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Many parts of the world are without grid-connected electrical power. As their population and standard of living increase, so will their demand for energy, and a suitable system for providing that electricity to them. The current energy system is unable to offer connectivity to many of these remote locations for economic or logistical reasons. One solution to providing energy to these remote locations is to install microgrids. Several large firms have expanded operations into the microgrid marketplace, while niche firms have developed customized programs specific to the market. The 33-page special report, Microgrids: The BRICS Opportunity, reveals that by 2020, the total BRICS microgrid market is projected to reach $4.5 billion with China accounting for 45% of the BRICS market at $2 billion and a staggering $13.4 billion globally. In this report Zpryme zero-ins on the BRICS microgrid ecosystem by identifying market trends and drivers, recounting country by country projects descriptions, challenges/opportunities to market entry and also two unique Q&A’s from Echelon and Siemens.
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PREMIUM
INTELLIGENCE BY ZPRYME | ZPRYME.COM© 2012 ZPRYME RESEARCH & CONSULTING, LLC. ALL RIGHTS RESERVED.
SMARTGRIDRESEARCH.ORG INTELLIGENT RESEARCH FOR AN INTELLIGENT MARKETTMSMART GRID INSIGHTS
MICROGRIDS: THE BRICSOPPORTUNITY
JULY 2012
1 [PREMIUM] ZPRYME SMART GRID INSIGHTS
Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
Microgrids: The BRICS Opportunity | July 2012
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
China: Drivers ........................................................................ 24
China: Microgrid Market Forecast ..................................... 25
China: Projects ...................................................................... 25
South Africa ............................................................................ 27
South Africa: Drivers ............................................................. 27
South Africa: Microgrid Market Forecast .......................... 28
South Africa: Projects ........................................................... 28
BRICS: Microgrid Outlook ...................................................... 29
Q&A with Echelon .................................................................. 31
Q&A with Siemens ................................................................. 33
Special Thanks
Thierry Godart
Siemens, President of Smart Grid Division, U.S.
www.siemens.com
Jeff Lund
Echelon, VP of Business Development
www.echelon.com
2 [PREMIUM] ZPRYME SMART GRID INSIGHTS
Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org
Microgrids: The BRICS Opportunity | July 2012
Executive Summary
Many parts of the world are without grid-connected
electrical power. As their population and standard of
living increase, so will their demand for energy, and a
suitable system for providing that electricity to them. The
current energy system is unable to offer connectivity to
many of these remote locations for economic or logistical
reasons. One solution to providing energy to these remote
locations is to install microgrids. Several large firms have
expanded operations into the microgrid marketplace,
while niche firms have developed customized programs
specific to the market.
The global microgrids market is projected to reach
$4.95 billion in 2012. By 2020, the global microgrid
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.
In 2012, the combined microgrids market value for
BRICS (Brazil, Russia, India, China, and South Africa)
nations is projected to reach $0.73 billion in 2012. By
2020, the microgrids market among BRICS nations
will reach $4.47 billion.
The BRICS nations, as a whole, are projected to
grow at a compound annual growth rate of 25%
from 2012 to 2020.
In 2012, BRICS nations are projected to account for
15% of the global microgrid market. By 2020, they will
account for 33% of the global market.
$4.95
$6.20 $6.90
$7.50 $8.33
$9.57
$10.82
$12.01
$13.40
$0
$3
$6
$9
$12
$15
2012 2013 2014 2015 2016 2017 2018 2019 2020
Global Microgrids Market Value Forecast
CAGR = 13%
2012 to 2020 (in US billions)
(figure 1, source: Zpryme)
$0.73 $0.87 $1.04
$1.24 $1.49
$1.96
$2.57
$3.39
$4.47
$0
$1
$2
$3
$4
$5
2012 2013 2014 2015 2016 2017 2018 2019 2020
BRICS Microgrids Market Value Forecast
CAGR = 25%
2012 to 2020 (in US billions)
(figure 2, source: Zpryme)
3 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
How well do you
know the BRICS
microgrid
ecosystem? BRICS Market Value Forecast by Country - 2012, 2020
(figure 3, source: Zpryme, in US millions)
$2,015
$1,191
$518 $433
$312 $320
$115 $149
$99 $50
China India Brazil Russia South Africa
2012
2020
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Microgrids: The BRICS Opportunity | July 2012
Microgrids incorporate renewable energy solutions, energy
storage, and energy management technology into an
integrated system that manages energy generation,
transmission, distribution, and usage on a small scale
compared to the current grid system, as it serves a smaller
base of local residents. However, this small local nature
offers significant benefits, such as reliability, flexibility, and
increased security. Key technology has been introduced
to allow widespread adoption of microgrids.
BRICS (Brazil, Russia, India, China, and South Africa) nations
are the fastest growing countries internationally and have
large percentages of their population without power.
These five nations can benefit from microgrid installation,
thus allowing their rural citizens to experience reliable
power for the first time.
In BRICS nations (Brazil, Russia, India, China, and South
Africa), the demand for energy, particularly electricity, is
growing much more rapidly than the rate of expansion of
conventional electricity grids in the industrialized world.
Microgrids are a cost-effective solution to help meet this
rising demand for more power, without increasing carbon
emissions. The microgrid market across BRICS nations is
being driven by the growing energy demand; the need for
reliable power; increasing focus on renewable energy;
requirement for electrification in rural and inaccessible
areas; and government incentives provided for achieving
energy efficiency and renewable power generation.
Several microgrid projects are coming up across the BRICS
countries to provide a more reliable power supply to
consumers. For example, recently, in early 2012, Echelon
Corporation, announced that it will set up two microgrids
in India and South Africa that integrate distributed
generation to compensate for disruptions in utility-supplied
power. Smart mini-grids are very useful for stand-alone
projects in villages and inaccessible areas. Microgrids not
only foster the effective inter-connection and utilization of
multiple renewable energy resources, but also help in
advancing access to energy to the last mile in the most
optimum way by improving the efficiency of the overall
system. The PRISMA project in the Amazon village of
Cachoeira do Aruã, Brazil is a run-of-the-river micro-hydro
facility that provides the community with power that is
distributed via a mini-grid. The project establishes
community ownership and management of local
infrastructure, such as power generating stations, while
strengthening small local enterprises that then use the
infrastructure for productive uses which help them in
earning an income.
Benefits of Microgrids
The current electrical generation system, where energy
flows in one direction from the utility to consumers is
becoming obsolete. Outdated transmission lines,
inefficient equipment and antiquated software will require
a tremendous expense to update, as well as present
security and reliability problems. Microgrids provide one
solution to a more efficient energy system and offer many
benefits.
First, the smaller scale of microgrids offers several benefits
including increased efficiency because less energy is lost
during the transmission of energy. In a microgrid, energy
travels shorter distances from the energy source to the
customer and serves fewer customers. Thus, overall
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Microgrids: The BRICS Opportunity | July 2012
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.
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Microgrids: The BRICS Opportunity | July 2012
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%
44%
16%
20%
13%
7%
BRICS Market Value by %, 2012
(figure 4, source: Zpryme)
China India Brazil Russia South Africa
45%
27%
11%
10%
7%
BRICS Market Value by %, 2020
(figure 5, source: Zpryme)
China India Brazil Russia South Africa
7 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
Key Players In the microgrid market, two main types of key players are
strengthening their position. First, large Smart Grid firms are
expanding their product lines to offer products specifically
designed for the microgrid market. Small niche firms have
also entered the marketplace with products uniquely
suited for microgrids. In addition, these two types of firms
have collaborated to provide solutions for specific
locations and projects.
