Remote parts of the Asia Pacific region, including rural Australia, could soon see a boom in regional microgrids with heavy integration of renewable energy technologies, according to a recent report from California-based research firm Frost & Sullivan. The firm predicts that investment in microgrids will skyrocket in the next five years, increasing tenfold from 84.2M USD in 2013 to 814.3M USD by 2020.
Driving the explosive growth is a mix of government policy and the increasing cost-effectiveness of renewables like solar PV. In developing countries like the Philippines, Malaysia and Indonesia, the boom will be fueled by a combination of falling technology prices, the need for grid reliability and government-sponsored rural electrification schemes. The Philippines, for example, has a rural electrification target of 90% by 2017. In such countries, where extensive electricity generation and distribution infrastructure does not exist, building scalable, distributed energy systems has proved to be a more attractive model than the ‘conventional’, large-scale power plants and sprawling electricity grids generally seen in developed countries.
Nevertheless, in the report Australia and Japan serve as two case studies for the way in which commercial microgrids could potentially flourish in the developed world. Both countries have already taken steps to support them. Australian utilities in states like Queensland and South Australia, for example, are planning for their broader support and implementation, with a focus on energy storage. Renewables & microgrids are also frequently considered as an option for remote mining operations. In Japan, a number of microgrids have already sprung up, including one on Miyako Island in Okinawa and another in Aomori prefecture’s Hachinohe City. The Okinawan project was built as both a practical grid as well as a demonstration site for how renewables such as wind and solar can be integrated into a microgrid using energy storage.
Frost & Sullivan’s report cites the lack of commercial precedent & financing conventions as well as high energy storage costs as two of the biggest challenges to the microgrid market in developed nations. It also points out, however, that rising fuel prices in remote areas–notably the cost of diesel in Australia–will push utilities and companies to seek more affordable alternatives such as solar PV. Government policy will also play an integral role in microgrid growth, with subsidies, tax breaks and other incentives to pave the way for greater uptake.
Top image: Miyako Island solar plant & wind turbines, via IRENA/Okinawa Electric Power Company
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