Navigant Research Blog

Microgrids Expand Across India

Peter Asmus — May 13, 2015

Navigant Research’s data on the microgrid market has historically pointed to North America being the mother lode. The host of state programs supporting community resilience microgrids would seem to confirm this conclusion. But there is a counter argument that the developing world is the best microgrid market, and that’s why SunEdison’s move into northern India is so significant.

I think the Asia Pacific region’s microgrid market is likely to ultimately surpass North America, but not until 2030 or so. Recent data provided by Aalborg University in Denmark shows that China alone is planning on installing 4.3 GW of new microgrid capacity over the next 5 years, which bolsters this opinion. But China’s market is problematic due to the prevalence of nationalized grid companies and other unique vendor challenges.

To the Subcontinent

And then there is India. As one telecom infrastructure provider pointed out, there are more planned telecommunications tower deployments in India as there are in all African nations combined! (These telecom towers often serve as anchor loads for microgrids.) Couple that with a government policy of deregulating all microgrids 1 MW and less, and the stage is set for rapid innovation at the lower end of the microgrid market spectrum.

Back to SunEdison … Working with on-the-ground innovators, such as OMC Power, the company hopes to bring online 5,000 microgrids, ranging from 10 kW to 1 MW, by 2020, providing power to 20 million people. While it’s fascinating that SunEdison is moving into this market, given its success with the power purchase agreement model in mature economies such as the United States, largely through solar PV leasing arrangements, even more interesting is its choice of partners: OMC Power.

Having begun in 2011 by focusing on the concept of bringing power to rural developing nation markets, such as India, employing e-power device business models, OMC Power is now changing its tune.  In the past, the company focused on daily home delivery of solar-charged portable energy products (e.g., LED lanterns); its customers paid the equivalent or less as they had paid for diesel or kerosene. The company financed, built, owned, and operated hybrid off-grid micro-power plants that tap solar, wind, or biofuels to provide alternating current (AC) power to telecom sites and portable direct current (DC) power to local villages.

Finding Scale

According to chief marketing officer Par Almqvist, the company’s new direction is a natural evolution. “Once most communities get power, they want more of it,” Almqvist said in a phone interview.  In order to get to the right price point, it has become apparent to us we need to centralize power production. One must find an efficiency of scale.”

Almqvist still sees a role for e-power products and nanogrids, and in some cases, such options are the only viable path for electrification. Yet to reach scale, other business models must also be deployed. “We have proven that the perception that the bottom of the pyramid is a risky clientele is not necessarily accurate. What we’ve discovered is that, especially in rural northern India, people will pay for what is an essential service, especially when they can save money.”

The benefits go beyond economics. The mix of solar PV and deep cycle batteries will also allow telecomm operators to reduce diesel generation to less than an hour a day. This kind of result prompted the Rockefeller Foundation to announce another program that OMC Power is a part of–this one designed to bring power to 1,000 villages.

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