[smart grid market research] microgrids: the brics opportunity - zpryme smart grid insights

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SMARTGRIDRESEARCH.ORG INTELLIGENT RESEARCH FOR AN INTELLIGENT MARKETTMSMART GRID INSIGHTS

MICROGRIDS: THE BRICSOPPORTUNITY

JULY 2012

1 [PREMIUM] ZPRYME SMART GRID INSIGHTS

Copyright © 2012 Zpryme Research & Consulting, LLC All rights reserved. www.zpryme.com | www.smartgridresearch.org

Microgrids: The BRICS Opportunity | July 2012

Table of Contents

Executive Summary ................................................................. 2

Benefits of Microgrids .............................................................. 4

Global Market Value Forecasts.............................................. 6

Key Players ............................................................................... 7

Challenges & Barriers to the Microgrid Market ..................... 9

Key Microgrid Solutions ......................................................... 10

BRICS: The Microgrid Opportunity ........................................ 12

BRICS Nations: Drivers ........................................................... 12

Major End-Use Industries for Microgrids ............................. 14

Brazil ........................................................................................ 16

Brazil: Drivers .......................................................................... 16

Brazil: Microgrid Market Forecast ....................................... 16

Brazil: Projects ........................................................................ 17

Russia ...................................................................................... 19

Russia: Drivers ........................................................................ 19

Russia: Microgrid Market Forecast ..................................... 20

Russia: Projects ...................................................................... 20

India ........................................................................................ 21

India: Drivers .......................................................................... 21

India: Microgrid Market Forecast ....................................... 22

India: Projects ........................................................................ 22

China....................................................................................... 24

China: Drivers ........................................................................ 24

China: Microgrid Market Forecast ..................................... 25

China: Projects ...................................................................... 25

South Africa ............................................................................ 27

South Africa: Drivers ............................................................. 27

South Africa: Microgrid Market Forecast .......................... 28

South Africa: Projects ........................................................... 28

BRICS: Microgrid Outlook ...................................................... 29

Q&A with Echelon .................................................................. 31

Q&A with Siemens ................................................................. 33

Special Thanks

Thierry Godart

Siemens, President of Smart Grid Division, U.S.

www.siemens.com

Jeff Lund

Echelon, VP of Business Development

www.echelon.com

http://www.siemens.com/

http://www.echelon.com/




Executive Summary

Many parts of the world are without grid-connected

electrical power. As their population and standard of

living increase, so will their demand for energy, and a

suitable system for providing that electricity to them. The

current energy system is unable to offer connectivity to

many of these remote locations for economic or logistical

reasons. One solution to providing energy to these remote

locations is to install microgrids. Several large firms have

expanded operations into the microgrid marketplace,

while niche firms have developed customized programs

specific to the market.

The global microgrids market is projected to reach

$4.95 billion in 2012. By 2020, the global microgrid

market is projected to reach $13.40 billion. The

market is projected to grow at a compound annual

growth rate of 13% from 2012 to 2020.

In 2012, the combined microgrids market value for

BRICS (Brazil, Russia, India, China, and South Africa)

nations is projected to reach $0.73 billion in 2012. By

2020, the microgrids market among BRICS nations

will reach $4.47 billion.

The BRICS nations, as a whole, are projected to

grow at a compound annual growth rate of 25%

from 2012 to 2020.

In 2012, BRICS nations are projected to account for

15% of the global microgrid market. By 2020, they will

account for 33% of the global market.

$4.95

$6.20 $6.90

$7.50 $8.33

$9.57

$10.82

$12.01

$13.40

$0

$3

$6

$9

$12

$15

2012 2013 2014 2015 2016 2017 2018 2019 2020

Global Microgrids Market Value Forecast

CAGR = 13%

2012 to 2020 (in US billions)

(figure 1, source: Zpryme)

$0.73 $0.87 $1.04

$1.24 $1.49

$1.96

$2.57

$3.39

$4.47

$0

$1

$2

$3

$4

$5

2012 2013 2014 2015 2016 2017 2018 2019 2020

BRICS Microgrids Market Value Forecast

CAGR = 25%

2012 to 2020 (in US billions)





How well do you

know the BRICS

microgrid

ecosystem? BRICS Market Value Forecast by Country - 2012, 2020

(figure 3, source: Zpryme, in US millions)

$2,015

$1,191

$518 $433

$312 $320

$115 $149

$99 $50

China India Brazil Russia South Africa

2012

2020




Microgrids incorporate renewable energy solutions, energy

storage, and energy management technology into an

integrated system that manages energy generation,

transmission, distribution, and usage on a small scale

compared to the current grid system, as it serves a smaller

base of local residents. However, this small local nature

offers significant benefits, such as reliability, flexibility, and

increased security. Key technology has been introduced

to allow widespread adoption of microgrids.

BRICS (Brazil, Russia, India, China, and South Africa) nations

are the fastest growing countries internationally and have

large percentages of their population without power.

These five nations can benefit from microgrid installation,

thus allowing their rural citizens to experience reliable

power for the first time.

In BRICS nations (Brazil, Russia, India, China, and South

Africa), the demand for energy, particularly electricity, is

growing much more rapidly than the rate of expansion of

conventional electricity grids in the industrialized world.

Microgrids are a cost-effective solution to help meet this

rising demand for more power, without increasing carbon

emissions. The microgrid market across BRICS nations is

being driven by the growing energy demand; the need for

reliable power; increasing focus on renewable energy;

requirement for electrification in rural and inaccessible

areas; and government incentives provided for achieving

energy efficiency and renewable power generation.

Several microgrid projects are coming up across the BRICS

countries to provide a more reliable power supply to

consumers. For example, recently, in early 2012, Echelon

Corporation, announced that it will set up two microgrids

in India and South Africa that integrate distributed

generation to compensate for disruptions in utility-supplied

power. Smart mini-grids are very useful for stand-alone

projects in villages and inaccessible areas. Microgrids not

only foster the effective inter-connection and utilization of

multiple renewable energy resources, but also help in

advancing access to energy to the last mile in the most

optimum way by improving the efficiency of the overall

system. The PRISMA project in the Amazon village of

Cachoeira do Aruã, Brazil is a run-of-the-river micro-hydro

facility that provides the community with power that is

distributed via a mini-grid. The project establishes

community ownership and management of local

infrastructure, such as power generating stations, while

strengthening small local enterprises that then use the

infrastructure for productive uses which help them in

earning an income.

Benefits of Microgrids

The current electrical generation system, where energy

flows in one direction from the utility to consumers is

becoming obsolete. Outdated transmission lines,

inefficient equipment and antiquated software will require

a tremendous expense to update, as well as present

security and reliability problems. Microgrids provide one

solution to a more efficient energy system and offer many

benefits.

First, the smaller scale of microgrids offers several benefits

including increased efficiency because less energy is lost

during the transmission of energy. In a microgrid, energy

travels shorter distances from the energy source to the

customer and serves fewer customers. Thus, overall




demand on the transmission infrastructure decreases.

Further, the system becomes more reliable and is able to

respond more quickly to local demand.

In addition, distributed resources are locally controlled and

function as a single unit. Not only does this optimize

energy generation, but it also creates energy

independence and encourages the adoption of

renewable technology to meet clean energy

requirements.

Flexibility is also a key benefit of microgrids. Microgrids are

arranged in a modular fashion. New components can be

added with minimal problems and the system can be

easily updated and maintained. In addition, the

development of the microgrid is locally controlled, which

means local needs are considered when designing the

microgrid. Therefore, transformation of the grid is planned

to meet the needs of the local or regional area.

Lastly, microgrids utilizing distributed resources offer

improved security. The microgrid is able to island itself,

creating a separation from the main grid and decreasing

its vulnerability to outside attacks. This increases both the

cyber-security of the grid and its physical security. This is

especially important when valuable resources must be

maintained, such as in hospital or military installations. In

addition, islanding prevents the local area from being

affected due to widespread blackouts or other problems

occurring in the main electrical grid.