BPL Global was founded in 1983 and has expanded its
operations to include member firms in 7 countries,
including Africa, China, Brazil and the Middle East. The BPL
Africa branch offers Intelligent Power Smart Grid
Integrated Demand Response Software to design the most
cost effective energy microgrid solution based on cost
and other grid conditions. BPL Africa is the only firm on the
continent to offer a turnkey solution to microgrid
deployment for the remote power market. The solution
provides the basic starting components and allows the
user to add modules as they need the additional capacity
and can afford the upgrades. BPL Africa has experienced
success in developing microgrid solutions for mining
operations that were totally unconnected from the grid
and had no electricity. In addition, its turnkey solution has
been implemented in small villages, providing consistent
energy for the first time to the remote locations. BPL
Global has had several strategic partnerships that have
further developed its position in the field including its
acquisition of Serveron and a partnership with Siemens.
ABB has expanded its position as a transmission and
distribution Smart Grid leader to develop solutions for the
microgrid market, through its Adaptive Protective System
architecture. ABB is also involved in utilizing microgrids to
provide ancillary services for utilities. In addition, ABB has
been very active in the Advanced Architecture Program
for the European Consortium. ABB is a member of the
steering committee, which develops functions and
schemes for microgrids. ABB has experienced success in
installing a $16 million microgrid upgrade in Qatar, where it
was responsible for reengineering and reinforcing the
existing system to improve the availability and reliability of
electricity. In addition, ABB has developed strategic
partnerships with wind and solar manufacturers, as well as
acquiring Powercorp, an Australian firm specializing in
renewable energy integration.
Siemens has expanded its position as an electrical
engineering and electronics leader to include global
energy management for microgrids. Siemens views
microgrids as a central component in the Smart Grid
evolution. Siemens offers energy-efficiency technology for
a microgrid’s consumption, transmission and production
needs. Siemens has been involved in a series of
partnerships. Recently, Siemens partnered with Boeing to
develop microgrid solutions for the Department of Defense
to be use in military installations. In addition, Siemens
partnered with BPL Global to combine demand response
solutions with distributed generation resources for homes
and businesses, creating a mini-grid. Siemens has also
worked with Viridity Energy and has several other
partnerships and projects underway to further develop its
microgrid position.
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Microgrids: The BRICS Opportunity | July 2012
Echelon has expanded its position as a leader in network
platforming to provide solutions for the microgrid market.
Echelon’s microgrid software is able to outline the usage
of power by source, delineating power from renewable
sources, from the grid, and from back-up power sources.
This allows consumers to make choices about their energy
consumption, in turn creating a more efficient system.
Echelon has announced two projects in India and South
Africa. Echelon will supply each project with smart meters
for each residence or business to provide feedback on
energy consumption, and provide their software to
provide energy management capabilities. In addition,
applications from Echelon’s partners will provide
additional functionality for supply/demand management
and automatically switch to backup power if Echelon’s
Networked Energy System senses any irregularity. The
projects will not only provide greater efficiency, but also
will also allow better pricing methods and serve as an
example of an entry-level microgrid market, where back-
up generators support the electrical grid in times of need.
In addition to large Smart Grid firms expanding into the
microgrid market, several niche firms have also developed
specialty products to serve microgrids. Green Energy
Corporation has received numerous awards, including
being named one of the Top 50 Colorado Firms to Watch.
Green Energy Corporation offers a Master Controller
program, allowing for monitoring of both energy storage
and distributed generation. Utilizing cutting edge cloud
computing on an open source format, the software
combines new energy applications and legacy systems,
allowing interoperation that is stable and secure. Green
Energy Corporation has partnered with such companies as
the National Rural Electric Cooperative, the National
Science Foundation, and Red Hat to provide software
engineering for the utility, energy, and communications
fields.
Pareto Energy was founded in 2004 and began operations
focused on creating legislation to enable microgrid
development and deployment. Pareto’s Grid Link product
overcomes problems with interconnection between the
microgrid and the utility. It solves momentary instability
and energy loss problems experienced when switching to
island mode due to grid difficulty. The main grid is thus
shielded from inconsistent distributed generation, and
allows for upgrades and improvements to distributed
generation resources. Pareto currently has over $70 million
committed to microgrid projects. In addition, Pareto has
installed over 20 microgrids, including systems at Howard
University and for a pilot project in Stamford, Connecticut.
Lastly, Viridity Energy is a new firm that enables a microgrid
to achieve a shorter payback period on investments.
Viridity’s software consolidates all of the microgrid’s assets
to allow for comprehensive decision-making. The VPower
program allows a microgrid to not only balance supply
and demand, but also maximize selling energy back to
the grid. The program manages energy production,
storage, consumption, and distributed resources to avoid
peak loads to not only minimize cost, but also maximize
profits. Viridity has worked with Siemens, Drexel University,
Penn State University, The University of Pennsylvania, PECO
Energy, San Diego Gas & Electric, University of San Diego,
Con Edison and other firms to maximize microgrid
profitability.
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Microgrids: The BRICS Opportunity | July 2012
Challenges & Barriers to the Microgrid Market Several factors have created barriers to successful
microgrid deployment. First, the cost and integration of
energy storage has provided a barrier to microgrids.
Energy storage is absolutely essential to the successful
integration of microgrids. Energy storage allows energy to
be captured when excess energy is produced during non-
peak times and utilized during peak or inconsistent
periods. Storage systems improve reliability and quality;
however energy storage options are not cost effective in
most cases. Because of the size and the scope
requirements of microgrids, it is difficult to choose the
appropriate storage option for each installation. However,
recent developments have lowered the cost of some
storage options and small-scale applications of energy
storage can be significantly less expensive than previously
available.
Pumped hydro facilities are the most common storage
solution worldwide, with over 127,000 MW installed
worldwide. Two reservoirs at two different heights are
utilized. Excess energy is used to pump water to the upper
reservoir to be stored until energy is needed. Then the
water is released and gravity pulls it towards the lower
reservoir, and through a turbine, thus releasing the stored
energy. For it to be successful, the environment must be
able to provide for pumped hydro storage (water must be
present, etc.). The system is able to come online quickly
and typically stores 5-6 hours of energy at capacity. In
addition, it operates at 70-75% capacity and is expensive
to install, however its long life cycle makes it more
affordable over the long term.
Compressed Air Energy Storage (CAES) is not implemented
as widespread as pumped hydro, but is very popular. It
requires either an underground storage space, such as a
cavern, or an aboveground storage tank for storage.
Excess energy is used to compress air and move it to the
storage space. When it is needed, the air is released and
passes through a turbine, thus producing energy. Energy
efficiency for CAES systems is typically close to 40% due to
cooling, air compression, and turbine generation losses.
Because of these losses, additional features are usually
added to capture the lost energy and produce additional
energy from it. CAES systems are expensive to install, but
have a long life cycle, reducing its cost over time.
Battery Energy Storage systems have different
compositions, come in different sizes and can be used for
different purposes. Batteries have been frequently used
for substation back-up systems and significant research is
aimed at improving efficiency and making them more
cost effective. One key advantage is the portability of
batteries, as well as the fact that they can be immediately
connected and utilized without significant additional
installation costs. However, the lifetime of battery storage
is 2-10 years, after which they must be replaced and safely
discarded. They can also have high maintenance costs,
but can operate at 90% efficiency.
