The Asia-Pacific microgrid market is poised for “exponential growth,” a 38.3 percent rise from $84.2 million in 2013 to $814.3 million in 2020, according to a new Frost & Sullivan report.
Test pilots are underway in most countries – largely to secure resilient supply. Japan leads the pack, according to the report, “Analysis of the Asia-Pacific Microgrid Market, which looks at Japan, South Korea, Indonesia, Malaysia, the Philippines, and Australia.
Rural electrification programs are spurring growth in developing countries, while commercial microgrids are drivers 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 Avanthika Satheesh, Frost & Sullivan energy & environmental senior research analyst. “In developed countries, a separate renewable energy (RE) fund, such as the one from ARENA Australia, gave the market added thrust.”
Sarawak Energy in Malaysia, Perusahaan Listrik Negara (PLN) in Indonesia and power corporations in the Philippines 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, according to the report.
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, according to Frost & Sullivan.
“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,” Satheesh said.
Analysis of the Asia-Pacific Microgrid Market is part of the Frost & Sullivan Energy & Power Growth Partnership Service program.