Global Market Value Forecasts

Global and BRICS Market Value Forecast, 2012 – 2020

(table 1, source: Zpryme, in US billions)

Market Value 2012 2013 2014 2015 2016 2017 2018 2019 2020 CAGR

Global Market $4.95 $6.20 $6.90 $7.50 $8.33 $9.57 $10.82 $12.01 $13.40 13%

BRICS $0.73 $0.87 $1.04 $1.24 $1.49 $1.96 $2.57 $3.39 $4.47 25%

BRICS % of Global Market Europe 15% 14% 15% 17% 18% 20% 24% 28% 33%

BRICS Market Value Forecast by Country, 2012 – 2020

(table 2, source: Zpryme, in US millions)

Market Value 2012 2013 2014 2015 2016 2017 2018 2019 2020 CAGR

Country

Brazil $149 $166 $186 $209 $234 $285 $348 $424 $518 17%

Russia $99 $112 $126 $143 $161 $207 $264 $339 $433 20%

India $115 $150 $194 $253 $328 $453 $626 $863 $1,191 34%

China $320 $384 $461 $553 $664 $876 $1,156 $1,526 $2,015 26%

South Africa $50 $59 $71 $86 $103 $135 $179 $236 $312 26%

Total $732 $871 $1,039 $1,243 $1,490 $1,956 $2,573 $3,388 $4,468 25%

44%

16%

20%

13%

7%

BRICS Market Value by %, 2012



45%

27%

11%

10%

7%

BRICS Market Value by %, 2020






Key Players In the microgrid market, two main types of key players are

strengthening their position. First, large Smart Grid firms are

expanding their product lines to offer products specifically

designed for the microgrid market. Small niche firms have

also entered the marketplace with products uniquely

suited for microgrids. In addition, these two types of firms

have collaborated to provide solutions for specific

locations and projects.

BPL Global was founded in 1983 and has expanded its

operations to include member firms in 7 countries,

including Africa, China, Brazil and the Middle East. The BPL

Africa branch offers Intelligent Power Smart Grid

Integrated Demand Response Software to design the most

cost effective energy microgrid solution based on cost

and other grid conditions. BPL Africa is the only firm on the

continent to offer a turnkey solution to microgrid

deployment for the remote power market. The solution

provides the basic starting components and allows the

user to add modules as they need the additional capacity

and can afford the upgrades. BPL Africa has experienced

success in developing microgrid solutions for mining

operations that were totally unconnected from the grid

and had no electricity. In addition, its turnkey solution has

been implemented in small villages, providing consistent

energy for the first time to the remote locations. BPL

Global has had several strategic partnerships that have

further developed its position in the field including its

acquisition of Serveron and a partnership with Siemens.

ABB has expanded its position as a transmission and

distribution Smart Grid leader to develop solutions for the

microgrid market, through its Adaptive Protective System

architecture. ABB is also involved in utilizing microgrids to

provide ancillary services for utilities. In addition, ABB has

been very active in the Advanced Architecture Program

for the European Consortium. ABB is a member of the

steering committee, which develops functions and

schemes for microgrids. ABB has experienced success in

installing a $16 million microgrid upgrade in Qatar, where it

was responsible for reengineering and reinforcing the

existing system to improve the availability and reliability of

electricity. In addition, ABB has developed strategic

partnerships with wind and solar manufacturers, as well as

acquiring Powercorp, an Australian firm specializing in

renewable energy integration.

Siemens has expanded its position as an electrical

engineering and electronics leader to include global

energy management for microgrids. Siemens views

microgrids as a central component in the Smart Grid

evolution. Siemens offers energy-efficiency technology for

a microgrid’s consumption, transmission and production

needs. Siemens has been involved in a series of

partnerships. Recently, Siemens partnered with Boeing to

develop microgrid solutions for the Department of Defense

to be use in military installations. In addition, Siemens

partnered with BPL Global to combine demand response

solutions with distributed generation resources for homes

and businesses, creating a mini-grid. Siemens has also

worked with Viridity Energy and has several other

partnerships and projects underway to further develop its

microgrid position.




Echelon has expanded its position as a leader in network

platforming to provide solutions for the microgrid market.

Echelon’s microgrid software is able to outline the usage

of power by source, delineating power from renewable

sources, from the grid, and from back-up power sources.

This allows consumers to make choices about their energy

consumption, in turn creating a more efficient system.

Echelon has announced two projects in India and South

Africa. Echelon will supply each project with smart meters

for each residence or business to provide feedback on

energy consumption, and provide their software to

provide energy management capabilities. In addition,

applications from Echelon’s partners will provide

additional functionality for supply/demand management

and automatically switch to backup power if Echelon’s

Networked Energy System senses any irregularity. The

projects will not only provide greater efficiency, but also

will also allow better pricing methods and serve as an

example of an entry-level microgrid market, where back-

up generators support the electrical grid in times of need.

In addition to large Smart Grid firms expanding into the

microgrid market, several niche firms have also developed

specialty products to serve microgrids. Green Energy

Corporation has received numerous awards, including

being named one of the Top 50 Colorado Firms to Watch.

Green Energy Corporation offers a Master Controller

program, allowing for monitoring of both energy storage

and distributed generation. Utilizing cutting edge cloud

computing on an open source format, the software

combines new energy applications and legacy systems,

allowing interoperation that is stable and secure. Green

Energy Corporation has partnered with such companies as

the National Rural Electric Cooperative, the National

Science Foundation, and Red Hat to provide software

engineering for the utility, energy, and communications

fields.

Pareto Energy was founded in 2004 and began operations

focused on creating legislation to enable microgrid

development and deployment. Pareto’s Grid Link product

overcomes problems with interconnection between the

microgrid and the utility. It solves momentary instability

and energy loss problems experienced when switching to

island mode due to grid difficulty. The main grid is thus

shielded from inconsistent distributed generation, and

allows for upgrades and improvements to distributed

generation resources. Pareto currently has over $70 million

committed to microgrid projects. In addition, Pareto has

installed over 20 microgrids, including systems at Howard

University and for a pilot project in Stamford, Connecticut.

Lastly, Viridity Energy is a new firm that enables a microgrid

to achieve a shorter payback period on investments.

Viridity’s software consolidates all of the microgrid’s assets

to allow for comprehensive decision-making. The VPower

program allows a microgrid to not only balance supply

and demand, but also maximize selling energy back to

the grid. The program manages energy production,

storage, consumption, and distributed resources to avoid

peak loads to not only minimize cost, but also maximize

profits. Viridity has worked with Siemens, Drexel University,

Penn State University, The University of Pennsylvania, PECO

Energy, San Diego Gas & Electric, University of San Diego,

Con Edison and other firms to maximize microgrid

profitability.




Challenges & Barriers to the Microgrid Market Several factors have created barriers to successful

microgrid deployment. First, the cost and integration of

energy storage has provided a barrier to microgrids.

Energy storage is absolutely essential to the successful

integration of microgrids. Energy storage allows energy to

be captured when excess energy is produced during non-

peak times and utilized during peak or inconsistent

periods. Storage systems improve reliability and quality;

however energy storage options are not cost effective in

most cases. Because of the size and the scope

requirements of microgrids, it is difficult to choose the

appropriate storage option for each installation. However,

recent developments have lowered the cost of some

storage options and small-scale applications of energy

storage can be significantly less expensive than previously

available.

Pumped hydro facilities are the most common storage

solution worldwide, with over 127,000 MW installed

worldwide. Two reservoirs at two different heights are

utilized. Excess energy is used to pump water to the upper

reservoir to be stored until energy is needed. Then the

water is released and gravity pulls it towards the lower

reservoir, and through a turbine, thus releasing the stored

energy. For it to be successful, the environment must be

able to provide for pumped hydro storage (water must be

present, etc.). The system is able to come online quickly

and typically stores 5-6 hours of energy at capacity. In

addition, it operates at 70-75% capacity and is expensive

to install, however its long life cycle makes it more

affordable over the long term.

Compressed Air Energy Storage (CAES) is not implemented

as widespread as pumped hydro, but is very popular. It

requires either an underground storage space, such as a

cavern, or an aboveground storage tank for storage.

Excess energy is used to compress air and move it to the

storage space. When it is needed, the air is released and

passes through a turbine, thus producing energy. Energy

efficiency for CAES systems is typically close to 40% due to

cooling, air compression, and turbine generation losses.

Because of these losses, additional features are usually

added to capture the lost energy and produce additional

energy from it. CAES systems are expensive to install, but

have a long life cycle, reducing its cost over time.

Battery Energy Storage systems have different

compositions, come in different sizes and can be used for

different purposes. Batteries have been frequently used

for substation back-up systems and significant research is

aimed at improving efficiency and making them more

cost effective. One key advantage is the portability of

batteries, as well as the fact that they can be immediately

connected and utilized without significant additional

installation costs. However, the lifetime of battery storage

is 2-10 years, after which they must be replaced and safely

discarded. They can also have high maintenance costs,

but can operate at 90% efficiency.

