New analysis of the global renewable/diesel genset hybrid power systems market finds that the sector earned revenues of $358.4 million in 2013 and is estimated to reach $552.2 million in 2018 at a compound annual growth rate of 9%.

According to a report from Frost & Sullivan, with a lack of grid connectivity in distant and rural areas – especially in developing countries – prompting end users to retrofit or replace ubiquitous diesel generator sets with cost-effective and efficient hybrid power systems. Latin America and Africa are expected to witness the fastest growth.

However, lack of clarity on subsidies and other incentives provided for hybrid power systems discourages some end users, the research concludes. Proper legislation governing installation of hybrid power systems is also reducing market potential. For instance, solar and wind power subsidies are extended to hybrid power systems but do not have legislative supporting literature with specific technical requirements.

In addition, the relatively higher capital costs of hybrid power systems compared to diesel generator sets, and increased costs incurred while transporting these solutions to far-flung areas can deter uptake.

Nevertheless, cost may become less of a concern among customers with the gradual reduction in the prices of solar modules and wind turbines, which are the dominant renewable energy sources for hybrids. The cost of installation and equipment required for the use of hybrid power systems is decreasing as well.

‘Industrial penetration into off-grid remote areas is boosting power requirements, driving the installation of hybrid power systems. Telecom sector penetration is particularly strong and will thus contribute most to global market revenues,’ said Frost & Sullivan energy & environmental research analyst Ashay Abbhi. He added:  ‘Capital costs will fall further once clear legislations regarding subsidies provided for hybrid power systems are defined by governments. The standardization of modular hybrid power systems will also lower capital costs substantially and power use of these solutions globally.’