Solar energy integration has also produced significant
barriers to microgrid operation. One challenge of solar
energy is its distribution nature. Many times solar panels
are spread out and produce small amounts of highly
variable power. The energy is then collected at a central
source and then transmitted to energy customers. This
process raises technical problems, such as inconsistent
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Microgrids: The BRICS Opportunity | July 2012
voltage and frequency, grounding, protection and
regulation, power quality, and variability caused by
various weather conditions. Utilities and remote areas
considering installing microgrids must be sure that their
systems are able to integrate the solar energy, even during
fluctuations without compromising the grid itself. Research
has developed new technology to both protect the grid
from variability in production and integrate the distributed
resources. In addition, the price of solar photovoltaic
panels has decreased significantly, allowing them to be a
more cost efficient option for microgrid use. One final
consideration for installing solar panels for use in a
microgrid setting is suitability. A major challenge to
microgrids is to implement the right distributed generation
mix. Not all areas are conducive to solar energy
production and installing the wrong mix can be very costly
and result in not only excess unused materials, but
inefficient energy capacity as well.
Wind integration has presented some similar barriers to
microgrid deployment. Like solar energy, wind energy
production is highly variable, producing intermittent
power. Frequency and voltage are affected by weather
and wind conditions. The proper technology must be in
place to allow a microgrid to utilize wind energy, without
compromising the electrical system. The microgrid must
be able to balance the power the wind turbines generate,
storing energy over its maximum capacity for later use,
when wind production declines or load increases. Proper
software programs are the key to effective energy
management. New wind technology has been
developed that has both increased efficiency and
lowered the costs for wind technology. Increased
efficiency has improved reliability and safety, while
reducing the cost of wind turbines. Finally, not all regions
are well suited to wind energy production. Some areas
have inadequate wind flow for wind technology to be a
feasible option. Because of the expense, the feasibility of
producing wind energy needs to be studied before the
technology is implemented.
Key Microgrid Solutions Several key technological developments have enabled
microgrid deployment. GridLink by Pareto Energy provides
protection to the main electrical grid from any issues of the
microgrid, including variability experienced when
islanding, problems when upgrading distributed resources,
and local energy generation and loads. GridLink allows
the utility to be considered as an equal input with all other
resources. All inputs pass through inverters before
connecting to the microgrid. This insures consistent power
to the microgrid even during times of blackout on the
main grid, while insuring no impact on the utility system
itself. GridLink has been utilized at many large utilities, as
well as Howard University with great success. GridLink has
proven its success in over 20 microgrid installations, and in
overcoming interconnection problems between
microgrids and the main utility system.
A second key technology in microgrid deployment is BPL
Global’s Power SG Integrated Distributed Energy
Resources Software (iDER). iDER is a turnkey microgrid
solution that allows end-to-end energy management of all
resources. The software allows the main components of a
microgrid to be set up quickly and for the customer to add
components later, as necessary. BPL Global offers a
―unique combination of solutions for the continent in
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Microgrids: The BRICS Opportunity | July 2012
energy efficiency and management, solar energy
generation, renewable energy storage, electrification of
off-grid areas with energy islands, electrical network
optimization via MicroGrid, sustainable solutions to the
economic realities‖, making it a key technological
development.
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
issues. In addition, energy management strategies can be
tested to determine the most efficient plan before the
plans are undertaken in the actual system. Power
Analytics’ Paladin program offers superb analytical data
processing that predicts and prevents real time problems,
making it a key technology in the emerging microgrid
market place.
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Microgrids: The BRICS Opportunity | July 2012
BRICS: The Microgrid Opportunity
Developing countries compose 80% of the world’s
population, but only comprise 30% of the world’s energy
consumption. As the population increases, energy
demand will also increase. These developing countries
are improving their standard of living, thus requiring more
energy. However, many parts of the world are not
connected to a central grid, and rely on individual gas or
diesel generators, or biomass for their energy needs.
The electrical grid is centralized and it is either cost
prohibitive to connect these locations or the population is
too disbursed to allow for connectivity. Meeting the
energy needs for this segment of the population around
the world presents a huge opportunity. The BRICS nations
(Brazil, Russia, India, China, and South Africa) are the five
fastest growing segments of this market. The rural
communities that are not connected to any electrical
system seek an alternative to the traditional energy
system. They seek access to affordable, reliable energy.
Renewable energy utilized in microgrids can meet the
needs of these communities in a sustainable manner.
Renewables offer a more reliable option than traditional
connectivity, as well as providing access to water for
irrigation purposes. Thus, microgrids in BRICS will improve
the overall way of life for remote locations.
In 2012, the combined microgrids market value for BRICS
nations is projected to reach $0.73 billion in 2012. By 2020,
the microgrids market among BRICS will reach $4.47 billion.
The BRICS market is projected to grow at a compound
annual growth rate of 25% from 2012 to 2020.
BRICS Nations: Drivers
Demand for energy, specifically electricity, in BRICS
nations is growing much more rapidly than the rate of
expansion of conventional electricity grids in the
industrialized world. Demand for energy in these countries
is expected to grow in tandem with projected increases in
human population and rising living standards among the
chronically poor. Microgrids are ideally suited to help meet
this rising demand for more power, without increasing
carbon emissions. The growing demand for energy;
increasing focus on renewable energy; government
incentives provided for achieving energy efficiency and
renewable power generation; unreliable power quality
and power shortages; and poor rural electrification
systems are driving the microgrid market across Brazil,
Russia, India, China, and South Africa.
$0
$1,000
$2,000
$3,000
$4,000
$5,000
2012 2013 2014 2015 2016 2017 2018 2019 2020
BRICS Microgrids Market Value Forecast
CAGR = 25%
2012 to 2020 (in US millions)
(figure 6, source: Zpryme)
Brazil Russia India China South Africa
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Microgrids: The BRICS Opportunity | July 2012
Microgrids act as a cost-effective and viable option in the
developing world which is coping with an unreliable
power supply. Several microgrid projects are coming up
across the BRICS nations to provide consumers with a more
dependable power supply system. For example, recently,
in early 2012, Echelon Corporation (an American
company which designs control networks to connect
machines and other electronic devices, for the purposes
of sensing, monitoring and control), announced that it will
set up two microgrids in India and South Africa that
integrate distributed generation to compensate for
disruptions in utility-supplied power. The model microgrid
deployments are at Palm Meadows in Hyderabad, India,
and Clearwater Mall in Johannesburg, South Africa. Palm
Meadows is an 86-acre integrated gated community with
335 homes and residential services. Clearwater Mall in
Johannesburg is a retail building with more than 240
stores.1
Microgrids also help in providing electricity in de-electrified
villages. Smart mini-grids are very useful for stand-alone
projects in villages and inaccessible areas. Microgrids not
only foster the effective inter-connection and utilization of
multiple renewable energy resources but also help in
advancing access to energy to the last mile in the most
optimum way by improving the efficiency of the overall
system. In one of India’s poorest states, Uttar Pradesh, the
founders of Mera Gao Micro Grid Power build and
operate solar-powered microgrids to provide low-cost
lighting and mobile phone charging to village houses,
1 Solar Feeds
providing many rural people access to both light and
power for the first time in their lives.2
Another microgrid project is being undertaken for insular
and remote localities in the Asia-Pacific Economic
Cooperation (APEC) economies. Led by the Russian
Federation, the objective of the project is to maximize the
economic and environmental effect of deployment of the
Smart Grid technology in insular and remote localities as
these areas experience bigger challenges in securing
reliable and efficient energy supply.3
Together with local partners, the local utility, and the local
community, Winrock International, a global nonprofit
organization, in 2005 began the installation of the first
PRISMA project in the Amazon village of Cachoeira do
Aruã, Brazil. A run-of-river micro-hydro facility the project
provides the community with power that is distributed via
a mini-grid – all governed under simplified contracts
between the community and the electric utility. One of
the activities undertaken under this project is to promote
ecotourism, raising global awareness of the environmental
challenges that this region faces each day.
The PRISMA Cachoeira do Aruã project in Brazil establishes
community ownership and management of local
infrastructure, such as power generating stations, while
strengthening small local enterprises that then use the
infrastructure for productive uses which help them in
earning an income. In the case of electricity, the
community ―sells‖ the power to the local utility (which in
Brazil holds a monopoly on power distribution) and
2 Tree Hugger 3 EGNRET
14 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
villagers manage the local mini-grid under a contract to
the power company. The electric utility provides technical
support if required, so villagers are not completely on their
own.4
To supply electricity to those areas that have rare
population, inconvenient traffic and those that are unable
to be covered by the main power grid, Beijing Huadian
Tianren Power Control Technology Co., Ltd. (The
company’s business focuses on energy saving,
environmental protection, new energy and innovation
transformation of traditional industries.) started a wind-
solar hybrid microgrid project in Jijiao Village, Chawu
Townership, Lazi County, Rikaze, Tibet. On December 4,
2011, the project was formally put into production.5
Government incentives for energy efficiency and
renewable power generation also stimulate investment in
advanced energy infrastructure. Husk Power Systems, an
Indian firm, uses second-world-war-era diesel generators
fitted with biomass gasifiers that can use rice husks, which
are otherwise left to rot, as a feedstock. Wires are strung
on cheap, easy-to-repair bamboo poles to provide power
to around 600 families for each generator. By 2010, Husk
Power had established five mini-grids in Bihar, where rice is
a staple crop. Consumers pay door-to-door collectors
upfront for power, and Husk collects a 30 percent
government subsidy for construction costs. Its pilot plants
were profitable within six months, so its model is
sustainable.
4 Winrock 5 KJT
Major End-Use Industries for Microgrids
The microgrid system has a great potential in large
commercial and industrial complexes, hospitals, shopping
malls/ complexes, apartments, residential complexes,
educational institutions, remote un-electrified as well as
electrified locations to ensure maximum flexibility, reliability
and safety.6
6 The Economic Times
$99
$174
$186
$149
$199
$435
$223
$536
$626
$849
$894
$1,340
$0 $500 $1,000 $1,500
Other
Military
Community/Utility
Off-grid
Community/Industrial
Institutional
BRICS Microgrids Market Forecast by End-Use Industry
All 5 Countries Combined
2015 and 2020 (in US millions)
(figure 7, source: Zpryme)
2020
2015
15 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
Recently, in early 2012, China’s Xiamen University
partnered with leading multinational technology providers
to build the country’s first direct current microgrid.
Significant changes brought by the new DC microgrid
include integrating renewable energy generation and
storage batteries with building electrical loads via mobile
and web-based energy management and control
applications; changing the way Chinese campuses and
building complexes manage, control and consume
energy; and for reducing building energy consumption,
which could run up to 20% of 2020 global coal
consumption if left unchecked.7 Use of micro grids at mine
sites is also gaining popularity due to an expected
upswing in interest in shifting to more sustainable energy
strategies for mine sites controlled by large multinationals.
Globally, nearly 75% of existing mines are remote
operations, though very few deploy renewable energy
generation.8
Microgrids have been specifically helpful to people
running small and medium enterprises, particularly in rural
areas of the BRICS nations. For example, to further extend
centralized grid electricity to remote rural areas and to
address the increasing demand and supply gap in
electrified rural areas, The Energy and Resources Institute
(TERI), in India, has initiated a strategy to set up solar
microgrids that can cater to a segment of households or
small enterprises (shops) in a village. Upscaling and
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
Systems, Saran Renewable Energy, Mera Gaon Micro Grid
Power, and Naturetech Infra all operate microgrids on a
commercial basis in India.
Certain commercial and industrial environments have a
critical need for a constant power supply and cannot
afford brownouts or blackouts – research labs, data
centers, semiconductor manufacturing, and infrastructure
deemed critical to national security. Furthermore, as the
reliance on modern communication technology increases
(wireless, cloud computing, etc.), power systems are also
becoming vulnerable to cyber-attacks and hackers.
In some specific customer segments, such as the military
and research labs, there is significant value in a secure
network. Microgrid power can provide greater security for
ground army troops in remote areas. The technology
would work very much like a portable power plant,
providing and storing enough energy to power smaller,
mostly communications systems, in very remote locations
where re-supplying fuel is difficult or dangerous. Hotels,
one of the most intensive power users, can opt to develop
microgrids that incorporate solar, wind, hydro, geothermal
and other technologies to reduce the need for grid power
and for uninterrupted power supply. Hospitals are
particularly well suited for smart microgrids as they often
have a multi-building campus lay-out and require reliable
and constant power supply.
16 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
Brazil
Brazil has a population of approximately 195 million people
and is the fastest growing country on the planet.
However, the Northern Amazonian Para region only has
0.8% of citizens with access to power. Isolated grids exist in
the Amazon that use diesel powered generators for
energy production; however energy production is limited
due to the cost of fuel. In addition, the overall grid is
unable to meet the country’s needs, as 91 large blackouts
were experienced in 2011. The largest blackout left 50
million people in 8 states without power overnight. Brazil is
particularly suited to PV arrays. In addition, many
locations are close to the Amazon River, making
hydropower incorporation an attractive option. Several
projects have successfully tested microgrids in the Amazon
region. In Coelba, the Sao Paulo Research Foundation
installed 10,133 Photovoltaic systems for free to its
residents, who only had to pay for energy consumption
after installation. Ilha de Ferradura installed PV for 6
fishermen’s homes successfully in demonstrating Brazil’s
microgrid potential, in both large and small installations.
Brazil: Drivers
Due to vast sparsely populated areas, Brazil faces
particular difficulty in providing universal access to
electricity, as required by law. In Brazil, about 23 million
people do not have access to electricity. The highest
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
ranching. To stop deforestation, residents must have a stake
in remaining in their villages, generating income through
environmentally sustainable livelihoods. Therefore, providing
the area with electricity is significant. Off-grid solutions are
the only practical way to bring power to remote areas in
the Amazon.10
Brazil: Microgrid Market Forecast
From 2012 to 2020, the Brazil market is projected to grow
from $149 million to $518 million with a compound annual
growth rate of 17%.
10 SolarServer
$149 $166 $186
$209 $234
$285
$348
$424
$518
$0
$100
$200
$300
$400
$500
$600
2012 2013 2014 2015 2016 2017 2018 2019 2020
Brazil Microgrids Market Value Forecast
CAGR = 17%
2012 to 2020 (in US millions)
(figure 8, source: Zpryme)
17 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
Brazil: Projects
Light for All
In 2003, the Government of Brazil (GOB) launched the
program Luz Para Todos (LPT) or ―Light for All‖ to subsidize
universal access to electricity by:
Extending and establishing connections to the
national electrical grid.