Solar energy integration has also produced significant

barriers to microgrid operation. One challenge of solar

energy is its distribution nature. Many times solar panels

are spread out and produce small amounts of highly

variable power. The energy is then collected at a central

source and then transmitted to energy customers. This

process raises technical problems, such as inconsistent




voltage and frequency, grounding, protection and

regulation, power quality, and variability caused by

various weather conditions. Utilities and remote areas

considering installing microgrids must be sure that their

systems are able to integrate the solar energy, even during

fluctuations without compromising the grid itself. Research

has developed new technology to both protect the grid

from variability in production and integrate the distributed

resources. In addition, the price of solar photovoltaic

panels has decreased significantly, allowing them to be a

more cost efficient option for microgrid use. One final

consideration for installing solar panels for use in a

microgrid setting is suitability. A major challenge to

microgrids is to implement the right distributed generation

mix. Not all areas are conducive to solar energy

production and installing the wrong mix can be very costly

and result in not only excess unused materials, but

inefficient energy capacity as well.

Wind integration has presented some similar barriers to

microgrid deployment. Like solar energy, wind energy

production is highly variable, producing intermittent

power. Frequency and voltage are affected by weather

and wind conditions. The proper technology must be in

place to allow a microgrid to utilize wind energy, without

compromising the electrical system. The microgrid must

be able to balance the power the wind turbines generate,

storing energy over its maximum capacity for later use,

when wind production declines or load increases. Proper

software programs are the key to effective energy

management. New wind technology has been

developed that has both increased efficiency and

lowered the costs for wind technology. Increased

efficiency has improved reliability and safety, while

reducing the cost of wind turbines. Finally, not all regions

are well suited to wind energy production. Some areas

have inadequate wind flow for wind technology to be a

feasible option. Because of the expense, the feasibility of

producing wind energy needs to be studied before the

technology is implemented.

Key Microgrid Solutions Several key technological developments have enabled

microgrid deployment. GridLink by Pareto Energy provides

protection to the main electrical grid from any issues of the

microgrid, including variability experienced when

islanding, problems when upgrading distributed resources,

and local energy generation and loads. GridLink allows

the utility to be considered as an equal input with all other

resources. All inputs pass through inverters before

connecting to the microgrid. This insures consistent power

to the microgrid even during times of blackout on the

main grid, while insuring no impact on the utility system

itself. GridLink has been utilized at many large utilities, as

well as Howard University with great success. GridLink has

proven its success in over 20 microgrid installations, and in

overcoming interconnection problems between

microgrids and the main utility system.

A second key technology in microgrid deployment is BPL

Global’s Power SG Integrated Distributed Energy

Resources Software (iDER). iDER is a turnkey microgrid

solution that allows end-to-end energy management of all

resources. The software allows the main components of a

microgrid to be set up quickly and for the customer to add

components later, as necessary. BPL Global offers a

―unique combination of solutions for the continent in




energy efficiency and management, solar energy

generation, renewable energy storage, electrification of

off-grid areas with energy islands, electrical network

optimization via MicroGrid, sustainable solutions to the

economic realities‖, making it a key technological

development.

HOMER is a microgrid modeling software that analyzes

different distributed energy possibilities to provide the

design for the most efficient microgrid possible, based on

a number of different factors, including weather, energy

usage, and environmental factors. HOMER stands for

Hybridization Optimization Model for Electric Renewables

and identifies the most cost effective options for

renewable energy and hybrid renewable microgrids. It

has been downloaded by 68,000 people in 193 countries

and is used in numerous microgrid projects. It helps utilities

avoid costly mistakes during renewable energy

deployments. HOMER was originally developed for off-

grid village power systems, but has been enhanced to

consider new technology options and changes in the

microgrid marketplace.

Paladin Live program, by Power Analytics, analyzes data

from the microgrid to predict possible problems with the

system. It uses data from the installation of the microgrid

as baseline data to compare present microgrid

performance. It offers users real time data about system

efficiency, and is able to show capacity, reliability, and

availability of the microgrid. This information is able to

identify potential problems and address them before they

affect the system. In addition, different plans can be

tested before they are implemented. Upgrades can be

simulated before they are made to assess unforeseen

issues. In addition, energy management strategies can be

tested to determine the most efficient plan before the

plans are undertaken in the actual system. Power

Analytics’ Paladin program offers superb analytical data

processing that predicts and prevents real time problems,

making it a key technology in the emerging microgrid

market place.




BRICS: The Microgrid Opportunity

Developing countries compose 80% of the world’s

population, but only comprise 30% of the world’s energy

consumption. As the population increases, energy

demand will also increase. These developing countries

are improving their standard of living, thus requiring more

energy. However, many parts of the world are not

connected to a central grid, and rely on individual gas or

diesel generators, or biomass for their energy needs.

The electrical grid is centralized and it is either cost

prohibitive to connect these locations or the population is

too disbursed to allow for connectivity. Meeting the

energy needs for this segment of the population around

the world presents a huge opportunity. The BRICS nations

(Brazil, Russia, India, China, and South Africa) are the five

fastest growing segments of this market. The rural

communities that are not connected to any electrical

system seek an alternative to the traditional energy

system. They seek access to affordable, reliable energy.

Renewable energy utilized in microgrids can meet the

needs of these communities in a sustainable manner.

Renewables offer a more reliable option than traditional

connectivity, as well as providing access to water for

irrigation purposes. Thus, microgrids in BRICS will improve

the overall way of life for remote locations.

In 2012, the combined microgrids market value for BRICS

nations is projected to reach $0.73 billion in 2012. By 2020,

the microgrids market among BRICS will reach $4.47 billion.

The BRICS market is projected to grow at a compound

annual growth rate of 25% from 2012 to 2020.

BRICS Nations: Drivers

Demand for energy, specifically electricity, in BRICS

nations is growing much more rapidly than the rate of

expansion of conventional electricity grids in the

industrialized world. Demand for energy in these countries

is expected to grow in tandem with projected increases in

human population and rising living standards among the

chronically poor. Microgrids are ideally suited to help meet

this rising demand for more power, without increasing

carbon emissions. The growing demand for energy;

increasing focus on renewable energy; government

incentives provided for achieving energy efficiency and

renewable power generation; unreliable power quality

and power shortages; and poor rural electrification

systems are driving the microgrid market across Brazil,

Russia, India, China, and South Africa.

$0

$1,000

$2,000

$3,000

$4,000

$5,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

BRICS Microgrids Market Value Forecast

CAGR = 25%

2012 to 2020 (in US millions)


Brazil Russia India China South Africa




Microgrids act as a cost-effective and viable option in the

developing world which is coping with an unreliable

power supply. Several microgrid projects are coming up

across the BRICS nations to provide consumers with a more

dependable power supply system. For example, recently,

in early 2012, Echelon Corporation (an American

company which designs control networks to connect

machines and other electronic devices, for the purposes

of sensing, monitoring and control), announced that it will

set up two microgrids in India and South Africa that

integrate distributed generation to compensate for

disruptions in utility-supplied power. The model microgrid

deployments are at Palm Meadows in Hyderabad, India,

and Clearwater Mall in Johannesburg, South Africa. Palm

Meadows is an 86-acre integrated gated community with

335 homes and residential services. Clearwater Mall in

Johannesburg is a retail building with more than 240

stores.1

Microgrids also help in providing electricity in de-electrified

villages. Smart mini-grids are very useful for stand-alone

projects in villages and inaccessible areas. Microgrids not

only foster the effective inter-connection and utilization of

multiple renewable energy resources but also help in

advancing access to energy to the last mile in the most

optimum way by improving the efficiency of the overall

system. In one of India’s poorest states, Uttar Pradesh, the

founders of Mera Gao Micro Grid Power build and

operate solar-powered microgrids to provide low-cost

lighting and mobile phone charging to village houses,

1 Solar Feeds

providing many rural people access to both light and

power for the first time in their lives.2

Another microgrid project is being undertaken for insular

and remote localities in the Asia-Pacific Economic

Cooperation (APEC) economies. Led by the Russian

Federation, the objective of the project is to maximize the

economic and environmental effect of deployment of the

Smart Grid technology in insular and remote localities as

these areas experience bigger challenges in securing

reliable and efficient energy supply.3

Together with local partners, the local utility, and the local

community, Winrock International, a global nonprofit

organization, in 2005 began the installation of the first

PRISMA project in the Amazon village of Cachoeira do

Aruã, Brazil. A run-of-river micro-hydro facility the project

provides the community with power that is distributed via

a mini-grid – all governed under simplified contracts

between the community and the electric utility. One of

the activities undertaken under this project is to promote

ecotourism, raising global awareness of the environmental

challenges that this region faces each day.

