs per installed electrical connection rose over 2010 to 2011, to add 310,000 new households, and is time as more distant areas were connected to the grid. expected to be extended until 2014 to add an additional The average cost per connection in 2004 was R$4,300. By 495,000 households. In total, the objective of this phase of 2010, connection costs had risen to between R$7,000 to the program is to bring energy services to approximately R$9,000 per connection.11 810,000 new households in the remotest areas of the country, including the greater Amazon rainforest in Brazilian territory. 11www.actionaidusa.org/assets/pdfs/climate_change/Access_to_Energy_for_the_Poor_2011.p df 17 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 19. CEMIG’s Microgrid Project Other partners are expected to be incorporated to the project depending on the choice of the location for the CISB approved a microgrid project to distribute electric implementation of the infrastructure. They could be local energy for CEMIG in an urban area of Belo Horizonte.12 This providers of infrastructure, telecommunications and gas. project will be implemented in three phases. Also, other companies from the CEMIG group might join, such as CEMIG TELECOM and GASMIG.14 The first phase involves FAPEMIG and CEMIG together with the Federal University of Minas Geris (UFMG) and KTH Royal Institute of Technology, who have proposed to study decentralized energy production and distribution architecture.13 The initiative is considered strategic and will be funded directly by Cemig. A second group of partners, formed by the companies GAS ENERGY and CONCERT, will have the task of installing a distributed generation plant. This plant will serve to study the co-generation of energy from the binomial natural gas and sunlight. The plant should be initially sized to satisfy the study of co-generation and generation necessary for the existence of a ―microgrid‖, but it should be designed in a way that will allow modular expansion, in order to correspond to the suggested business models that will also be studied. The third group is formed by the research institute LACTEC and the companies HITACHI and CONCERT. They will be responsible for the technical implementation of the distributed generation grid and for all the issues related to the engineering tasks. 12 www.kth.se/en/studies/why/focus-regions/brazil/additional-collaborations-with-brazil- 1.296141 13 www.kth.se/en/studies/why/focus-regions/brazil/additional-collaborations-with-brazil- 1.296141 14Microfoundations of Open Innovation (Sao Paulo, 2012) 18 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 20. Russia shortfall in funding for the renovation of the electric power sector assets for about 10-15 years in the early 90s, Russia is In Russia, over 10 million people are not connected to the now seeing critical wear of the substation equipment fleet. grid and are using diesel or gas powered generators to The guideline equipment life (25 years) has ended for meet their energy needs. Fifty percent of these generators 54.7% of these assets and total excess life (35 years) has are not working due to either fuel costs or delivery issues. been surpassed for 22.2% of equipment. The areas least connected are Siberia, the Northern and Far Eastern areas of Russia. Because of the size of Russia Considering the longer lifetime for HV power lines, on and its diverse resources, renewable energies are average 40 years, the wear of power transmission line particularly attractive and cost effective. In addition, equipment comprises the following – guideline life (40 Russia’s energy strategy until 2020 includes realizing years) has ended for 29.2%, total excess life (50 years) has sustainable development. Several small-scale wind been surpassed for 8.9% of equipment.16 However, Russia projects using wind-diesel hybridization have saved 40-80% possesses favorable conditions for the development of of total energy cost with a 3-4 year payback period. renewable energy sources, largely due to its size and Hydropower has been successfully utilized in areas located range of geographic features. by rivers. Solar also offers potential, especially in Southern areas. The very strong renewable energy potential, Russia has huge potential markets for off-grid electricity combined with the huge number of isolated areas lacking systems based on renewable energy. The renewable grid power create a tremendous microgrid opportunity in potential is especially applicable in some of the more Russia. remote parts of Russia that are not connected to the grid. In many isolated settlements, renewables can be the most Russia: Drivers economic, and perhaps even the only way to provide electricity and heat to consumers. Geothermal resources It is estimated that approximately five million farms and ten in the Far East or North Caucasus, or hydro from the many million people in Russia are not connected to the watersheds, or other renewables such as wind and solar electricity grid. Furthermore, an estimated 45 percent of all energy could potentially serve remote populations.17 energy in Russia is lost in production, transport, transmission or inefficient consumption—much of this due to artificially low prices which reduce incentives to improve