A microgrid is a local, self-sufficient energy system that can connect with the main utility grid or operate independently. It works within a specified geographical area and can be powered by either renewable or carbon-based energy resources, such as solar panels, wind turbines, natural gas and nuclear fission. This way, microgrids can continue to operate even when the main grid experiences disruptions, and rural areas with less access to the main grid can receive electricity more reliably.
Microgrid Definition
A microgrid is a localized energy network that can connect and disconnect from the main grid. It is used to power everything from university campuses to airports and hospitals.
What Is a Microgrid?
Microgrids are small-scale energy networks that operate independently or in tandem with the main “macro” grid. Working within a fixed geographic footprint, these self-contained systems generate power from on-site energy sources and distribute it to in-network users. They can either store it for use at a later date or feed it back into the main grid.
How Are Microgrids Different From Main Grids?
Microgrids and main grids complement one another, but they are still distinct from each other — mainly due to the self-sufficiency of microgrids.
Microgrids Are More Localized Than Main Grids
Main grids deliver electricity from industrial-scale power plants to consumers over long distances. In contrast, microgrids leverage distributed power that’s generated from nearby energy sites.
Microgrids Are Self-Sufficient From Main Grids
The wide-area distribution networks of main grids can be inefficient. A single tree fall can trigger a cascading power failure across several states if it causes enough damage to a powerline. While microgrids can be connected to the main grid, they can also operate on “island mode” and be totally self-sufficient.
Microgrids “provide standby backup via a self-contained supply of energy to the location they serve, which protects its users from the vulnerabilities of the grid,” Allan Schurr, chief commercial officer at microgrid firm Enchanted Rock, told Built In. “Because microgrids are self-contained with enough generating capacity to sustain operations when the grid is down, they provide significantly more local reliability than the grid can.”
Microgrids Transport Electricity in Multiple Directions
Unlike traditional centralized systems, microgrids also have a multi-directional flow that can move power in more ways than one — from microgrid to consumer, main grid or battery storage and back again. For example, users can generate power from their rooftops and feed it into the microgrid, rather than only having power move into their homes.
“The multi or bi-directional flow makes [microgrids] particularly innovative, adaptive and flexible to changes in demand and risks from weather or incidents,” Benjamin Dierker, an executive director at Alliance for Innovation and Infrastructure, told Built In.
How Do Microgrids Work?
The purpose of a microgrid is to safely separate energy from the main grid for on-demand use. To do this, one or more energy sites must be installed to serve a specific area. These systems typically feature a combination of different kinds of energy that range from renewables, like wind turbines or photovoltaic solar panels, to fossil fuels and nuclear fission.
The energy produced from these sources are either used in real time or reserved in battery storage. But to actually separate itself from the main grid, a microgrid’s intelligent control system uses a big switch — sometimes called an automatic transfer switch — that autonomously manages the distribution of power within the microgrid’s network and, when connected, coordinates its supply needs with the main electrical grid.
“In response to an unplanned outage or when the grid is stressed, a microgrid functions just like a generator or a battery,” Schurr said. A microgrid’s power supply kicks in instantaneously, and the system runs as long as needed — at least until the power supply from the central utility grid stabilizes and returns to service. When this happens, the switch is closed back in so the generating capacity can synchronize with the grid before it returns to its pre-outage state.
“Once the generation has synchronized and the grid is again supplying power to the site, the microgrid goes back into standby mode,” Schurr continued. “Advanced microgrid controls automate this process, helping to ensure reliable and continuous power.”
Components of a Microgrid
Another way to think of a microgrid is to break it down into its individual components. Here’s a quick summary of each part that makes up a microgrid:
- Generation sources: Microgrids often rely on renewable energy sources like solar panels, wind turbines and hydro-powered systems to produce electricity. They may also use non-renewable gas generators.
- Energy storage systems: Batteries are a popular choice for storing energy in microgrids, especially as lithium-ion batteries have become more affordable.
- Distribution resources: A network of cables, power lines, transformers, circuit breakers and switches distributes electricity throughout a microgrid.
- Controls and load management tools: A microgrid possesses a ‘brain’ that regulates all its elements. Load management tools like energy storage systems also help balance supply and demand, ensuring a microgrid isn’t pushed past its limits.
- Point of common coupling: The point of common coupling is the physical connection between a microgrid and the main grid. The PCC has the ability to shut off the microgrid from the main grid, so the microgrid can operate independently when needed.
Types of Microgrids
There are two categories of microgrids: off-grid and grid-connected systems.
1. Off-Grid
An off-grid microgrid operates independently of the main electrical grid. It can support isolated communities on islands or in remote locations, where significant electricity is needed but access to the main grid is either impractical, impossible or extremely limited. Off-grid systems rely entirely on local energy generation and storage. Traditional models use diesel or heavy fuel oil, but newer tech uses hybrid systems that integrate renewable sources like solar panels or wind turbines, which are connected to batteries or generators.
2. Grid-Connected
A grid-connected microgrid operates both independently and in conjunction with the main grid. This allows it to leverage local energy generation with mainline power as needed. For an added layer of resilience, multi-building facilities and institutions that run critical systems — like military bases, airports and hospitals — primarily employ grid-connected systems to maintain reliable, efficient electrical service in the event of a power outage. It can also be used to reduce cost, offering supplemental energy access that may even rotate in locally sourced renewable energy.
“The wind doesn’t always blow and sometimes the sun doesn’t shine,” Schurr said. “It’s during these times that dual-purpose microgrids can temporarily make up the difference, balancing out the grid until the renewables are able to supply enough power to meet the demand.”
What Are the Benefits of Microgrids?