The PRISMA Cachoeira do Aruã project in Brazil establishes

community ownership and management of local

infrastructure, such as power generating stations, while

strengthening small local enterprises that then use the

infrastructure for productive uses which help them in

earning an income. In the case of electricity, the

community ―sells‖ the power to the local utility (which in

Brazil holds a monopoly on power distribution) and

2 Tree Hugger 3 EGNRET

http://www.solarfeeds.com/echelon-building-micro-grids-in-india/

http://www.treehugger.com/renewable-energy/solar-powered-micro-grids-light-indian-villages.html

http://www.egnret.ewg.apec.org/meetings/egnret37/%5bC5B%5d%20New%20Projects%20Submitted%20by%20Russia.pdf




villagers manage the local mini-grid under a contract to

the power company. The electric utility provides technical

support if required, so villagers are not completely on their

own.4

To supply electricity to those areas that have rare

population, inconvenient traffic and those that are unable

to be covered by the main power grid, Beijing Huadian

Tianren Power Control Technology Co., Ltd. (The

company’s business focuses on energy saving,

environmental protection, new energy and innovation

transformation of traditional industries.) started a wind-

solar hybrid microgrid project in Jijiao Village, Chawu

Townership, Lazi County, Rikaze, Tibet. On December 4,

2011, the project was formally put into production.5

Government incentives for energy efficiency and

renewable power generation also stimulate investment in

advanced energy infrastructure. Husk Power Systems, an

Indian firm, uses second-world-war-era diesel generators

fitted with biomass gasifiers that can use rice husks, which

are otherwise left to rot, as a feedstock. Wires are strung

on cheap, easy-to-repair bamboo poles to provide power

to around 600 families for each generator. By 2010, Husk

Power had established five mini-grids in Bihar, where rice is

a staple crop. Consumers pay door-to-door collectors

upfront for power, and Husk collects a 30 percent

government subsidy for construction costs. Its pilot plants

were profitable within six months, so its model is

sustainable.

4 Winrock 5 KJT

Major End-Use Industries for Microgrids

The microgrid system has a great potential in large

commercial and industrial complexes, hospitals, shopping

malls/ complexes, apartments, residential complexes,

educational institutions, remote un-electrified as well as

electrified locations to ensure maximum flexibility, reliability

and safety.6

6 The Economic Times

$99

$174

$186

$149

$199

$435

$223

$536

$626

$849

$894

$1,340

$0 $500 $1,000 $1,500

Other

Military

Community/Utility

Off-grid

Community/Industrial

Institutional

BRICS Microgrids Market Forecast by End-Use Industry

All 5 Countries Combined

2015 and 2020 (in US millions)


2020

2015

http://www.winrock.org/clean_energy/files/power_struggle.pdf

http://www.khjt.com.cn/en/news/details.aspx?id=711

http://articles.economictimes.indiatimes.com/2011-07-04/news/29735874_1_renewable-energy-grid-areas




Recently, in early 2012, China’s Xiamen University

partnered with leading multinational technology providers

to build the country’s first direct current microgrid.

Significant changes brought by the new DC microgrid

include integrating renewable energy generation and

storage batteries with building electrical loads via mobile

and web-based energy management and control

applications; changing the way Chinese campuses and

building complexes manage, control and consume

energy; and for reducing building energy consumption,

which could run up to 20% of 2020 global coal

consumption if left unchecked.7 Use of micro grids at mine

sites is also gaining popularity due to an expected

upswing in interest in shifting to more sustainable energy

strategies for mine sites controlled by large multinationals.

Globally, nearly 75% of existing mines are remote

operations, though very few deploy renewable energy

generation.8

Microgrids have been specifically helpful to people

running small and medium enterprises, particularly in rural

areas of the BRICS nations. For example, to further extend

centralized grid electricity to remote rural areas and to

address the increasing demand and supply gap in

electrified rural areas, The Energy and Resources Institute

(TERI), in India, has initiated a strategy to set up solar

microgrids that can cater to a segment of households or

small enterprises (shops) in a village. Upscaling and

promoting this endeavor would serve two purposes: i) to

provide access to quality lighting in rural areas, and ii) to

enhance the income of both the entrepreneurs and end-

users.9 Organizations such as Desi Power, Husk Power 7 Engerati 8 The Smart Grid Observer 9 SEI International

Systems, Saran Renewable Energy, Mera Gaon Micro Grid

Power, and Naturetech Infra all operate microgrids on a

commercial basis in India.

Certain commercial and industrial environments have a

critical need for a constant power supply and cannot

afford brownouts or blackouts – research labs, data

centers, semiconductor manufacturing, and infrastructure

deemed critical to national security. Furthermore, as the

reliance on modern communication technology increases

(wireless, cloud computing, etc.), power systems are also

becoming vulnerable to cyber-attacks and hackers.

In some specific customer segments, such as the military

and research labs, there is significant value in a secure

network. Microgrid power can provide greater security for

ground army troops in remote areas. The technology

would work very much like a portable power plant,

providing and storing enough energy to power smaller,

mostly communications systems, in very remote locations

where re-supplying fuel is difficult or dangerous. Hotels,

one of the most intensive power users, can opt to develop

microgrids that incorporate solar, wind, hydro, geothermal

and other technologies to reduce the need for grid power

and for uninterrupted power supply. Hospitals are

particularly well suited for smart microgrids as they often

have a multi-building campus lay-out and require reliable

and constant power supply.

http://www.engerati.com/article/multinational-collaboration-build-china%E2%80%99s-first-dc-microgrid

http://www.smartgridobserver.com/n6-15-12-1.htm

http://www.google.co.in/#hl=en&sclient=psy-ab&q=The+micro-grids+run+on+an+entrepreneurial+model%2C+in+which+a+local+entrepreneur+invests+in+the+installation+of+the+system+and+consumers+pay+for+the+energy+they+receive.+A+subsidy+is+provided+to+the+entrepren




Brazil

Brazil has a population of approximately 195 million people

and is the fastest growing country on the planet.

However, the Northern Amazonian Para region only has

0.8% of citizens with access to power. Isolated grids exist in

the Amazon that use diesel powered generators for

energy production; however energy production is limited

due to the cost of fuel. In addition, the overall grid is

unable to meet the country’s needs, as 91 large blackouts

were experienced in 2011. The largest blackout left 50

million people in 8 states without power overnight. Brazil is

particularly suited to PV arrays. In addition, many

locations are close to the Amazon River, making

hydropower incorporation an attractive option. Several

projects have successfully tested microgrids in the Amazon

region. In Coelba, the Sao Paulo Research Foundation

installed 10,133 Photovoltaic systems for free to its

residents, who only had to pay for energy consumption

after installation. Ilha de Ferradura installed PV for 6

fishermen’s homes successfully in demonstrating Brazil’s

microgrid potential, in both large and small installations.

Brazil: Drivers

Due to vast sparsely populated areas, Brazil faces

particular difficulty in providing universal access to

electricity, as required by law. In Brazil, about 23 million

people do not have access to electricity. The highest

concentrations are in the Amazon, which makes up 45% of

the area of the nation, but only 3% of the population. If

modern energy services cannot be provided in the Amazon

region, the local population will continue to abandon the

forest for nearby cities, leaving vast areas to predatory

ranching. To stop deforestation, residents must have a stake

in remaining in their villages, generating income through

environmentally sustainable livelihoods. Therefore, providing

the area with electricity is significant. Off-grid solutions are

the only practical way to bring power to remote areas in

the Amazon.10

Brazil: Microgrid Market Forecast

From 2012 to 2020, the Brazil market is projected to grow

from $149 million to $518 million with a compound annual

growth rate of 17%.

10 SolarServer

$149 $166 $186

$209 $234

$285

$348

$424

$518

$0

$100

$200

$300

$400

$500

$600

2012 2013 2014 2015 2016 2017 2018 2019 2020

Brazil Microgrids Market Value Forecast

CAGR = 17%



http://www.solarserver.com/solar-magazine/solar-report/solar-report/electricity-for-the-rest-of-the-world-opportunities-in-off-grid-solar-power.html




Brazil: Projects

Light for All

In 2003, the Government of Brazil (GOB) launched the

program Luz Para Todos (LPT) or ―Light for All‖ to subsidize

universal access to electricity by:

Extending and establishing connections to the

national electrical grid.