efficiency. According to several estimates, Russia could save around half of the energy it currently uses.15 Furthermore, due to a 16 PowerTec 15 MDPI 17 EBRD 19 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 21. Russia: Microgrid Market Forecast build a self-contained diesel-solar power unit, the first of its kind in Russia. The companies plan to build the pilot hybrid From 2012 to 2020, the Russian market is projected to grow power station with a capacity of over 100 KW, 70% of from $99 million to $433 million with a compound annual which is to come from solar generation, it said in a growth rate of 20%. statement. The company did not provide a timeframe for the work to be completed. Use of solar technology is Russia Microgrids Market Value Forecast limited in Russia, which mainly develops conventional CAGR = 20% energy resources. But the companies believe that 2012 to 2020 (in US millions) development of diesel-solar power generation "is a $500 (figure 9, source: Zpryme) technically and economically viable solution for Russian $433 regions with high levels of solar radiation," said Michael Lifshitz, CEO of Rosnano's subsidiary Rotek. $400 $339 In particular, he mentioned southern regions of Russia, $300 $264 southeastern Siberia, the east Siberian Republic of Sakha $207 (Yakutia) and far eastern regions, where diesel generation $200 $161 costs Rb30-40 kWh (around $1/kWh).18 $143 $126 $99 $112 $100 Russia: Solar Power Station In 2010, Russia's high-tech companies Rusnano and $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Renova announced plans to build the country's first industrial solar power station near the Black Sea. The 12.3 megawatt station will be built in the spa resort of Kislovodsk Russia: Projects by the companies' joint venture Khevel. "This is a breakthrough into a different dimension," Rusnano CEO Russia has included microgrids in the Energy Smart Anatoly Chubais told an innovation forum in Moscow. The Communities Initiative Smart Grid pillar. The plan, which will $97 million deal was sealed by Khevel CEO Yevgeny be implemented in 2012, will pilot smart/micro grid projects Zagorodny and Stavropol region Governor Valery for insular and remote localities in APEC economies. Gayevsky. Swiss-made thin-film solar panels will be used in the construction. The station may start operating as soon Renova and Rosnano Project as 2012, Zagorodny said.19 Russia's Renova holding company and state-run nanotechnology company Rosnano plan to develop and 18 www.renova.ru/en/press-center/publications/15/1964/ 19 ww.solardaily.com/reports/Russia_To_Build_Its_First_Industrial_Solar_Power_Station_999.html 20 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 22. India Moreover, approximately 30 percent of India’s generated power is lost in transmission. About 115 million households in rural areas lack grid access while 250,000 villages connected to the grid have Distribution is the weakest link of India’s power supply frequent connectivity issues. That is over 60% of the total chain as it faces substantial technical losses (because of population. Rural electrification has been identified as a overloading of transformers and conductors, for instance) priority by the Indian government. Where the grid cannot and commercial losses of electricity (because of low be connected, the government has authorized distributed metering efficiency, poor billing and collection, large- networks to be established. Solar energy offers tremendous scale theft of power). Furthermore, lack of transmission market potential for India. Several projects have shown and distribution of power to less densely populated areas the potential of the market. which are located far away from the power generating stations is the major reason for not being able to achieve The New Energy and Industrial Technology Development 100 percent electrification in the country. Organization of Japan installed 6 MW PV solar arrays at the Neemrana Industrial Park to demonstrate efficiency of In India, about 70% of the population lives in rural areas. In control technology and benefits of clean energy. 2010, it was estimated that 48 percent of rural households Greenpeace India has also released a report proposing were un-electrified nationally leaving approximately 400 clusters of microgrids be installed to support the electrical million people without electricity. Hence it is necessary to grid. Bihur is used as an example of how an area with a use energy sources which can be decentralized to supply substantial energy deficit can be an area of energy power to these households. Thus, India can leverage their surplus through microgrid deployment. Thus the microgrid abundant renewable energy sources such as wind, solar, market in India holds tremendous potential for future geothermal energy, and biomass to deploy microgrids to development. meet their pressing energy needs.20 India: Drivers Electricity consumption in India was about 543 KWh/capita in 2009, among the lowest in the world. Although India has considerably improved its generating capacity, it still has difficulty in meeting demand and there are persistent power shortages which constrain India’s economic growth. With the development of the industrial and commercial sectors as well as the wider use of electrical equipment, electricity demand keeps increasing. 