Microgrids predicated to be an investment hotspot in Australian energy sector

59 projects are currently in development.

The formation of a solar JV in Australia to focus on microgrids and batteries aligns with our view that residential solar, battery storage and community-level energy projects are emerging as an investment brightspot within the Australian renewables sector over the coming years, according to BMI Research.

"As such, we expect Australia to be increasingly targeted by companies deploying DES and battery storage over the coming years," BMI said.

Here's more from BMI Research:

Despite this challenging investment climate, we note that there are a number of bright spots within the industry, where companies can capitalise on growth opportunities.

Microgrids are becoming increasingly popular in Australia, as high electricity bills and growing environmental concerns at local level prompt investment into such schemes. The Coalition for Community Energy reported that there were 19 operational community energy groups operating in early 2015 and 59 projects in development.

As such, news in December that Carnegie Clean Energy's unit Energy Made Clean (EMC) formed a joint venture (JV) with Lendlease to focus on solar projects, battery storage and microgrids across Australia aligns with our view that these sub-segments are emerging as investment brightspots.

The 50/50 JV will look to identify and bid for Engineering, Procurement and Construction (EPC) contracts for those technologies.

Carnegie has estimated that the target market for these types of technologies is in advance of AUD1.6bn over the next five years - reinforcing our view that Australia will increasingly be targeted by companies deploying Distributed Energy Solutions (DES) and battery storage over the coming years.