3Q 2017 Frontier Power Market Outlook

The market for micro-grids and hybrid generation in emerging economies is getting bigger, with particularly strong demand from islands, remote regions, and the mining sector. While the project count remains small, policy-makers and project developers are growing more comfortable with the role that micro-grids and stand-alone solar kits play in serving remote regions.

Small-scale diesel generator imports

Source: Bloomberg New Energy Finance, PGS Consulting. Note: Units smaller than 375kVA only. Capacity is estimated based on unit shipments.

  • At least 20MW of renewables-based commercial or industrial micro-grid projects were announced since April, primarily in Africa’s mining sector. Vendors are gaining valuable experience with contract structures and operational challenges. Aggreko, the market leader for rental power, recently introduced a solar-diesel hybrid product and bought an energy storage company to better control integrated projects.
  • More broadly, the popularity of renewables is growing across emerging markets. Non-OECD countries bought $722 million worth of PV equipment from China in March 2017, the most since January 2017. India was by far the biggest buyer while total spend on PV from China has stalled in East Asia and Africa.
  • China and India are not just the largest PV trading partners, but active investors in renewables and rural electrification in Africa, which they regard as a promising market for component exports. Between them, Indian and Chinese governments and state-owned banks announced $189m in loans for African projects since April.
  • India’s domestic solar boom is well under way, along with efforts to improve the quality and reliability of its power. BNEF research shows that outages declined since the government stepped up efforts in 2016, but large areas remain affected by frequent black-outs.
  • Sales of diesel generators smaller than 375kVA in Africa and the Middle East fell by 25% in 2016, but competition from renewables is still too weak to explain the collapse. The market for branded portable solar kits suffered an 8% decline in 2H 2016, the latest period for which complete data is available.


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