Establishing a small number of off-grid distributed

energy pilot systems, including photovoltaic solar

and wind power systems; and hybrid systems of

solar, wind and diesel.

The program was implemented in 2004, extended in 2008,

and again in 2010. By May 2009, electrical services were

being provided to 10 million people through 2 million new

connections to the national electrical grid.

A total of 883,000 km of new electric cable had been

strung over 4.6 million new poles to bring transmission lines

and power switches to rural communities. Considered a

success by the government, the program was extended in

2010 to 2011, to add 310,000 new households, and is

expected to be extended until 2014 to add an additional

495,000 households. In total, the objective of this phase of

the program is to bring energy services to approximately

810,000 new households in the remotest areas of the

country, including the greater Amazon rainforest in

Brazilian territory.

To pay for the program, Brazil established three funds: The

Energy Development Fund (Conta de Desenvolvimento

de Energia, CDE); the Global Reversion Reserve (Reserva

Global de Reversao, RGR), and the Fuel Consumption

Fund (Conta de Consumo de Combustivel, CCC) into

which tax revenues are designated. These funds provide

the subsidies for both implementation and operation of

the program, and to offset the costs of individual electrical

consumption in the most remote regions.

Overall, LPT was estimated to cost R$20 billion, of which

R$14.3 was to be provided by the federal government. The

rest was to be funded by state governments (R$2.3 billion)

and by power companies (R$3.4 billion). By 2010, the

government had R$13.5 billion in contracts, funded by the

CDE and RGR. State governments had spent R$2.081

billion and power companies, R$3.164 billion.

The second phase of LPT, extended in March 2010 to end

in 2014, foresees a total investment of R$5.5 billion, and the

government is likely to extend the RGR, set to expire in

2010 and which has R$7 billion available, to cover the next

phase.

Program costs per installed electrical connection rose over

time as more distant areas were connected to the grid.

The average cost per connection in 2004 was R$4,300. By

2010, connection costs had risen to between R$7,000 to

R$9,000 per connection.11

11www.actionaidusa.org/assets/pdfs/climate_change/Access_to_Energy_for_the_Poor_2011.p

df




CEMIG’s Microgrid Project

CISB approved a microgrid project to distribute electric

energy for CEMIG in an urban area of Belo Horizonte.12 This

project will be implemented in three phases.

The first phase involves FAPEMIG and CEMIG together with

the Federal University of Minas Geris (UFMG) and KTH Royal

Institute of Technology, who have proposed to study

decentralized energy production and distribution

architecture.13 The initiative is considered strategic and will

be funded directly by Cemig.

A second group of partners, formed by the companies

GAS ENERGY and CONCERT, will have the task of installing

a distributed generation plant. This plant will serve to study

the co-generation of energy from the binomial natural gas

and sunlight. The plant should be initially sized to satisfy the

study of co-generation and generation necessary for the

existence of a ―microgrid‖, but it should be designed in a

way that will allow modular expansion, in order to

correspond to the suggested business models that will also

be studied.

The third group is formed by the research institute LACTEC

and the companies HITACHI and CONCERT. They will be

responsible for the technical implementation of the

distributed generation grid and for all the issues related to

the engineering tasks.

12 www.kth.se/en/studies/why/focus-regions/brazil/additional-collaborations-with-brazil-

1.296141 13 www.kth.se/en/studies/why/focus-regions/brazil/additional-collaborations-with-brazil-

1.296141

Other partners are expected to be incorporated to the

project depending on the choice of the location for the

implementation of the infrastructure. They could be local

providers of infrastructure, telecommunications and gas.

Also, other companies from the CEMIG group might join,

such as CEMIG TELECOM and GASMIG.14

14Microfoundations of Open Innovation (Sao Paulo, 2012)




Russia

In Russia, over 10 million people are not connected to the

grid and are using diesel or gas powered generators to

meet their energy needs. Fifty percent of these generators

are not working due to either fuel costs or delivery issues.

The areas least connected are Siberia, the Northern and

Far Eastern areas of Russia. Because of the size of Russia

and its diverse resources, renewable energies are

particularly attractive and cost effective. In addition,

Russia’s energy strategy until 2020 includes realizing

sustainable development. Several small-scale wind

projects using wind-diesel hybridization have saved 40-80%

of total energy cost with a 3-4 year payback period.

Hydropower has been successfully utilized in areas located

by rivers. Solar also offers potential, especially in Southern

areas. The very strong renewable energy potential,

combined with the huge number of isolated areas lacking

grid power create a tremendous microgrid opportunity in

Russia.

Russia: Drivers

It is estimated that approximately five million farms and ten

million people in Russia are not connected to the

electricity grid. Furthermore, an estimated 45 percent of all

energy in Russia is lost in production, transport, transmission

or inefficient consumption—much of this due to artificially

low prices which reduce incentives to improve efficiency.

According to several estimates, Russia could save around

half of the energy it currently uses.15 Furthermore, due to a

15 MDPI

shortfall in funding for the renovation of the electric power

sector assets for about 10-15 years in the early 90s, Russia is

now seeing critical wear of the substation equipment fleet.

The guideline equipment life (25 years) has ended for

54.7% of these assets and total excess life (35 years) has

been surpassed for 22.2% of equipment.

Considering the longer lifetime for HV power lines, on

average 40 years, the wear of power transmission line

equipment comprises the following – guideline life (40

years) has ended for 29.2%, total excess life (50 years) has

been surpassed for 8.9% of equipment.16 However, Russia

possesses favorable conditions for the development of

renewable energy sources, largely due to its size and

range of geographic features.

Russia has huge potential markets for off-grid electricity

systems based on renewable energy. The renewable

potential is especially applicable in some of the more

remote parts of Russia that are not connected to the grid.

In many isolated settlements, renewables can be the most

economic, and perhaps even the only way to provide

electricity and heat to consumers. Geothermal resources

in the Far East or North Caucasus, or hydro from the many

watersheds, or other renewables such as wind and solar

energy could potentially serve remote populations.17

16 PowerTec 17 EBRD

http://www.google.co.in/url?sa=t&rct=j&q=despite%20russia%E2%80%99s%20status%20as%20a%20major%20producer%20and%20exporter%20of%20energy%2C%20it%20is%20estimated%20that%20approximately%20five%20million%20farms%20and%20ten%20million%20russians%20are%20not%20

http://www.powertecrussia.com/blog/roman-birdnikov-federal-smart-grid-company/

http://www.ebrdrenewables.com/sites/renew/countries/Russia/profile.aspx




Russia: Microgrid Market Forecast

From 2012 to 2020, the Russian market is projected to grow

from $99 million to $433 million with a compound annual

growth rate of 20%.

Russia: Projects

Russia has included microgrids in the Energy Smart

Communities Initiative Smart Grid pillar. The plan, which will

be implemented in 2012, will pilot smart/micro grid projects

for insular and remote localities in APEC economies.

Renova and Rosnano Project

Russia's Renova holding company and state-run

nanotechnology company Rosnano plan to develop and

build a self-contained diesel-solar power unit, the first of its

kind in Russia. The companies plan to build the pilot hybrid

power station with a capacity of over 100 KW, 70% of

which is to come from solar generation, it said in a

statement. The company did not provide a timeframe for

the work to be completed. Use of solar technology is

limited in Russia, which mainly develops conventional

energy resources. But the companies believe that

development of diesel-solar power generation "is a

technically and economically viable solution for Russian

regions with high levels of solar radiation," said Michael

Lifshitz, CEO of Rosnano's subsidiary Rotek.

