Investment in Microgrids In Asia-Pacific To Near US$31 Billion By 2023

Remote microgrids are the main microgrid market opportunity in Asia-Pacific as declining renewables costs enhance their business prospects.
Published: Wed 27 Aug 2014

The Asia-Pacific region is set to be a major market for microgrids, with cumulative investment over the next decade expected to total US$30.8 billion, Navigant Research has projected in a new study.

Microgrid projects increase

Demand for electricity and generation capacity from renewable energy sources is growing at an unprecedented rate in the region. As a result, the number of microgrid projects deployed, both for electrification purposes and as experimental testbeds, is also rising.

By 2023 the annual capacity of grid-tied and remote microgrids in the nine countries reviewed is projected to reach almost 600MW –  more than a factor six greater than the capacity projected for the current year, with a compound annual growth rate of 32.1%.

“Several of the most heavily populated countries in the Asia Pacific region, including China, India, Indonesia, and Malaysia, are experiencing very high rates of rural electrification,” commented Peter Asmus, principal research analyst with Navigant Research. “Both developed and developing countries in the region are turning to microgrids to extend electrical service to remote and underserved communities.”

Asia-Pacific a diverse region

Asia-Pacific consists of many divergent aspects, including diverse demographic factors, different economic and social infrastructure levels, and different levels of power grid development. As a result, both the requirements and demand for microgrids differ greatly among nations.

Developed nations within the region are actively pursuing community-based and commercial/industrial microgrid developments. Some demonstration projects focused on integrating renewable resources are being tested and developed with the goal to deliver multiple applications to the end user. Specifically, Japan and South Korea aim to export microgrid business models and systems and then capture a larger share of global supply chain opportunities in global markets. [Engerati-Off-Grid Trend is Growing in Japan]

In contrast, developing nations in the region face more urgent issues related to power supply.

Low electrification, an underdeveloped power grid infrastructure, and a lack of capital to underwrite new technologies to advance power grid services are key challenges.

Remote microgrids

The most attractive microgrid market in Asia-Pacific is remote microgrids, which operate autonomously or have yet to be connected to a larger grid, according to Navigant Research. In the developing Asia-Pacific nations, these remote power systems have traditionally burned diesel fuel as their primary source of electricity, but declining costs for renewables are increasing the business prospects for remote microgrids.

The market leaders for remote microgrids in Asia-Pacific are India, Indonesia, and the Philippines, because electrification enhancement is the top priority in these nations. Australia is another top proponent of remote microgrids due to its unique need for power supplies to off-grid or isolated mining sites.

On a global basis, North America currently dominates the microgrid market and is expected to through 2020. However, due to the huge need for power in the developing nations in Asia-Pacific, the region will likely emerge as the global leader for microgrid deployments by 2030 or 2035, Navigant Research believes.

The nine countries studied are Australia, China, India, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea.