Thursday, October 23, 2014

Micro grids and Sustainable Energy Markets

At the opening session of the workshop “Facilitating Energy Access and Security: Role of Mini/Micro-grids”, held by United Nations Foundation last September 6th 2012, seven high impact opportunities were identified based on their significance and ability to make an immediate impact towards reaching the initiative’s three objectives. Those Sectoral Action Areas were classified as follows:

ü  Modern cooking appliances and fuels

ü  Distributed electricity solutions

ü  Grid infrastructure and supply efficiency

ü  Large scale renewable power

ü  Industrial and agricultural processes

ü  Transportation

ü  Buildings and appliances

Where micro-grids would fall within the area of “distributed electricity solutions”.

On the other hand, during the “The Remote Micro-grid Market” webinar organized by HOMER and Pike Research last December 2012, we could hear that:

“Driven largely by the falling price of solar photovoltaics, the global remote micro-grid market will expand from 349 megawatts (MW) of generation capacity in 2011 to over 1.1 gigawatts (GW) by 2017, an amount that at least equals all other micro-grid segments combined. The remote micro-grid market is expected to grow to $10.2 billion by 2017, and investors and suppliers are starting to take notice”.

Keeping ourselves in the conservative side, we could still think the potentiality of the micro-grid market is not so promising. So let´s have a look at other sources to see what they say about micro-grids.

According to the 2011 World Energy Outlook by the IAE, achieving Energy for All by 2030 is going to ask for an increase in global electricity generation of 2.5%, requiring additional electricity generating capacity of around 220 GW. The additional electricity (around 840 TWh) is expected to be generated as follows:

ü  44% through extensions to national grids

ü  36% by minigrid solutions

ü  20% by isolated offgrid solutions

Almost more than 60% of the additional ongrid generation would come from fossil fuel sources (half of it from coal). While in the case of minigrid and offgrid generation, more than 90% would be provided by renewables. Renewable energy and therefore related technologies will account for the 68% of the additional electricity required, thus begin a relevant element in the path of providing energy for all.

In fact, if we compare the figures above with the scenario drawn in the WEO-2010 (Fig.1), we will observe there is a steady trend to consider mini/micro grids as a fundamental part of the energy mix in emerging economies over the next two decades.

Given this scenario, it seems obvious that this enormous amount of financial resources cannot be leveraged only from the International Cooperation but rather through the involvement of the private sector and the development of sustainable energy markets. Indeed, the above represents a substantial and largely untapped market for local and foreign companies and entrepreneurs to deliver better alternatives in developing countries.

At this point, we should ask to ourselves… are micro-grids the right vehicle for boosting and promoting sustainable energy markets in the developing world?

Next post coming soon!


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