- Micro grids enable distributed energy generation at a localized scale with the objective to: deliver efficient, reliable electricity while offsetting or eliminating fuel fossil consumption.
- The market for micro grid will grow from $10billion annually in 2013 to $40billion by 2020.
- Decreasing solar PV module prices and investments in battery technologies are leading to new micro grid solutions and market opportunities.
Micro grids can be classified as one or more generating energy sources supporting a local independent grid. Although there are many views of what a micro grid is they consist of energy production or generation sources, a consumption or demand load and some form of storage technology. Micro grids enable distributed energy generation at a localized scale with the primary goals to deliver efficient, reliable electricity while offsetting or eliminating fuel fossil consumption. Micro grids range in generating capacity from kWs to MWs covering a number of military, telecommunication and village power applications. Most common generating sources are diesel generators and solar PV modules with batteries being the primary storage technology. Today, lead acid is the primary battery chemistry although lithium ion is quickly catching up and various new forms of next generation battery technologies will begin to emerge in the next years. The market for micro grids will grow from $10billion annually in 2013 to $40billion by 2020. The primary drivers for the growth are coming from the collapse of solar PV module cost and the lowering cost of efficient storage technologies. Combining low cost solar PV with battery systems is a combination that is opening up a wave of new applications.
Fallout of Solar PV Module Cost
The decrease in solar PV equipment cost, notably solar cells and solar modules which encapsulates cells into a final product has been instrumental for the development of the micro grid market. The industry experienced extreme growth that was primarily driven by European incentives, which led to a component and material shortage in 2007-2008. This boom was followed by 4 years of bust, which led to a significant industry shakeout. The main driver for the collapse was significant state-level investments in China that led to a huge increase of over 500 Chinese companies producing modules, silicon, wafers, and cells. The Chinese investments caused an overcapacity in production, which negatively affected the majority of manufacturers in the space, and the non-Chinese manufacturers were quickly pushed out of the industry. A number of weaker Chinese companies also fell to price pressures leading to large number of bankruptcies. Wishing to leave the business, start-up manufacturers flooded the market with an abundant amount of exceptionally low-priced inventory, creating a significant glut in the global market. After four years of decline, global module prices have since stabilized.
Lowering Battery Cost Driven By New Investment
Tesla Motor Inc. (NASDAQ: TSLA) recently announced its planned "Giga Factory," which has created an overwhelming amount of interest in the energy storage space. The Giga Factory will be the largest battery-making facility in the world, producing, at its peak, 500,000 lithium-ion packs per year. It is possible that Tesla could deliver battery packs to other automotive companies and other applications including the stationary energy storage market. Tesla expects that this new facility will reduce the cost of lithium ion batteries by about 30%. Tesla isn't alone in wanting to invest in Lithium Ion battery manufacturing. Samsung SDI, an affiliate of Samsung Electronics Co. Ltd (OTC:SSNLF), said it will form a joint venture in China in 2014 to invest $600million in a factory in Shaanxi province. Toyota Motor Corporation (NYSE: TM) announced that it plans to partner with Panasonic Corporation (OTCPK:PCRFY) in expanding its lithium-ion battery production by six times current production. LG Chemical is reviewing the possibility of building a new plant for electric-car batteries in China.
New Applications for Low Cost Solar PV Battery Systems
First, military budgets will benefit the greatest from these new micro grid systems. According to industry information the capacity of military micro grids will grow at a rate of 739% between 2011 and 2017, increasing from 38MW to 316MW during that time period. A significant portion of the military budget is allocated to support the large number of diesel generators in the field. Combined solar PV, diesel and battery based systems can significantly offset diesel generator run time therefore reducing fuel consumption. Applications for such systems primarily include forward operating and command base power. More significantly, reducing diesel fuel consumption reduces manpower and logistics needed to provide continuous power and reduces the amount of diesel that is required to power forward operating bases. This ultimately could collapse the supply chain.
Throughout developing countries the case for micro grids is very compelling especially in regions with extremely poor power grids or no grids such as in rural areas. Rising diesel fuel costs, the removal of subsidies for fuel and fuel thefts in remote areas are primary drivers for micro grids in developing nations. An example is India's booming telecom network market, which is supporting the growing number of mobile users. The rapid global growth for mobile services has dramatically driven demand for reliable wireless telecommunication towers and backup power for the towers. India alone projected in 2012 that they expect to add another 300,000 telecom towers in the next five years. According to the Telecom Equipment Manufacturers' Association of India (TEMA) India currently represents 500,000 telecom towers. Diesel generators supporting India's telecom industry is estimates to be consuming approximately 8750 litres of diesel per year per site, which equates into 3.5billion litres per year to support India's telecom tower back up power. The OM Group (NYSE:OMG) is the parent company for EaglePicher Technologies. EaglePicher is an industry leader in integrated power solutions that is aggressively developing battery solutions to meet these market applications. Toronto based Electrovaya (OTC:EFLVF) announced that it is working with Bhaskar Solar to harness Electrovaya's Lithium-ion battery technology in making renewable-based telecom towers possible. The companies are targeting 15,000 telecom towers in India.
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