Rising energy costs, power outages and natural disasters all contribute to the growing interest in microgrid technology. But it’s really about playing the long game when investing in these small, self-sufficient systems.
Resilience During Main Grid Disruptions
Microgrids provide backup power during main grid failures. They enable a continuous energy supply to critical facilities like hospitals, schools and emergency services, adding an extra layer of community resilience and response to extraneous circumstances.
“The list of disruptions and impacts to safe, reliable power are seemingly growing each year,” Steve Kiser, senior vice president and global energy sector lead at WSP USA, told Built In. Power outages caused by hurricanes, wildfires and floods can last for days or weeks, prolonging recovery efforts. “Microgrids provide power,” Kiser added, “when it’s needed most.”
Increased Sustainability Through Renewable Energy
The majority of microgrids are powered by renewable energy technologies like wind turbines, hydro-power systems and solar panels. These decentralized systems offer a compatible way to integrate clean, low-carbon energy into existing power generation infrastructure, reducing reliance on the grid and fossil fuels. Using a hybrid system, the microgrid network that supports the 36-square mile Marine Corps Air Station in Miramar, which includes over 100 buildings and an entire flight line, generates half of its electricity from renewable sources.
Greater Efficiency and Reliability
By localizing power generation, microgrids reduce the percentage of transmission loss and increase efficiency by simply traveling shorter distances. Renewable energy sources and storage systems also provide a more stable and predictable energy supply that can be balanced based on demand.
Reduced Operational Costs
Over the last decade, electricity rates have increased by 20 percent and power outages have more than doubled in likelihood. To combat this, microgrids practice load-shifting, which autonomously swaps energy transmission back and forth from the main grid to a microgrid based on volatile price surges during peak hours.
Renewable energy sources also tend to have lower operational costs compared to traditional fossil fuel power plants. A microgrid’s ability to keep operations running smoothly prevents any financial loss a company or facility may incur because of a blackout.
“Power outages can last for days or weeks in severe cases, further slowing the recovery from such events,” Kiser said. “For consumers who cannot afford extended outages, the benefits of microgrids can be invaluable.”
Broader Access to Electricity in Remote Areas
All microgrids come with the ability to operate independently from the main grid, making them essential in delivering electricity to remote or disaster-prone areas. Take for example SunMoksha’s nanogrid, which helps Kudagaon’s 300 island residents get through the monsoon season, or the Kigbe solar-powered minigrid, which decontaminates a bore hole that provides clean drinking water to an off-grid community of more than 2,000 members. Schneider Electric’s 8.7 kilowatt microgrid directly contributed to an increase in birth rates at Matongo’s Women’s Clinic in Kenya after delivering reliable electricity for the first time.
What Are the Challenges of Microgrids?
While microgrids offer undeniable advantages, they do come with some downsides to consider before investing in the technology.
High Installation Costs
Microgrids are made up of various systems for generating, storing and regulating energy. New infrastructure is also needed to support microgrids. These initial costs may be too much for communities and companies to afford, making microgrids a less viable option.
Extensive Technical Planning and Expertise
Specialized knowledge is needed to monitor control systems, balance load profiles, manage generation demands and properly store energy. If businesses or communities don’t have or aren’t willing to invest in the proper personnel, microgrids may prove to be too complex to set up and run in the long term.
Regulatory Obstacles
Building and integrating microgrids with existing main grids can be hindered by local and national regulations. If organizations and communities are unable to meet electrical standards, a microgrid project may not be able to move forward.
Operational Complexities
Striking a balance between generating, storing and consuming energy to ensure the most efficient use of energy can be an issue, especially as energy demands shift from one moment to the next. Advanced control systems can help, but they become less easy to monitor in larger microgrids.
Scaling Difficulties
Microgrids are designed to cover smaller areas and are sometimes tied to specific corporate offices, campuses and neighborhoods. Communities and organizations looking to expand their microgrids need to adjust existing infrastructure. This can add to the complexities and costs of microgrids, limiting their effectiveness.
The Future of Microgrids
Currently, there are 692 microgrids installed across the states, holding a total capacity of about 4.4 gigawatts. And while that means these decentralized systems provide less than 0.3 percent of the nation’s electricity, that’s still an 11 percent increase in the past four years, according to the Center for Climate and Energy Solutions.
Access to clean, reliable energy at lower cost is not only on trend for big business and eco-conscious government initiatives. It’s also captured the interest of homeowners, with residential solutions being the fastest-growing sector of the microgrid market.
As our cars and cities become electrified, our relationship to energy consumption is also changing. The widespread adoption of low-carbon tech is enabling new concepts like energy modeling, where consumers can allocate specific energy types to different use cases for optimal performance. It’s also fostering novel business models, as demonstrated by energy-as-a-service startups.
That being said, microgrids are by no means replacing the main grid any time soon.
“More microgrids in the future will reduce strain and demand on the central grid — which will have to stick around to meet larger demand needs,” Dierker said. “With more distributed power … microgrids serve as a lower cost supplement, working with the main grid to improve the overall resilience of our energy system.”
Frequently Asked Questions
Are microgrids legal in the US?
Yes, microgrids are legal in the United States — but the regulatory framework varies by state.
Are microgrids being used?
Yes, microgrids are currently in use. As of 2023, there were 692 microgrids installed across the states, with a total capacity of about 4.4 gigawatts.
What is the difference between grid and microgrid?
A traditional, centralized grid distributes electricity over large areas from industrial power plants, whereas a microgrid is a localized network that can operate independently or alongside the main grid thanks to nearby energy sites and battery storage.
What are the two types of microgrids?
The two types of microgrids are off-grid and grid-connected microgrid systems.
