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Dominance in the Distributed Energy Market Places the Spotlight on Asia-Pacific
September 6, 2016 | Frost & SullivanEstimated reading time: 2 minutes
Several global trends are catalysing the distributed energy market. Increased electrification, decreasing costs of solar photovoltaic (PV) power generation, higher wind power and battery storage and developed countries’ strong carbon emission reduction initiatives are expected to drive revenues that stood at $59.41 billion in 2015 to $65.39 billion by the end of 2016. The largest segment in the distributed energy market will be distributed PV, with 65% of the installed distributed energy capacity, worth $42 billion. This gives Asia-Pacific a place of eminence, as it is expected to dominate the distributed energy market over the next 10 years with almost 50% share of the PV market, and annual revenues of more than $21 billion.
2016 Global Distributed Energy Outlook is part of the Distributed Energy Growth Partnership Service program, which also includes subjects such as power generation, oil and gas, utilities, energy & environment, solar power, smart gas meters, transformers, biomass power and LPG. This analysis covers the segments of distributed solar PV, energy storage, micro grids, gensets, CHP, prosumers, demand response (DR) and distributed energy resource management systems (DERMS).
China and India are important market players as their rapid pace of industrialization and widening demand-supply gap is creating a vast market for distributed energy. Meanwhile, the inadequate power infrastructure for the growing electrification needs in Indonesia, Vietnam and the Philippines is attracting investments in efficient and flexible distributed power solutions. Japan too has played a vital role in putting the Asia-Pacific market on the map with its extremely high unit sales of gas engine-based combined heat and power (CHP) plants.
North America too is proving its commitment to attracting investors with Environment Protection Agency (EPA) regulations regarding energy efficiency. Europe, on the other hand, will grow at a slower pace due to the uncertain investment climate and retroactive policies regarding renewable energy in the key markets of Spain and Italy.
The distributed energy market is expected to grow with improvements in flexibility, scalability and price competitiveness of renewables. Increasing investments in supportive subsidies and commercialisation will also be a significant market driver, especially in the cogeneration and distributed storage segments.
“There are sizeable opportunities in distributed energy resource management, as technology companies have been investing in R&D for enhanced data integration as well as onsite and offsite technology support,” saidFrost & Sullivan Energy & Environment Programme ManagerPritil Gunjan. “Further disruptions to the utility business models are expected with energy suppliers actively participating in prosumer-led energy models.”
With 2016 shaping up to be the year of the prosumer, there is considerable interest in new business models such as the hybrid model, wherein companies lease household rooftops and repay through discounts in energy bills. Another big trend is the rise of DR in Europe. All developments in the smart grid market point towards greater investment in consumer and network-wide analytics to aid the decentralization of utilities and integration of disparate resources.
“Aggregators of multiple distributed energy sources will play a critical role across the value chain by managing energy system integrations,” noted Gunjan. “Customer interfaces and automated technologies will further enable a transparent and secure distributed generation implementation.”
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants. For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies?
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