Rural electrification programs to boost Asia-Pacific microgrid market

The microgrid market in Asia-Pacific is on the threshold of exponential growth, with numerous pilot projects being tested in most countries. Japan leads the pack with several established microgrids, while Australia has also set up microgrids in 2013. The key driver for the market is the need for a resilient power supply.

New analysis from Frost & Sullivan finds that the market earned revenues of $84.2 million in 2013 and estimates this to reach $814.3 million in 2020, growing at an impressive compound annual growth rate (CAGR) of 38.3 percent. The study covers Japan, South Korea, Indonesia, Malaysia, The Philippines and Australia.

The proliferation of microgrids in Asia-Pacific is encouraged by the rural electrification programs in developing countries, and establishment of commercial microgrids in developed nations.

“Rural electrification projects such as the 1000 islands project in Indonesia, solar photovoltaic (PV) program in the Philippines, and off-grid projects in Malaysia are promoting the market,” said Frost & Sullivan Energy & Environmental Senior Research Analyst Avanthika Satheesh.

“In developed countries, a separate renewable energy fund, such as the one from ARENA Australia, gave the market added thrust,” she added.

Sarawak Energy in Malaysia, Perusahaan Listrik Negara (PLN) in Indonesia and power corporations in the Philippines aim to electrify rural areas using off-grid microgrids. In Indonesia, utility companies are giving priority to rural electrification, and they intend to complete 90 percent of electrification by 2025. Similarly, in the Philippines and Malaysia, where electrification rates are below 100 percent, utility companies are turning to microgrids to achieve complete electrification.

While the importance of microgrids in the region is evident, the market still has to clear several hurdles to achieve its full potential. For instance, land acquisition for solar PV installation is complicated in rural areas, where land is unregistered. Acquisition of skilled labor in remote areas is another challenge that can hold the market back to some extent.

More importantly, the capital cost of installing the microgrid is high when it is installed with energy storage systems (ESS). This will deter its adoption in various countries unless there is strong government support for the project implementation. The lack of structured financing model for commercial microgrids also dulls its market prospects.

“However, the increasing electricity tariffs will eventually turn utility companies away from expensive diesel fuels to renewable sources of energy in their off-grid microgrids. As the use of RE necessitates ESS, market participants can expect stronger governmental support through favorable regulations, funds and subsidies,” noted Satheesh.


Previous articleGoole Fields 1 Wind Farm now generating power
Next articleMexico energy reforms leave solar power behind

No posts to display