Cleantech Market Intelligence
How the Developed World Can Learn about Energy Solutions from the Developing World
With utility resistance to policies that support distributed renewable energy emerging as a global phenomenon, it might be wise for vendors in the space not to push the panic button, but instead look to emerging markets in the developing world for a reality check.
As utilities and states modify their past support vehicles (i.e., net metering and feed-in tariffs) for technologies such as solar photovoltaic (PV) systems, purveyors of hardware and software that help integrate distributed renewables into power grids see increasing opportunity. The decline in generous feed-in tariffs for solar PV, for example, creates new opportunities for energy storage.
Among those sensing opportunity is ABB. When the company purchased Powercorp of Australia in 2011, few realized that ABB would integrate Powercorp’s distributed controls approach to remote hybrid wind/diesel microgrids (and its PowerStore flywheel technology) into its grid-tied offering. ABB has recognized that a top-down approach to controlling distributed energy resources may not be the best fit. Instead, innovation fostered in off-grid systems – which must provide 24/7 power under the most harsh environmental conditions – proves to be a better approach. Peter Lilienthal of HOMER Energy agrees, arguing in Navigant Research’s Remote Microgrid Business Models webinar late last year that the smart grid is being pioneered in places like the Caribbean, Africa, and India, not in developed world markets like Europe or the United States.
Look to the Islands
While many observers are focused on the so-called utility death spiral, growing numbers of forward-looking utilities – along with diversified energy companies such as NRG Energy – see the proliferation of distributed generation as an opportunity. In fact, NRG Energy is now developing remote microgrids, starting with the private island owned by Richard Branson.
The world of the future will not feature a one-size-fits-all business model – especially not the utility monopoly that has slowly eroded over the past century. While long-term planning and dense regulatory proceedings won’t go away, the future of energy requires flexibility and learning from areas where the provision of electricity requires the utmost in creativity: the developing world. Other large technology companies such as Toshiba are also moving into the remote island microgrid market.
Navigant Research’s new Nanogrids report shows that even the lowly sounding nanogrid is a huge market in the developing world, with global revenue forecast to exceed $20 billion by 2023 in three regions that have historically lagged behind the developed world in new technologies.
Residential Remote Nanogrid Vendor Revenue by Region, World Markets: 2014-2023
(Source: Navigant Research)