20 TERI 21 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 23. India: Microgrid Market Forecast distributes power through a micro grid, approximately 0.75 to 1 km in length. An electronics company, DD Solar 23 From 2012 to 2020, India’s market is projected to grow from India Pvt. Ltd (which works under the banner of the Bergen $115 million to $1,191 million with a compound annual Group) has provided the technical know-how for this growth rate of 34%. project. India Microgrids Market Value Forecast There are 60 solar panels in the plant, each one producing CAGR = 34% 145 watts of power. A battery bank consisting of 24 cells of 2012 to 2020 (in US millions) two volts each provides the power back up for 4 to 5 $1,400 (figure 10, source: Zpryme) cloudy or rainy days, when there is no sun.21 $1,191 $1,200 The project was conceived, managed and financed by Scatec Solar at the cost of Rs 5 million (US$1=Rs 46.6). $1,000 $863 Delhi-based NGO, Development Alternatives (DA), was $800 engaged to identify the beneficiary villages.22 $626 $600 Azure Power to Asses Solar Powered Microgrids (Int'l) $453 $400 $328 $253 India-based independent power producer Azure Power $194 $200 $115 $150 has been awarded a grant from the U.S. Trade and Development Agency (USTDA) to assess the development $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 and accelerate adoption of solar power in rural India. The $476,670 grant will fund a feasibility study on two 500 kW microgrid solar photovoltaic power generation pilot India: Projects projects in the states of Gujarat and Chhattisgarh. Having spearheaded the national initiative of grid-connected Northern India solar power projects that are over 1 MW in capacity, Azure Power will, with this study, open up the potential of Norway-based company Scatec Solar decided to set up electrifying rural India through solar powered microgrids. an 8.7 kilowatt power plant in Rampura. Assisted by Following the study, Azure aims to set up over 100 Development Alternatives, an NGO working locally, the microgrid solar systems, with each system covering an community in this village was mobilized to take charge of average of 2-3 acres of rural land which would generate perhaps India’s first community-managed solar power plant. As a result, since January 26, 2009, this village has 21www.actionaidusa.org/assets/pdfs/climate_change/Access_to_Energy_for_the_Poor_2011.p not been without power for a single day. The plant df 22 www.smeworld.org/story/features-108/solar-power-at-everyones-doorstep-234.php 22 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 24. sufficient power to electrify approximately 800-1,000 villages with little or no connectivity to existing electrical The Skynet software interfaces with the NES system grids. software and creates a bill for the customer that reflects the customers' actual use of lower cost grid power and The USTDA India mission aims to further development of more expensive locally generated power. Customers have projects that have a positive economic, social and the option of reducing usage at times when the more environmental impact while promoting exports of US to expensive energy is being supplied. The Palm Meadows India. The grants provided by USTDA support the initiation micro grid is providing reliable service even during of such projects and bring them close to realization. In this frequent utility grid outages and enabling the customer to light, the benefits of solar power are obvious and make intelligent trade-offs between comfort and cost.25 imperative. USTDA helps companies create US jobs through the export of US goods and services for priority development projects in emerging economies. Azure Power is claiming to be India's first independent solar service provider offers clean and affordable solar energy to its customers with minimum upfront cost and ongoing operational expenses.23 Southern India Echelon Corporation has successfully deployed micro grid installations in an 86-acre integrated gated community with 335 homes and residential services at Palm Meadows in Hyderabad. Palm Meadows runs diesel generators and seeks to incorporate solar power in the future to its micro grid.24 Echelon's has equipped the residences with smart meters that connect into data concentrators at distribution transformers and feed near real-time information into the company's Networked Energy Systems (NES) software. Grene Robotics' Skynet management application automatically turns on local generation if utility-delivered power is inadequate. 