Establishing a small number of off-grid distributed
energy pilot systems, including photovoltaic solar
and wind power systems; and hybrid systems of
solar, wind and diesel.
The program was implemented in 2004, extended in 2008,
and again in 2010. By May 2009, electrical services were
being provided to 10 million people through 2 million new
connections to the national electrical grid.
A total of 883,000 km of new electric cable had been
strung over 4.6 million new poles to bring transmission lines
and power switches to rural communities. Considered a
success by the government, the program was extended in
2010 to 2011, to add 310,000 new households, and is
expected to be extended until 2014 to add an additional
495,000 households. In total, the objective of this phase of
the program is to bring energy services to approximately
810,000 new households in the remotest areas of the
country, including the greater Amazon rainforest in
Brazilian territory.
To pay for the program, Brazil established three funds: The
Energy Development Fund (Conta de Desenvolvimento
de Energia, CDE); the Global Reversion Reserve (Reserva
Global de Reversao, RGR), and the Fuel Consumption
Fund (Conta de Consumo de Combustivel, CCC) into
which tax revenues are designated. These funds provide
the subsidies for both implementation and operation of
the program, and to offset the costs of individual electrical
consumption in the most remote regions.
Overall, LPT was estimated to cost R$20 billion, of which
R$14.3 was to be provided by the federal government. The
rest was to be funded by state governments (R$2.3 billion)
and by power companies (R$3.4 billion). By 2010, the
government had R$13.5 billion in contracts, funded by the
CDE and RGR. State governments had spent R$2.081
billion and power companies, R$3.164 billion.
The second phase of LPT, extended in March 2010 to end
in 2014, foresees a total investment of R$5.5 billion, and the
government is likely to extend the RGR, set to expire in
2010 and which has R$7 billion available, to cover the next
phase.
Program costs per installed electrical connection rose over
time as more distant areas were connected to the grid.
The average cost per connection in 2004 was R$4,300. By
2010, connection costs had risen to between R$7,000 to
R$9,000 per connection.11
11www.actionaidusa.org/assets/pdfs/climate_change/Access_to_Energy_for_the_Poor_2011.p
df
18 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
CEMIG’s Microgrid Project
CISB approved a microgrid project to distribute electric
energy for CEMIG in an urban area of Belo Horizonte.12 This
project will be implemented in three phases.
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
Other partners are expected to be incorporated to the
project depending on the choice of the location for the
implementation of the infrastructure. They could be local
providers of infrastructure, telecommunications and gas.
Also, other companies from the CEMIG group might join,
such as CEMIG TELECOM and GASMIG.14
14Microfoundations of Open Innovation (Sao Paulo, 2012)
19 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
Russia
In Russia, over 10 million people are not connected to the
grid and are using diesel or gas powered generators to
meet their energy needs. Fifty percent of these generators
are not working due to either fuel costs or delivery issues.
The areas least connected are Siberia, the Northern and
Far Eastern areas of Russia. Because of the size of Russia
and its diverse resources, renewable energies are
particularly attractive and cost effective. In addition,
Russia’s energy strategy until 2020 includes realizing
sustainable development. Several small-scale wind
projects using wind-diesel hybridization have saved 40-80%
of total energy cost with a 3-4 year payback period.
Hydropower has been successfully utilized in areas located
by rivers. Solar also offers potential, especially in Southern
areas. The very strong renewable energy potential,
combined with the huge number of isolated areas lacking
grid power create a tremendous microgrid opportunity in
Russia.
Russia: Drivers
It is estimated that approximately five million farms and ten
million people in Russia are not connected to the
electricity grid. Furthermore, an estimated 45 percent of all
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
15 MDPI
shortfall in funding for the renovation of the electric power
sector assets for about 10-15 years in the early 90s, Russia is
now seeing critical wear of the substation equipment fleet.
The guideline equipment life (25 years) has ended for
54.7% of these assets and total excess life (35 years) has
been surpassed for 22.2% of equipment.
Considering the longer lifetime for HV power lines, on
average 40 years, the wear of power transmission line
equipment comprises the following – guideline life (40
years) has ended for 29.2%, total excess life (50 years) has
been surpassed for 8.9% of equipment.16 However, Russia
possesses favorable conditions for the development of
renewable energy sources, largely due to its size and
range of geographic features.
Russia has huge potential markets for off-grid electricity
systems based on renewable energy. The renewable
potential is especially applicable in some of the more
remote parts of Russia that are not connected to the grid.
In many isolated settlements, renewables can be the most
economic, and perhaps even the only way to provide
electricity and heat to consumers. Geothermal resources
in the Far East or North Caucasus, or hydro from the many
watersheds, or other renewables such as wind and solar
energy could potentially serve remote populations.17
16 PowerTec 17 EBRD
20 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
Russia: Microgrid Market Forecast
From 2012 to 2020, the Russian market is projected to grow
from $99 million to $433 million with a compound annual
growth rate of 20%.
Russia: Projects
Russia has included microgrids in the Energy Smart
Communities Initiative Smart Grid pillar. The plan, which will
be implemented in 2012, will pilot smart/micro grid projects
for insular and remote localities in APEC economies.
Renova and Rosnano Project
Russia's Renova holding company and state-run
nanotechnology company Rosnano plan to develop and
build a self-contained diesel-solar power unit, the first of its
kind in Russia. The companies plan to build the pilot hybrid
power station with a capacity of over 100 KW, 70% of
which is to come from solar generation, it said in a
statement. The company did not provide a timeframe for
the work to be completed. Use of solar technology is
limited in Russia, which mainly develops conventional
energy resources. But the companies believe that
development of diesel-solar power generation "is a
technically and economically viable solution for Russian
regions with high levels of solar radiation," said Michael
Lifshitz, CEO of Rosnano's subsidiary Rotek.
In particular, he mentioned southern regions of Russia,
southeastern Siberia, the east Siberian Republic of Sakha
(Yakutia) and far eastern regions, where diesel generation
costs Rb30-40 kWh (around $1/kWh).18
Russia: Solar Power Station
In 2010, Russia's high-tech companies Rusnano and
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
by the companies' joint venture Khevel. "This is a
breakthrough into a different dimension," Rusnano CEO
Anatoly Chubais told an innovation forum in Moscow. The
$97 million deal was sealed by Khevel CEO Yevgeny
Zagorodny and Stavropol region Governor Valery
Gayevsky. Swiss-made thin-film solar panels will be used in
the construction. The station may start operating as soon
as 2012, Zagorodny said.19
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
$99 $112 $126
$143 $161
$207
$264
$339
$433
$0
$100
$200
$300
$400
$500
2012 2013 2014 2015 2016 2017 2018 2019 2020
Russia Microgrids Market Value Forecast
CAGR = 20%
2012 to 2020 (in US millions)
(figure 9, source: Zpryme)
21 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
India
About 115 million households in rural areas lack grid
access while 250,000 villages connected to the grid have
frequent connectivity issues. That is over 60% of the total
population. Rural electrification has been identified as a
priority by the Indian government. Where the grid cannot
be connected, the government has authorized distributed
networks to be established. Solar energy offers tremendous
market potential for India. Several projects have shown
the potential of the market.
The New Energy and Industrial Technology Development
Organization of Japan installed 6 MW PV solar arrays at
the Neemrana Industrial Park to demonstrate efficiency of
control technology and benefits of clean energy.