In particular, he mentioned southern regions of Russia,

southeastern Siberia, the east Siberian Republic of Sakha

(Yakutia) and far eastern regions, where diesel generation

costs Rb30-40 kWh (around $1/kWh).18

Russia: Solar Power Station

In 2010, Russia's high-tech companies Rusnano and

Renova announced plans to build the country's first

industrial solar power station near the Black Sea. The 12.3

megawatt station will be built in the spa resort of Kislovodsk

by the companies' joint venture Khevel. "This is a

breakthrough into a different dimension," Rusnano CEO

Anatoly Chubais told an innovation forum in Moscow. The

$97 million deal was sealed by Khevel CEO Yevgeny

Zagorodny and Stavropol region Governor Valery

Gayevsky. Swiss-made thin-film solar panels will be used in

the construction. The station may start operating as soon

as 2012, Zagorodny said.19

18 www.renova.ru/en/press-center/publications/15/1964/ 19 ww.solardaily.com/reports/Russia_To_Build_Its_First_Industrial_Solar_Power_Station_999.html

$99 $112 $126

$143 $161

$207

$264

$339

$433

$0

$100

$200

$300

$400

$500

2012 2013 2014 2015 2016 2017 2018 2019 2020

Russia Microgrids Market Value Forecast

CAGR = 20%






India

About 115 million households in rural areas lack grid

access while 250,000 villages connected to the grid have

frequent connectivity issues. That is over 60% of the total

population. Rural electrification has been identified as a

priority by the Indian government. Where the grid cannot

be connected, the government has authorized distributed

networks to be established. Solar energy offers tremendous

market potential for India. Several projects have shown

the potential of the market.

The New Energy and Industrial Technology Development

Organization of Japan installed 6 MW PV solar arrays at

the Neemrana Industrial Park to demonstrate efficiency of

control technology and benefits of clean energy.

Greenpeace India has also released a report proposing

clusters of microgrids be installed to support the electrical

grid. Bihur is used as an example of how an area with a

substantial energy deficit can be an area of energy

surplus through microgrid deployment. Thus the microgrid

market in India holds tremendous potential for future

development.

India: Drivers

Electricity consumption in India was about 543 KWh/capita

in 2009, among the lowest in the world. Although India has

considerably improved its generating capacity, it still has

difficulty in meeting demand and there are persistent

power shortages which constrain India’s economic

growth. With the development of the industrial and

commercial sectors as well as the wider use of electrical

equipment, electricity demand keeps increasing.

Moreover, approximately 30 percent of India’s generated

power is lost in transmission.

Distribution is the weakest link of India’s power supply

chain as it faces substantial technical losses (because of

overloading of transformers and conductors, for instance)

and commercial losses of electricity (because of low

metering efficiency, poor billing and collection, large-

scale theft of power). Furthermore, lack of transmission

and distribution of power to less densely populated areas

which are located far away from the power generating

stations is the major reason for not being able to achieve

100 percent electrification in the country.

In India, about 70% of the population lives in rural areas. In

2010, it was estimated that 48 percent of rural households

were un-electrified nationally leaving approximately 400

million people without electricity. Hence it is necessary to

use energy sources which can be decentralized to supply

power to these households. Thus, India can leverage their

abundant renewable energy sources such as wind, solar,

geothermal energy, and biomass to deploy microgrids to

meet their pressing energy needs.20

20 TERI

http://www.teriin.org/index.php?option=com_publication&task=details&sid=1436




India: Microgrid Market Forecast

From 2012 to 2020, India’s market is projected to grow from

$115 million to $1,191 million with a compound annual

growth rate of 34%.

India: Projects

Northern India

Norway-based company Scatec Solar decided to set up

an 8.7 kilowatt power plant in Rampura. Assisted by

Development Alternatives, an NGO working locally, the

community in this village was mobilized to take charge of

perhaps India’s first community-managed solar power

plant. As a result, since January 26, 2009, this village has

not been without power for a single day. The plant

distributes power through a micro grid, approximately 0.75

to 1 km in length. An electronics company, DD Solar 23

India Pvt. Ltd (which works under the banner of the Bergen

Group) has provided the technical know-how for this

project.

There are 60 solar panels in the plant, each one producing

145 watts of power. A battery bank consisting of 24 cells of

two volts each provides the power back up for 4 to 5

cloudy or rainy days, when there is no sun.21

The project was conceived, managed and financed by

Scatec Solar at the cost of Rs 5 million (US$1=Rs 46.6).

Delhi-based NGO, Development Alternatives (DA), was

engaged to identify the beneficiary villages.22

Azure Power to Asses Solar Powered Microgrids (Int'l)

India-based independent power producer Azure Power

has been awarded a grant from the U.S. Trade and

Development Agency (USTDA) to assess the development

and accelerate adoption of solar power in rural India. The

$476,670 grant will fund a feasibility study on two 500 kW

microgrid solar photovoltaic power generation pilot

projects in the states of Gujarat and Chhattisgarh. Having

spearheaded the national initiative of grid-connected

solar power projects that are over 1 MW in capacity, Azure

Power will, with this study, open up the potential of

electrifying rural India through solar powered microgrids.

Following the study, Azure aims to set up over 100

microgrid solar systems, with each system covering an

average of 2-3 acres of rural land which would generate 21www.actionaidusa.org/assets/pdfs/climate_change/Access_to_Energy_for_the_Poor_2011.p

df 22 www.smeworld.org/story/features-108/solar-power-at-everyones-doorstep-234.php

$115 $150 $194

$253 $328

$453

$626

$863

$1,191

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2012 2013 2014 2015 2016 2017 2018 2019 2020

India Microgrids Market Value Forecast

CAGR = 34%






sufficient power to electrify approximately 800-1,000

villages with little or no connectivity to existing electrical

grids.

The USTDA India mission aims to further development of

projects that have a positive economic, social and

environmental impact while promoting exports of US to

India. The grants provided by USTDA support the initiation

of such projects and bring them close to realization. In this

light, the benefits of solar power are obvious and

imperative. USTDA helps companies create US jobs

through the export of US goods and services for priority

development projects in emerging economies. Azure

Power is claiming to be India's first independent solar

service provider offers clean and affordable solar energy

to its customers with minimum upfront cost and ongoing

operational expenses.23

Southern India

Echelon Corporation has successfully deployed micro grid

installations in an 86-acre integrated gated community

with 335 homes and residential services at Palm Meadows

in Hyderabad. Palm Meadows runs diesel generators and

seeks to incorporate solar power in the future to its micro

grid.24 Echelon's has equipped the residences with smart

meters that connect into data concentrators at

distribution transformers and feed near real-time

information into the company's Networked Energy Systems

(NES) software. Grene Robotics' Skynet management

application automatically turns on local generation if

utility-delivered power is inadequate.

23 epoverviews.com/articles/visitor.php?keyword=Micro-Grid 24 www.echelon.com/company/news-room/2012/microgrids-india-south-africa.htm

The Skynet software interfaces with the NES system

software and creates a bill for the customer that reflects

the customers' actual use of lower cost grid power and

more expensive locally generated power. Customers have

the option of reducing usage at times when the more

expensive energy is being supplied. The Palm Meadows

micro grid is providing reliable service even during

frequent utility grid outages and enabling the customer to

make intelligent trade-offs between comfort and cost.25

25 www.pv-magazine.com/news/details/beitrag/a-growing-global-smart-grid-

market_100006258/#axzz1xsuXXnV6




China

In China, remote regions experience power supply issues

where the grid cannot be extended due to the expense

of extending the electrical grid. Energy consumption was

18% in 2005 in rural areas, especially in central and western

areas. China is dedicated to renewable energy

expansion and has 8 completed pilot projects, with many

more underway. One such project was completed in

Zuo’anmen at Beijing City, where 50 kWp PV, 30 kW

microturbines, 72 kWh energy storage was installed. Other

microgrids were installed in the Henan Province, in Tiajin

City, Mongolia, Foshan City, and Foshan Island. These

projects have had tremendous success and focused

mainly on PV and wind energy, as well as storage. China

realizes that microgrids are an important part of the

country’s Smart Grid and is also related to national

development strategies, further highlighting the microgrid

opportunity presented in China. In addition,

governmental support for microgrid development may

provide additional incentives to develop microgrids in

remote regions, thus extending reliable energy to its

citizens.

China: Drivers

Being the largest country in East Asia and the most

populous in the world, China’s rapidly growing economy

created a significant increase in energy consumption, as

well as a rise in harmful emissions and power shortages

over a very short period of 60 years. The number of people

lacking access to electricity in China in 2009 was around

eight million.26 The massive size of the country in terms of

population means that still a large number of individuals,

equal to the total population of countries such as Sweden

or Austria, do not have access to electricity.

