Navigant Research Blog

In China’s Hinterland, Microgrids Emerge

Peter Asmus — September 23, 2013

My research has made it clear that the United States is the best current market for microgrids, in large part due to the declining reliability of the incumbent utility grid, made more evident by Tropical Cyclone Sandy and other recent extreme weather events.  However, the Mid-West Energy Research Consortium (M-WERC) recently asked me to identify the world’s top non-U.S. markets for microgrids.  The results of that analysis revealed that remote off-grid systems will lead the market over the next 7 years – a conclusion also demonstrated in our newly released report, Remote Microgrids.

On the surface, the fact that 95% of the population of China is connected to a power grid might indicate that opportunities for remote microgrids are limited.  Yet, the sheer size of the country translates into one of the world’s best markets: 30 million people living in 20,000 villages and 7 million families on small farms have yet to be connected to a power grid.

While the development of grid-tied microgrids is limited to the two nationalized grid companies, third-party projects are allowed for off-grid applications.   Many of the areas not connected to one of the two main grid companies burn diesel for electricity, which is expensive and, therefore, power may be available for only a couple of hours per day.  Additionally, China has hundreds of inhabited islands, so the market for off-grid systems is substantial.

Tops Outside the United States

China has been investigating microgrids for the last 3 or 4 years, and the 12th Five-Year Plan for energy production, produced by the Energy Bureau, sets a target of 30 microgrid installations of 1 MW or larger by 2015.  In the analysis we conducted for M-WERC, China is expected to be ranked as the top non-U.S. microgrid market by 2020.  Even more interesting is that three of the top five markets (China, Australia, and India) will be led by remote off-grid systems.

Annual Total Microgrid Capacity by Top Five Export Markets, Conservative Scenario, World Markets: 2013-2020   

Microgrids Country Chart

(Source: Navigant Research)

One of the sleeper markets for microgrids not currently in the top 10 is South Africa, which is largely served by the nationalized utility Eskom.  Eskom provides the country with 95% of its power and supplies 45% of the entire African continent’s power.   At present, an unspecified number of remote microgrids that incorporate solar PV, wind, diesel, and energy storage have been installed.  Ranging in size from 6 kW to 200 kW, these systems serve farms and entire off-grid communities.   A typical community of 100 homes would need a remote microgrid of 100 kW to meet its most basic needs for lighting, entertainment, and refrigeration.

The best near-term market segment for microgrids in South Africa, though, is not communities but the numerous remote platinum, gold, and coal mines that dot the country.  A smart mining movement is taking hold in South Africa, with projects in the design stage ranging in size from 30 MW to 50 MW; this is also among the market segments examined in our new Remote Microgrids report.

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