Greenpeace India has also released a report proposing
clusters of microgrids be installed to support the electrical
grid. Bihur is used as an example of how an area with a
substantial energy deficit can be an area of energy
surplus through microgrid deployment. Thus the microgrid
market in India holds tremendous potential for future
development.
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.
Moreover, approximately 30 percent of India’s generated
power is lost in transmission.
Distribution is the weakest link of India’s power supply
chain as it faces substantial technical losses (because of
overloading of transformers and conductors, for instance)
and commercial losses of electricity (because of low
metering efficiency, poor billing and collection, large-
scale theft of power). Furthermore, lack of transmission
and distribution of power to less densely populated areas
which are located far away from the power generating
stations is the major reason for not being able to achieve
100 percent electrification in the country.
In India, about 70% of the population lives in rural areas. In
2010, it was estimated that 48 percent of rural households
were un-electrified nationally leaving approximately 400
million people without electricity. Hence it is necessary to
use energy sources which can be decentralized to supply
power to these households. Thus, India can leverage their
abundant renewable energy sources such as wind, solar,
geothermal energy, and biomass to deploy microgrids to
meet their pressing energy needs.20
20 TERI
22 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
India: Microgrid Market Forecast
From 2012 to 2020, India’s market is projected to grow from
$115 million to $1,191 million with a compound annual
growth rate of 34%.
India: Projects
Northern India
Norway-based company Scatec Solar decided to set up
an 8.7 kilowatt power plant in Rampura. Assisted by
Development Alternatives, an NGO working locally, the
community in this village was mobilized to take charge of
perhaps India’s first community-managed solar power
plant. As a result, since January 26, 2009, this village has
not been without power for a single day. The plant
distributes power through a micro grid, approximately 0.75
to 1 km in length. An electronics company, DD Solar 23
India Pvt. Ltd (which works under the banner of the Bergen
Group) has provided the technical know-how for this
project.
There are 60 solar panels in the plant, each one producing
145 watts of power. A battery bank consisting of 24 cells of
two volts each provides the power back up for 4 to 5
cloudy or rainy days, when there is no sun.21
The project was conceived, managed and financed by
Scatec Solar at the cost of Rs 5 million (US$1=Rs 46.6).
Delhi-based NGO, Development Alternatives (DA), was
engaged to identify the beneficiary villages.22
Azure Power to Asses Solar Powered Microgrids (Int'l)
India-based independent power producer Azure Power
has been awarded a grant from the U.S. Trade and
Development Agency (USTDA) to assess the development
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
projects in the states of Gujarat and Chhattisgarh. Having
spearheaded the national initiative of grid-connected
solar power projects that are over 1 MW in capacity, Azure
Power will, with this study, open up the potential of
electrifying rural India through solar powered microgrids.
Following the study, Azure aims to set up over 100
microgrid solar systems, with each system covering an
average of 2-3 acres of rural land which would generate 21www.actionaidusa.org/assets/pdfs/climate_change/Access_to_Energy_for_the_Poor_2011.p
df 22 www.smeworld.org/story/features-108/solar-power-at-everyones-doorstep-234.php
$115 $150 $194
$253 $328
$453
$626
$863
$1,191
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2012 2013 2014 2015 2016 2017 2018 2019 2020
India Microgrids Market Value Forecast
CAGR = 34%
2012 to 2020 (in US millions)
(figure 10, source: Zpryme)
23 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
sufficient power to electrify approximately 800-1,000
villages with little or no connectivity to existing electrical
grids.
The USTDA India mission aims to further development of
projects that have a positive economic, social and
environmental impact while promoting exports of US to
India. The grants provided by USTDA support the initiation
of such projects and bring them close to realization. In this
light, the benefits of solar power are obvious and
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 24 www.echelon.com/company/news-room/2012/microgrids-india-south-africa.htm
The Skynet software interfaces with the NES system
software and creates a bill for the customer that reflects
the customers' actual use of lower cost grid power and
more expensive locally generated power. Customers have
the option of reducing usage at times when the more
expensive energy is being supplied. The Palm Meadows
micro grid is providing reliable service even during
frequent utility grid outages and enabling the customer to
make intelligent trade-offs between comfort and cost.25
25 www.pv-magazine.com/news/details/beitrag/a-growing-global-smart-grid-
market_100006258/#axzz1xsuXXnV6
24 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
China
In China, remote regions experience power supply issues
where the grid cannot be extended due to the expense
of extending the electrical grid. Energy consumption was
18% in 2005 in rural areas, especially in central and western
areas. China is dedicated to renewable energy
expansion and has 8 completed pilot projects, with many
more underway. One such project was completed in
Zuo’anmen at Beijing City, where 50 kWp PV, 30 kW
microturbines, 72 kWh energy storage was installed. Other
microgrids were installed in the Henan Province, in Tiajin
City, Mongolia, Foshan City, and Foshan Island. These
projects have had tremendous success and focused
mainly on PV and wind energy, as well as storage. China
realizes that microgrids are an important part of the
country’s Smart Grid and is also related to national
development strategies, further highlighting the microgrid
opportunity presented in China. In addition,
governmental support for microgrid development may
provide additional incentives to develop microgrids in
remote regions, thus extending reliable energy to its
citizens.
China: Drivers
Being the largest country in East Asia and the most
populous in the world, China’s rapidly growing economy
created a significant increase in energy consumption, as
well as a rise in harmful emissions and power shortages
over a very short period of 60 years. The number of people
lacking access to electricity in China in 2009 was around
eight million.26 The massive size of the country in terms of
population means that still a large number of individuals,
equal to the total population of countries such as Sweden
or Austria, do not have access to electricity.
As of 2012, some five million Chinese people living in
remote villages in mountainous or border areas are
currently without electricity, and the government has
vowed to extend electricity services to such groups by the
end of 2015. According to the annual social responsibility
report of the State Grid Corporation of China (SGCC), the
country's largest power supplier, China's urban residents
endured an average of 6.92 hours of blackouts, while rural
households experienced an average of 29.35 hours of
blackouts in 2011. SGCC has pledged to shorten the
periods of electricity cut-offs to 5.71 hours for urban citizens
and 23.7 hours for rural residents through grid upgrades
and renovations.27
Additionally, energy consumption efficiency is very low in
China, i.e. the amount of energy consumed per unit of
economic output is considerably higher than the world
average.28 Microgrid systems thus offer tremendous
opportunities to develop the power system in China with
investments focused on increasing capacity, reliability,
efficiency, and integration of renewable energy.
State level projects have already been initiated in China
to encourage and support universities and institutions that
conduct research on the use of microgrid systems.
Furthermore, microgrid systems may represent the best
solution to provide electricity to those rural areas, 26 China Europe International Business School 27 China.Org.cn 28 National University of Singapore
25 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
especially in the Western regions, where the grid extension
is not feasible and off-grid applications are required. This is
the sector where the new renewable energies such as
wind and solar are expected to play a key role by
becoming the most appropriate solution in order to
achieve the Central government’s goal of a full rural
electrification before 2020.
China: Microgrid Market Forecast
From 2012 to 2020, China’s market is projected to grow
from $320 million to $2,015 million with a compound
annual growth rate of 26%.