As of 2012, some five million Chinese people living in

remote villages in mountainous or border areas are

currently without electricity, and the government has

vowed to extend electricity services to such groups by the

end of 2015. According to the annual social responsibility

report of the State Grid Corporation of China (SGCC), the

country's largest power supplier, China's urban residents

endured an average of 6.92 hours of blackouts, while rural

households experienced an average of 29.35 hours of

blackouts in 2011. SGCC has pledged to shorten the

periods of electricity cut-offs to 5.71 hours for urban citizens

and 23.7 hours for rural residents through grid upgrades

and renovations.27

Additionally, energy consumption efficiency is very low in

China, i.e. the amount of energy consumed per unit of

economic output is considerably higher than the world

average.28 Microgrid systems thus offer tremendous

opportunities to develop the power system in China with

investments focused on increasing capacity, reliability,

efficiency, and integration of renewable energy.

State level projects have already been initiated in China

to encourage and support universities and institutions that

conduct research on the use of microgrid systems.

Furthermore, microgrid systems may represent the best

solution to provide electricity to those rural areas, 26 China Europe International Business School 27 China.Org.cn 28 National University of Singapore

http://www.ceibs.edu/bmt/images/20110221/30210.pdf

http://www.china.org.cn/china/2012-02/21/content_24694786.htm

http://www.esi.nus.edu.sg/publications/2012/02/27/improving-energy-consumption-efficiency-urgent




especially in the Western regions, where the grid extension

is not feasible and off-grid applications are required. This is

the sector where the new renewable energies such as

wind and solar are expected to play a key role by

becoming the most appropriate solution in order to

achieve the Central government’s goal of a full rural

electrification before 2020.

China: Microgrid Market Forecast

From 2012 to 2020, China’s market is projected to grow

from $320 million to $2,015 million with a compound

annual growth rate of 26%.

China: Projects

Xiamen Direct-Current Microgrid

The Haixi International New Energy Industry Expo and

Forum, Xiamen University, Nextek Power Systems, People

Power Company, Canadian Solar, Intel Corporation and

Lawrence Berkeley National Laboratory (LBNL) announced

a ground-breaking alliance to construct and manage

direct-current microgrids at the School of Energy Research

in Xiamen University (SER-XMU). This microgrid will become

operational this year and will make Xiamen University

China's first direct-current powered commercial building,

and will serve as a global showcase for distributed direct-

current microgrid innovation and commercialization.

The Xiamen University's direct-current microgrid could

change the way Chinese campuses and building

complexes manage, control and consume energy by

directly integrating renewable energy generation and

storage batteries with building electrical loads through

one-touch mobile and web-based energy management

and control applications. This change is significant

because of Chinese building energy consumption.

Nextek Power Systems will introduce the first Direct

Coupling(R) microgrid in mainland China that will manage

and support diverse energy loads, such as direct-current

lighting, air conditioning, data centers, electrical vehicle

charging and building plug loads. People Power

Company will provide its award-winning, cloud-based

energy management, control and behavioral analytics

applications that will enable building managers to control

and manage buildings loads. LBNL will develop methods

$320 $384 $461

$553 $664

$876

$1,156

$1,526

$2,015

$0

$500

$1,000

$1,500

$2,000

$2,500

2012 2013 2014 2015 2016 2017 2018 2019 2020

China Microgrids Market Value Forecast

CAGR = 26%






and algorithms for the optimal equipment choice and

operation of direct-current microgrids. Canadian Solar will

provide customized solar panels for this rooftop solar

system and Intel will provide technical expertise and

advisory on this research.

The School of Energy Research in Xiamen University

conducts research and develops technologies in

Advanced Nuclear Energy, Solar Energy, Chemical

Energy, Bio-energy, Energy Efficiency Engineering and

Energy Economics. A 150kW solar system will be deployed

on the rooftop of an engineering building. The School of

Energy Research will work with partners to integrate state-

of-the-art technologies into a showcase for energy

efficiency and a platform for developing renewable

energy applications.

The new Chinese building energy codes call for at least 50

percent energy savings at less than a 10 percent cost

increase, compared to existing building costs. DC

microgrids provide an option to achieve these

requirements because of the clean renewable energy

adoption and behavioral energy building management

controls that reduce energy consumption, significantly

increase building efficiency and improve occupant

comfort and productivity. 29

Guangdong Electric Power Development

Guangdong Electric Power Development plans to invest in

an offshore wind farm demonstration project near

Guishan, Zhuhai, in order to improve its offshore wind farm

research and development capabilities, sources reported.

29 www.reuters.com/article/2012/03/19/idUS170454+19-Mar-2012+MW20120319

The Guishan offshore wind farm demonstration project is

led by China Southern Power Grid and will require a total

investment of 4.45 billion yuan and 900 million yuan of

working capital.

The project comprises the building of 198 MW of offshore

wind power installed capacity, an island smart microgrid,

a power transmission network, monitoring and

management systems, and a new energy testing center.

Construction is scheduled to start in 2012, and the facilities

are expected to be completed and put into operations by

2014.30

According to the company, the Guishan demonstration

project is in line with government policy, and has a break-

even period of 11 years, while the internal rate of return is

eight percent. In the meantime, Guangdong Power

forecasts a 40-60 percent year-on-year drop in 2011 net

profit attributable to shareholders to between 306 million

yuan and 459 million yuan due to the increase in coal

prices. The magnitude of the two adjustments made to

power prices could not match the rise in coal prices,

added the company.31

30 en.sxcoal.com/69141/NewsShow.html 31 www.capitalvue.com/home/CE-news/inset/@10063/post/6465453




South Africa

In South Africa, over 30% of the population uses paraffin

and biomass to meet its energy needs. Although

renewable energy is less expensive in the long term than

diesel, many villages are unable to pay the initial

investment. Once the initial investment is made,

microgrids provide a cost effective solution for South

Africa’s energy needs. Solar, biomass, and hydropower

are the most promising renewable energy options.

However, some areas are not suited for all three and the

HOMER software has been able to be successfully used to

determine the most appropriate and cost effective

options in South Africa. Solar Aid has been installing PV

panels on schools and community facilities. In addition, a

study was performed on Tukakgomo to determine the

feasibility of a microgrid system for 30 households. Finally,

Solea Renewables has developed a small scale PV

microgrid for a mining operation that was previously

without power, further demonstrating the huge potential

of implementing microgrids for the country’s remote

energy needs.

South Africa: Drivers

In South Africa, about 22 million people, that is 45% of the

population of the nation lacks electricity. The

electrification rate of South Africa was 75% in 2009.

(Electrification is registered as electrification of households

and not as the number of people). However, there is a

great variation in the electrification rate between the

provinces, with Eastern Cape being mainly a rural area

and having the lowest electrification rate (60%) and

Western Cape having the highest rate (86%). Furthermore,

in 2009, 3.4 million households in South Africa did not have

access to electricity. About half (1.7 million) of these

households lived in informal settlements.

South Africa also experiences major power shortages with

rolling blackouts on a regular basis. In addition, total

electricity losses (includes system losses and theft) other

than technical varied between 10% and 15% in 2009.32

Therefore, implementing a rock solid energy control

networking platform is of utmost importance. Studies in

South Africa indicate that off-grid PV solutions are often far

more cost-effective than current ways of meeting power

needs, and in many areas can be an extension of the

existing electric grid.33

32 IEA 33 SolarServer

http://www.oecd-ilibrary.org/docserver/download/fulltext/5kmh3nj5rzs4.pdf?expires=1340547182&id=id&accname=guest&checksum=D2AEBCD5BF6AE4C67BD15517739D5C9B

http://www.solarserver.com/solar-magazine/solar-report/solar-report/electricity-for-the-rest-of-the-world-opportunities-in-off-grid-solar-power.html




South Africa: Microgrid Market Forecast

From 2012 to 2020, South Africa’s market is projected to

grow from $50 million to $312 million with a compound

annual growth rate of 25%.

South Africa: Projects

DC Microgrid in Sedgefield, South Africa

Specialized Solar Systems (SSS), being a local company in

George, has for a period of six months been co-operating

with a Sedgefield based NGO called SANCO. The purpose

has been to demonstrate that a complete home

electrification system that is powered by alternative

energy, can be installed in a matter of minutes, and

provides a long term solution. A solar panel and a battery

drive what is called the DC microgrid system that provides

lights and a cell phone charger- this is the basic system.

What distinguishes this system from others is that it has the

ability to accommodate additional appliances such as a

TV and DVD, a laptop charger, and even a fridge if solar

and battery capacity is also extended. All these

appliances can easily plug into the basic system, and they

all operate on a 12volt current.