23 epoverviews.com/articles/visitor.php?keyword=Micro-Grid www.pv-magazine.com/news/details/beitrag/a-growing-global-smart-grid- 25 24 www.echelon.com/company/news-room/2012/microgrids-india-south-africa.htm market_100006258/#axzz1xsuXXnV6 23 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 25. China eight million.26 The massive size of the country in terms of population means that still a large number of individuals, In China, remote regions experience power supply issues equal to the total population of countries such as Sweden where the grid cannot be extended due to the expense or Austria, do not have access to electricity. of extending the electrical grid. Energy consumption was 18% in 2005 in rural areas, especially in central and western As of 2012, some five million Chinese people living in areas. China is dedicated to renewable energy remote villages in mountainous or border areas are expansion and has 8 completed pilot projects, with many currently without electricity, and the government has more underway. One such project was completed in vowed to extend electricity services to such groups by the Zuo’anmen at Beijing City, where 50 kWp PV, 30 kW end of 2015. According to the annual social responsibility microturbines, 72 kWh energy storage was installed. Other report of the State Grid Corporation of China (SGCC), the microgrids were installed in the Henan Province, in Tiajin country's largest power supplier, China's urban residents City, Mongolia, Foshan City, and Foshan Island. These endured an average of 6.92 hours of blackouts, while rural projects have had tremendous success and focused households experienced an average of 29.35 hours of mainly on PV and wind energy, as well as storage. China blackouts in 2011. SGCC has pledged to shorten the realizes that microgrids are an important part of the periods of electricity cut-offs to 5.71 hours for urban citizens country’s Smart Grid and is also related to national and 23.7 hours for rural residents through grid upgrades development strategies, further highlighting the microgrid and renovations.27 opportunity presented in China. In addition, governmental support for microgrid development may Additionally, energy consumption efficiency is very low in provide additional incentives to develop microgrids in China, i.e. the amount of energy consumed per unit of remote regions, thus extending reliable energy to its economic output is considerably higher than the world citizens. average.28 Microgrid systems thus offer tremendous opportunities to develop the power system in China with China: Drivers investments focused on increasing capacity, reliability, efficiency, and integration of renewable energy. Being the largest country in East Asia and the most populous in the world, China’s rapidly growing economy State level projects have already been initiated in China created a significant increase in energy consumption, as to encourage and support universities and institutions that well as a rise in harmful emissions and power shortages conduct research on the use of microgrid systems. over a very short period of 60 years. The number of people Furthermore, microgrid systems may represent the best lacking access to electricity in China in 2009 was around solution to provide electricity to those rural areas, 26 China Europe International Business School 27 China.Org.cn 28 National University of Singapore 24 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
  • 26. especially in the Western regions, where the grid extension China: Projects is not feasible and off-grid applications are required. This is the sector where the new renewable energies such as Xiamen Direct-Current Microgrid wind and solar are expected to play a key role by becoming the most appropriate solution in order to The Haixi International New Energy Industry Expo and achieve the Central government’s goal of a full rural Forum, Xiamen University, Nextek Power Systems, People electrification before 2020. Power Company, Canadian Solar, Intel Corporation and Lawrence Berkeley National Laboratory (LBNL) announced China: Microgrid Market Forecast a ground-breaking alliance to construct and manage direct-current microgrids at the School of Energy Research From 2012 to 2020, China’s market is projected to grow in Xiamen University (SER-XMU). This microgrid will become from $320 million to $2,015 million with a compound operational this year and will make Xiamen University annual growth rate of 26%. China's first direct-current powered commercial building, and will serve as a global showcase for distributed direct- China Microgrids Market Value Forecast current microgrid innovation and commercialization. CAGR = 26% 2012 to 2020 (in US millions) The Xiamen University's direct-current microgrid could $2,500 (figure 11, source: Zpryme) change the way Chinese campuses and building complexes manage, control and consume energy by $2,015 directly integrating renewable energy generation and $2,000 storage batteries with building electrical loads through $1,526 one-touch mobile and web-based energy management $1,500 and control applications. This change is significant $1,156 because of Chinese building energy consumption. $1,000 $876 $664 Nextek Power Systems will introduce the first Direct $553 $461 Coupling(R) microgrid in mainland China that will manage $500 $320 $384 and support diverse energy loads, such as direct-current lighting, air conditioning, data centers, electrical vehicle $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 charging and building plug loads. People Power Company will provide its award-winning, cloud-based energy management, control and behavioral analytics applications that will enable building managers to control and manage buildings loads. LBNL will develop methods 25 [PREMIUM] ZPRYME SMART GRID INSIGHTS Microgrids: The BRICS Opportunity | July 2012 Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org