China: Projects
Xiamen Direct-Current Microgrid
The Haixi International New Energy Industry Expo and
Forum, Xiamen University, Nextek Power Systems, People
Power Company, Canadian Solar, Intel Corporation and
Lawrence Berkeley National Laboratory (LBNL) announced
a ground-breaking alliance to construct and manage
direct-current microgrids at the School of Energy Research
in Xiamen University (SER-XMU). This microgrid will become
operational this year and will make Xiamen University
China's first direct-current powered commercial building,
and will serve as a global showcase for distributed direct-
current microgrid innovation and commercialization.
The Xiamen University's direct-current microgrid could
change the way Chinese campuses and building
complexes manage, control and consume energy by
directly integrating renewable energy generation and
storage batteries with building electrical loads through
one-touch mobile and web-based energy management
and control applications. This change is significant
because of Chinese building energy consumption.
Nextek Power Systems will introduce the first Direct
Coupling(R) microgrid in mainland China that will manage
and support diverse energy loads, such as direct-current
lighting, air conditioning, data centers, electrical vehicle
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
$320 $384 $461
$553 $664
$876
$1,156
$1,526
$2,015
$0
$500
$1,000
$1,500
$2,000
$2,500
2012 2013 2014 2015 2016 2017 2018 2019 2020
China Microgrids Market Value Forecast
CAGR = 26%
2012 to 2020 (in US millions)
(figure 11, source: Zpryme)
26 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
and algorithms for the optimal equipment choice and
operation of direct-current microgrids. Canadian Solar will
provide customized solar panels for this rooftop solar
system and Intel will provide technical expertise and
advisory on this research.
The School of Energy Research in Xiamen University
conducts research and develops technologies in
Advanced Nuclear Energy, Solar Energy, Chemical
Energy, Bio-energy, Energy Efficiency Engineering and
Energy Economics. A 150kW solar system will be deployed
on the rooftop of an engineering building. The School of
Energy Research will work with partners to integrate state-
of-the-art technologies into a showcase for energy
efficiency and a platform for developing renewable
energy applications.
The new Chinese building energy codes call for at least 50
percent energy savings at less than a 10 percent cost
increase, compared to existing building costs. DC
microgrids provide an option to achieve these
requirements because of the clean renewable energy
adoption and behavioral energy building management
controls that reduce energy consumption, significantly
increase building efficiency and improve occupant
comfort and productivity. 29
Guangdong Electric Power Development
Guangdong Electric Power Development plans to invest in
an offshore wind farm demonstration project near
Guishan, Zhuhai, in order to improve its offshore wind farm
research and development capabilities, sources reported.
29 www.reuters.com/article/2012/03/19/idUS170454+19-Mar-2012+MW20120319
The Guishan offshore wind farm demonstration project is
led by China Southern Power Grid and will require a total
investment of 4.45 billion yuan and 900 million yuan of
working capital.
The project comprises the building of 198 MW of offshore
wind power installed capacity, an island smart microgrid,
a power transmission network, monitoring and
management systems, and a new energy testing center.
Construction is scheduled to start in 2012, and the facilities
are expected to be completed and put into operations by
2014.30
According to the company, the Guishan demonstration
project is in line with government policy, and has a break-
even period of 11 years, while the internal rate of return is
eight percent. In the meantime, Guangdong Power
forecasts a 40-60 percent year-on-year drop in 2011 net
profit attributable to shareholders to between 306 million
yuan and 459 million yuan due to the increase in coal
prices. The magnitude of the two adjustments made to
power prices could not match the rise in coal prices,
added the company.31
30 en.sxcoal.com/69141/NewsShow.html 31 www.capitalvue.com/home/CE-news/inset/@10063/post/6465453
27 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
South Africa
In South Africa, over 30% of the population uses paraffin
and biomass to meet its energy needs. Although
renewable energy is less expensive in the long term than
diesel, many villages are unable to pay the initial
investment. Once the initial investment is made,
microgrids provide a cost effective solution for South
Africa’s energy needs. Solar, biomass, and hydropower
are the most promising renewable energy options.
However, some areas are not suited for all three and the
HOMER software has been able to be successfully used to
determine the most appropriate and cost effective
options in South Africa. Solar Aid has been installing PV
panels on schools and community facilities. In addition, a
study was performed on Tukakgomo to determine the
feasibility of a microgrid system for 30 households. Finally,
Solea Renewables has developed a small scale PV
microgrid for a mining operation that was previously
without power, further demonstrating the huge potential
of implementing microgrids for the country’s remote
energy needs.
South Africa: Drivers
In South Africa, about 22 million people, that is 45% of the
population of the nation lacks electricity. The
electrification rate of South Africa was 75% in 2009.
(Electrification is registered as electrification of households
and not as the number of people). However, there is a
great variation in the electrification rate between the
provinces, with Eastern Cape being mainly a rural area
and having the lowest electrification rate (60%) and
Western Cape having the highest rate (86%). Furthermore,
in 2009, 3.4 million households in South Africa did not have
access to electricity. About half (1.7 million) of these
households lived in informal settlements.
South Africa also experiences major power shortages with
rolling blackouts on a regular basis. In addition, total
electricity losses (includes system losses and theft) other
than technical varied between 10% and 15% in 2009.32
Therefore, implementing a rock solid energy control
networking platform is of utmost importance. Studies in
South Africa indicate that off-grid PV solutions are often far
more cost-effective than current ways of meeting power
needs, and in many areas can be an extension of the
existing electric grid.33
32 IEA 33 SolarServer
28 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
South Africa: Microgrid Market Forecast
From 2012 to 2020, South Africa’s market is projected to
grow from $50 million to $312 million with a compound
annual growth rate of 25%.
South Africa: Projects
DC Microgrid in Sedgefield, South Africa
Specialized Solar Systems (SSS), being a local company in
George, has for a period of six months been co-operating
with a Sedgefield based NGO called SANCO. The purpose
has been to demonstrate that a complete home
electrification system that is powered by alternative
energy, can be installed in a matter of minutes, and
provides a long term solution. A solar panel and a battery
drive what is called the DC microgrid system that provides
lights and a cell phone charger- this is the basic system.
What distinguishes this system from others is that it has the
ability to accommodate additional appliances such as a
TV and DVD, a laptop charger, and even a fridge if solar
and battery capacity is also extended. All these
appliances can easily plug into the basic system, and they
all operate on a 12volt current.
This means that nobody will be endangered or shocked by
the system that is ideally suited for installation at informal
settlements. Indeed this DC microgrid system was donated
and installed last year, as reported in the local Sedgefield
Edge of 16 November – at the home of local Fundiso
Mbana. The purpose of the installation was to verify that
the DC microgrid could indeed live up to its claims, which
it indeed has done! We had trouble free operation,
replaced one bulb, and have a happy customer.
The progress of this project can be summarized follows:
The DC microgrid is now a well proven sustainable
solution for informal settlements. It is a viable
energisation solution to grid failed rural, urban and
peri-urban communities in South Africa, Africa and
even the rest of the world.
Fundiso and many others regard the DC microgrid
system as an ideal easy to install solution that takes
only 45 minutes to set up.
The public of Sedgefield have come out in support
of the idea and would like to see this plan put to
action now, instead of waiting another 3-4
years(who knows) for grid electrification. Currently
$50 $59 $71
$86 $103
$135
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$312
$0
$100
$200
$300
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2012 2013 2014 2015 2016 2017 2018 2019 2020
South Africa Microgrids Market Value Forecast
CAGR = 25%
2012 to 2020 (in US millions)
(figure 12, source: Zpryme)
29 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
the residents have been PROMISED electrification
and basic services for 11 years now.