This means that nobody will be endangered or shocked by

the system that is ideally suited for installation at informal

settlements. Indeed this DC microgrid system was donated

and installed last year, as reported in the local Sedgefield

Edge of 16 November – at the home of local Fundiso

Mbana. The purpose of the installation was to verify that

the DC microgrid could indeed live up to its claims, which

it indeed has done! We had trouble free operation,

replaced one bulb, and have a happy customer.

The progress of this project can be summarized follows:

The DC microgrid is now a well proven sustainable

solution for informal settlements. It is a viable

energisation solution to grid failed rural, urban and

peri-urban communities in South Africa, Africa and

even the rest of the world.

Fundiso and many others regard the DC microgrid

system as an ideal easy to install solution that takes

only 45 minutes to set up.

The public of Sedgefield have come out in support

of the idea and would like to see this plan put to

action now, instead of waiting another 3-4

years(who knows) for grid electrification. Currently

$50 $59 $71

$86 $103

$135

$179

$236

$312

$0

$100

$200

$300

$400

2012 2013 2014 2015 2016 2017 2018 2019 2020

South Africa Microgrids Market Value Forecast

CAGR = 25%






the residents have been PROMISED electrification

and basic services for 11 years now.

The residents of Sedgefield that are also ratepayers, do

not think it is fair to pay their taxes and then fund services

again personally. They believe this job should be done by

the local municipality – and it should happen immediately.

The fact that Specialized Solar Systems have developed a

pre-paid metering and other management control option

on their DC microgrid systems would facilitate a return on

investment on these systems, makes a community roll-out

even more feasible.

The Sedgefield community is now desperate for

electrification and has explored all possible avenues to

achieve this, even asking for public donations!34

Echelon Deploys Microgrid in South Africa

Echelon Corporation will deploy a microgrid in Clearwater

Mall in Johannesburg, South Africa that integrates

distributed generation to compensate for disruptions in

utility-supplied power. It is built on Echelon’s proven, open

standard, multi-application energy control networking

platform powered by its Control Operating System (COS)

and incorporate application software and services from its

local partners Grene Robotics and Power Meter Technics

(PMT). The first-of-its-kind in the two countries, the micro

grid deployments involve dynamically managing demand

and energy supply mix for a retail mall to deliver reliable

service cost-effectively.

34 www.specializedsolarsystems.co.za/index.php/dc-microgrids-viable-african-

energisation/rural-africa-energisation-solutions/rural-elecrification

The Clearwater Mall tenants, which consist of nine anchor

stores, and more than two hundred other local and

international fashion and quick serve food outlets,

restaurants, banks, electronic goods and other specialty

stores, require reliable electricity so they can continue to

run their business. The mall’s new retail micro grid solution,

based on Echelon partner PMT’s Meteringonline energy

management application, employs Echelon smart meters,

data concentrators, and NES system software to submeter

individual tenant usage, so they can pay only for their

actual energy usage rather than the industry norm of

paying for energy on a square footage basis. Furthermore,

tenants can opt-in to power supplied by local back-up

generation when blackouts occur. PMT’s Meteringonline

application interfaces to Echelon’s system software and

reconciles usage with energy source, allocating tariffs

based on actual use. The on-demand energy services

allow the store owners to manage their energy usage and

associated costs and maximize revenues. 35

BRICS: Microgrid Outlook

Overall BRICS nations present a significant opportunity for

microgrid development. Throughout the nations, several

projects have highlighted the enormous potential that an

integrated microgrid, combining renewable energy

generation, strategically selected software, and energy

storage solutions can offer to the citizens of the BRICS

nations. Because all five nations are in tremendous growth

phases and have such a huge portion of their citizens

without connected energy, the demand for energy will rise

35 www.echelon.com/company/news-room/2012/microgrids-india-south-africa.htm




in the near term, thus presenting a huge prospect for

microgrid development.

The microgrid system has a great potential in large

commercial and industrial complexes, hospitals, shopping

malls/ complexes, apartments, residential complexes,

educational institutions, remote un-electrified as well as

electrified locations to ensure maximum flexibility, reliability

and safety. Moreover, in some specific customer

segments, such as the military and research labs, there is

significant value in a secure network such as the microgrid.




Q&A with: Jeff Lund VP of Business Development

www.echelon.com

Q&A with Echelon

ZP: How does Echelon define the microgrid?

JL: We think of the electric grid as being an

interconnection of high, medium, and low voltage

distribution grids. Microgrids have to do with this

last tier, the low voltage distribution network. What

makes a low voltage distribution network a

microgrid is when it contains local generation (e.g.,

a diesel generator or roof top solar) along with

local intelligence that can dynamically manage

and balance local loads with supply and,

potentially, local storage. Some people define

microgrids as having the ability to actively ―island‖

themselves off of the main grid for security or

reliability reasons, but we see this more as a

potential application of microgrids and not the

defining characteristic.

ZP: How is software effecting the microgrid, what type of

microgrid software does Echelon provide?

JL: Software plays an essential role in microgrids. In

order to balance supply, demand, and storage at

the local low voltage distribution transformer level

requires an intelligent point of presence within the

low voltage grid and a software framework that

can host the local analytics and control

apps. Echelon provides a three-tier multi-

application energy control networking platform

powered by its Control Operating System (COS)

with open software interfaces at the device level,

enterprise level, and most importantly for micro

grids, at the edge of the gird where the low

voltage network connects to the internet. Working

with partners, Echelon can provide a

comprehensive suite of applications for

microgrids. For example, two Echelon partners

Grene Robotics and Power Meter Technics have

each deployed microgrid solutions in South Africa,

one focused on residential communities and the

other on retail malls.

ZP: What does the microgrid mean to developing

countries?

JL: We see microgrids as particularly important for

developing countries for a number of reasons. As

demonstrated by deployments by our partners in

South Africa, microgrids provide a way for

communities and businesses to supplement supply

form the grid with local generation to increase

reliability and availability of power while lowering










cost to consumers. Microgrids also represent a cost

effective and faster path for building infrastructure

and scaling the grid. Rather than the high

investment and long construction cycles

associated with building large centralized power

plants and associated distribution infrastructure,

microgrids allow for distributed generation and

local demand balancing to enable the grid to be

built up neighborhood by neighborhood.

ZP: What type of impact will the microgrid have on the

future Smart Grid?

JL: The microgrid will impact the smart grid from a

variety of dimensions. The rise of microgrids will

necessitate the move to a distributed networking

model that allows for intelligence and decision

making at the edge of the grid as well as in

devices and the enterprise. Having this local

intelligence will make the grid better able to

incorporate distributed generation and intermittent

renewables such as solar and wind. By being able

to adapt in real time to changing available of and

demand for power they will also make the grid

more able to absorb new loads such as electric

vehicles. Ultimately, microgrids with local

intelligence will increase the reliability and

survivability of the grid by being able to manage

supply, demand, and storage at a local level.




Q&A with:

Thierry Godart

President, Smart Grid Division, U.S.

www.siemens.com

Q&A with Siemens

ZP: How does Siemens define the microgrid?

TG: Siemens defines a microgrid as a regionally

limited energy system of distributed energy

resources, consumers and, optionally, storage. A

microgrid optimizes one or many of the

following: power quality, power reliability,

sustainability and economic benefits. Microgrids

may continuously run in off-grid- or on-grid mode,

as well as in dual mode by changing the grid

connection status.

ZP: How is software effecting the microgrid, what type of

microgrid software does Siemens provide?

TG: Siemens provides utility-grade control systems

for microgrid control. We use automation systems

(substation automation, SCADA and Distribution

Management Systems (DMS)) that have a long

track record and have been deployed hundreds

of times in other applications. Customer and

application specific engineering is required for

microgrids but the core control system and

applications are the same.

ZP: What does the microgrid mean to developing

countries?

TG: For developing countries specifically, a

microgrid can offer a very reliable network for a

specific region/location. A microgrid allows the

local community to take more ownership and

control of their infrastructure and ease the

investment burden of a national utility.

ZP: What type of impact will the microgrid have on the

future Smart Grid?

TG: Both of these concepts are fluid and have

broad meanings. Ultimately, Smart Grid is about

leveraging technology to improve the consumer's

experience and service, and enable the utility to

profitably improve its operations. A microgrid -

whether deployed by a utility of a group of

consumers - is one application that will leverage

technology to improve reliability and service.

http://www.siemens.com/entry/cc/en/



http://www.siemens.com/






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