Is the Asia Pacific Microgrid Market a hot-bed

for investments?

Avanthika Satheesh Senior Research Analyst

Energy & Environment

4th August 2014

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Focus Points

1. Asia Pacific Microgrid market Road-map.

2. What factors influence the microgrid market in the Asia Pacific region?

3. What are the opportunities in the market until 2020?

4. What business models will gain significance in the market?

5. What is the future of microgrid in the region?

2018-2020

“Rise of Off-grid micro grids” Market

Expansion

2014-2015

“Micro grid pilots”

Build track record

in the AMR/ AMI

pilot projects

Island micro grids and

rural electrifications to

take strong foothold

* Note: Design Build Own Operate Maintain

2016-2017

“Growth Phase”

Time

New RE sources such as

Biomass to be integrated

Community Micro grids in

developed nations

becomes self-sufficient

and goes off-grid

RE penetration in micro

grids reaches 100%

Develop feasible

business models on

DBOOM*

Short Term

Mid term

Long Term

Advance Controller

features to integrate EV

charging to microgrid

Source: Frost and Sullivan

Evaluating project

scalability, improve

energy efficiency

R&D to solve technical

challenges

Developed nations focus

on grid-connected micro

grids

Consolidations expected

in the value chain

Asia Pacific Microgrid Market Roadmap

Market Influencing Factors

Source: Frost & Sullivan analysis.

Factors influencing Micro

grid market

Government incentives and

supportive regulations

Rural electrification

through Island-microgrid

Commercial microgrid for

reliable power and peak load

shaving

Reduction of T&D losses by

encouraging distributed generation

Reducing generation fuel cost by

integrating RE sources

Battery storage system and Solar

PV panel price reduction

Market Opportunity Analysis

Total Microgrid Market Revenue By Country, Asia Pacific, 2013 and 2020

Japan is the front runner in the region, with ample support from government bodies.

Generation components revenue is the highest in 2013. But the expected reduction in price of ESS

component will encourage its adoption by 2020. *Power Distribution and metering equipment

Source: Frost & Sullivan

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

2013 2020

Others* Microgrid Components

ESS Components Generation Components

$82.2 Million

$824.5 Million

Japan 27%

South Korea

6%

Malaysia 8%

The Philippines

20%

Indonesia 17%

Australia 22%

CAGR- 32.8% 2020

Market Opportunity Analysis

Market Revenue

LEAD/INFLUENCE

High Low

Gro

wth

Ra

te

Low

High

Malaysia The Philippines

Japan

South Korea Indonesia

Australia

UK Text

Source: Frost & Sullivan

Regional Hotspots- Japan

Japan

• Leads in microgrid installations in the

region

• Supportive government policies -Microgrid

demonstration project Fund, Solar PV

Project Fund, Li-ion Battery Subsidy, FIT

Policy

Australia

• Market is hesitant after the

slash in ARENA budget. RE

powered microgrid are

installed in remotely located

mines and communes.

Indonesia

• PLN to improve electrification

ratio in 7 provinces by

installing solar powered

island microgrid.

The Philippines

• Placed in high revenue- high growth

quadrant.

• FIT Policy, National Renewable Energy

Program, Rural Electrification fund

(National Electrification Authority) are

drivers.

Regional Regulatory Trends

Source: Frost & Sullivan

Key Types Of Regulations Australia Japan South

Korea Indonesia

The

Philippines Malaysia

Government budget for

Microgrid projects

Rural Electrification

Assistance

Feed-in Tariff

Renewable Energy Target

Micro grid test-bed projects

Incentive Scheme for RE or

ESS projects

Microgrid Business Models

Microgrid

Financing Pattern In ESCO Model

Energy Flow

Money Flow

Technology Transfer

*Project specific.

Source: Frost & Sullivan

Key Takeaway: Government assistance is in the form of subsidy on RE components, and technical

and financial assistance for surveys and subsidized electricity tariffs.

15% *

85%*

Regulated Electricity tariff

Microgrid Owner

End-user/ Customer

Technical and financial

assistance from government

for Surveys, feasibility study

Government

funds support

CAPEX

Subsidy on feasibility study

Support from

government to

compensate the

regulation in tariff

Future Microgrids ─Virtual Power Plants

Electric Vehicles will charge and

discharge electrons based on

signal from the utilities, thus acting

as virtual energy storage plants

Millions of customers can monitor

and control their power

requirement s using smart devices

and help utilities to manage peak

power surges, thus obviating the

need to build new fossil power

plants. Thousands of these will be

‘Prosumers’

Each office, house and industrial

facility will be a power plant, all

linked by smart meters and real

time communications

Intermittent renewable energy

sources can more effectively be

integrated into the power system

because of availability of real time

information on demand & supply

Utility of the future will focus on

creating the platform, which will be

the Internet of Energy, while the

Prosumers will invest, co-create and

participate in managing the system Source: Frost & Sullivan

The Last Word

3 With the increase in grid electricity tariff, renewable energy generation in residential

sector will lead to the formation of community microgrid which will be capable of

functioning in island-mode.

4 Power grid resiliency during natural disasters has a profound impact on microgrid

investments. ‘Inter –microgrid-communication’ facilities will be developed which helps

them share resources.

1 Rural and remote microgrids as grid substitute make perfect commercial sense.

Source: Frost & Sullivan

5 ESCO based business model is the most suitable in urban and grid complementing

systems.

2 Urban and grid complementing microgrids will be dependent on government support

policies.

Next Steps

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Today’s Presenter

Over 5 years of experience in the Energy and Power Sector. Expertise includes market

research and consulting experience for Major multinational companies in the Asia Pacific

Power Market. Topics of interest includes Power Transmission & Distribution, Smart Grid

technologies, and Energy Storage Systems.

Avanthika Satheesh, Senior Research Analyst

Frost & Sullivan

Follow me on:

@AvanthikaP

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