The residents of Sedgefield that are also ratepayers, do
not think it is fair to pay their taxes and then fund services
again personally. They believe this job should be done by
the local municipality – and it should happen immediately.
The fact that Specialized Solar Systems have developed a
pre-paid metering and other management control option
on their DC microgrid systems would facilitate a return on
investment on these systems, makes a community roll-out
even more feasible.
The Sedgefield community is now desperate for
electrification and has explored all possible avenues to
achieve this, even asking for public donations!34
Echelon Deploys Microgrid in South Africa
Echelon Corporation will deploy a microgrid in Clearwater
Mall in Johannesburg, South Africa that integrates
distributed generation to compensate for disruptions in
utility-supplied power. It is built on Echelon’s proven, open
standard, multi-application energy control networking
platform powered by its Control Operating System (COS)
and incorporate application software and services from its
local partners Grene Robotics and Power Meter Technics
(PMT). The first-of-its-kind in the two countries, the micro
grid deployments involve dynamically managing demand
and energy supply mix for a retail mall to deliver reliable
service cost-effectively.
34 www.specializedsolarsystems.co.za/index.php/dc-microgrids-viable-african-
energisation/rural-africa-energisation-solutions/rural-elecrification
The Clearwater Mall tenants, which consist of nine anchor
stores, and more than two hundred other local and
international fashion and quick serve food outlets,
restaurants, banks, electronic goods and other specialty
stores, require reliable electricity so they can continue to
run their business. The mall’s new retail micro grid solution,
based on Echelon partner PMT’s Meteringonline energy
management application, employs Echelon smart meters,
data concentrators, and NES system software to submeter
individual tenant usage, so they can pay only for their
actual energy usage rather than the industry norm of
paying for energy on a square footage basis. Furthermore,
tenants can opt-in to power supplied by local back-up
generation when blackouts occur. PMT’s Meteringonline
application interfaces to Echelon’s system software and
reconciles usage with energy source, allocating tariffs
based on actual use. The on-demand energy services
allow the store owners to manage their energy usage and
associated costs and maximize revenues. 35
BRICS: Microgrid Outlook
Overall BRICS nations present a significant opportunity for
microgrid development. Throughout the nations, several
projects have highlighted the enormous potential that an
integrated microgrid, combining renewable energy
generation, strategically selected software, and energy
storage solutions can offer to the citizens of the BRICS
nations. Because all five nations are in tremendous growth
phases and have such a huge portion of their citizens
without connected energy, the demand for energy will rise
35 www.echelon.com/company/news-room/2012/microgrids-india-south-africa.htm
30 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
in the near term, thus presenting a huge prospect for
microgrid development.
The microgrid system has a great potential in large
commercial and industrial complexes, hospitals, shopping
malls/ complexes, apartments, residential complexes,
educational institutions, remote un-electrified as well as
electrified locations to ensure maximum flexibility, reliability
and safety. Moreover, in some specific customer
segments, such as the military and research labs, there is
significant value in a secure network such as the microgrid.
31 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
Q&A with: Jeff Lund VP of Business Development
www.echelon.com
Q&A with Echelon
ZP: How does Echelon define the microgrid?
JL: We think of the electric grid as being an
interconnection of high, medium, and low voltage
distribution grids. Microgrids have to do with this
last tier, the low voltage distribution network. What
makes a low voltage distribution network a
microgrid is when it contains local generation (e.g.,
a diesel generator or roof top solar) along with
local intelligence that can dynamically manage
and balance local loads with supply and,
potentially, local storage. Some people define
microgrids as having the ability to actively ―island‖
themselves off of the main grid for security or
reliability reasons, but we see this more as a
potential application of microgrids and not the
defining characteristic.
ZP: How is software effecting the microgrid, what type of
microgrid software does Echelon provide?
JL: Software plays an essential role in microgrids. In
order to balance supply, demand, and storage at
the local low voltage distribution transformer level
requires an intelligent point of presence within the
low voltage grid and a software framework that
can host the local analytics and control
apps. Echelon provides a three-tier multi-
application energy control networking platform
powered by its Control Operating System (COS)
with open software interfaces at the device level,
enterprise level, and most importantly for micro
grids, at the edge of the gird where the low
voltage network connects to the internet. Working
with partners, Echelon can provide a
comprehensive suite of applications for
microgrids. For example, two Echelon partners
Grene Robotics and Power Meter Technics have
each deployed microgrid solutions in South Africa,
one focused on residential communities and the
other on retail malls.
ZP: What does the microgrid mean to developing
countries?
JL: We see microgrids as particularly important for
developing countries for a number of reasons. As
demonstrated by deployments by our partners in
South Africa, microgrids provide a way for
communities and businesses to supplement supply
form the grid with local generation to increase
reliability and availability of power while lowering
32 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
cost to consumers. Microgrids also represent a cost
effective and faster path for building infrastructure
and scaling the grid. Rather than the high
investment and long construction cycles
associated with building large centralized power
plants and associated distribution infrastructure,
microgrids allow for distributed generation and
local demand balancing to enable the grid to be
built up neighborhood by neighborhood.
ZP: What type of impact will the microgrid have on the
future Smart Grid?
JL: The microgrid will impact the smart grid from a
variety of dimensions. The rise of microgrids will
necessitate the move to a distributed networking
model that allows for intelligence and decision
making at the edge of the grid as well as in
devices and the enterprise. Having this local
intelligence will make the grid better able to
incorporate distributed generation and intermittent
renewables such as solar and wind. By being able
to adapt in real time to changing available of and
demand for power they will also make the grid
more able to absorb new loads such as electric
vehicles. Ultimately, microgrids with local
intelligence will increase the reliability and
survivability of the grid by being able to manage
supply, demand, and storage at a local level.
33 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
Q&A with:
Thierry Godart
President, Smart Grid Division, U.S.
www.siemens.com
Q&A with Siemens
ZP: How does Siemens define the microgrid?
TG: Siemens defines a microgrid as a regionally
limited energy system of distributed energy
resources, consumers and, optionally, storage. A
microgrid optimizes one or many of the
following: power quality, power reliability,
sustainability and economic benefits. Microgrids
may continuously run in off-grid- or on-grid mode,
as well as in dual mode by changing the grid
connection status.
ZP: How is software effecting the microgrid, what type of
microgrid software does Siemens provide?
TG: Siemens provides utility-grade control systems
for microgrid control. We use automation systems
(substation automation, SCADA and Distribution
Management Systems (DMS)) that have a long
track record and have been deployed hundreds
of times in other applications. Customer and
application specific engineering is required for
microgrids but the core control system and
applications are the same.
ZP: What does the microgrid mean to developing
countries?
TG: For developing countries specifically, a
microgrid can offer a very reliable network for a
specific region/location. A microgrid allows the
local community to take more ownership and
control of their infrastructure and ease the
investment burden of a national utility.
ZP: What type of impact will the microgrid have on the
future Smart Grid?
TG: Both of these concepts are fluid and have
broad meanings. Ultimately, Smart Grid is about
leveraging technology to improve the consumer's
experience and service, and enable the utility to
profitably improve its operations. A microgrid -
whether deployed by a utility of a group of
consumers - is one application that will leverage
technology to improve reliability and service.
34 [PREMIUM] ZPRYME SMART GRID INSIGHTS
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Microgrids: The BRICS Opportunity | July 2012
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