What is a Microgrid?

Share Button

A microgrid is a self-sufficient energy system that serves a discrete geographic footprint, such as a college campus, hospital complex, business center, or neighborhood.

Within microgrids are one or more kinds of distributed energy (solar panels, wind turbines, combined heat & power, generators) that produce its power. In addition, many newer microgrids contain energy storage, typically from batteries. Some also now have electric vehicle charging stations.


A solar microgrid serving a Montgomery County, Maryland facility. Courtesy of Schneider Electric

Interconnected to nearby buildings, the microgrid provides electricity and possibly heat and cooling for its customers, delivered via sophisticated software and control systems.

Three key features characterize a microgrid.

1. A microgrid is local

First, this is a form of local energy, meaning it creates energy for nearby customers. This distinguishes microgrids from the kind of large centralized grids that have provided most of our electricity for the last century. Central grids push electricity from power plants over long distances via transmission and distribution lines. Delivering power from afar is inefficient because some of the electricity – as much as eight to fifteen percent – dissipates in transit. A microgrid overcomes this inefficiency by generating power close to those it serves; the generators are near or within the building, or in the case of solar panels, on the roof.

2. A microgrid is independent

Second, a microgrid can disconnect from the central grid and operate independently. This islanding capability allows them to supply power to their customers when a storm or other calamity causes an outage on the power grid. In the U.S., the central grid is especially prone to outages because of its sheer size and interconnectedness – more than 5.7 million miles of transmission and distribution lines. As we learned painfully during what’s known as the Northeast Blackout of 2003, a single tree falling on a power line can knock out power in several states, even across international boundaries into Canada. By islanding, a microgrid escapes such cascading grid failures.

While microgrids can run independently, most of the time they do not (unless they are located in a remote area where there is no central grid or an unreliable one). Instead, microgrids typically remain connected to the central grid. As long as the central grid is operating normally, the two function in a kind of symbiotic relationship, as explained below.

3. A microgrid is intelligent

Third, a microgrid – especially advanced systems – are intelligent. This intelligence emanates from what’s known as the microgrid controller, the central brain of the system, which manages the generators, batteries and nearby building energy systems with a high degree of sophistication. The controller orchestrates multiple resources to meet the energy goals established by the microgrid’s customers. They may be trying to achieve lowest prices, cleanest energy, greatest electric reliability or some other outcome. The controller achieves these goals by  increasing or decreasing use of any of the microgrid’s resources – or combinations of those resources –  much as a conductor would call upon various musicians to heighten, lower or stop playing their instruments for maximum effect.


Source: US Dept. of Energy

Side Note: The Department of Energy offers a more formal definition for a microgrid, describing it as a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island mode.

A software-based system, the controller can manage energy supply in many different ways. But here’s one example. An advanced controller can track real-time changes in the power prices on the central grid. (Wholesale electricity prices fluctuate constantly based on electricity supply and demand.) If energy prices are inexpensive at any point, it may choose to buy power from the central grid to serve its customers, rather than use energy from, say, its own solar panels. The microgrid’s solar panels will instead charge its battery systems. Later in the day, when grid power becomes expensive, the microgrid may discharge its batteries rather than use grid power.

Microgrids may contain other energy resources – combined heat and power, wind power, reciprocating engine generators – that add even greater complexity and nuance to these permutations.

Working together via complex algorithms, the microgrid’s resources create a whole that is greater than the sum of its parts. They drive system performance to a level of efficiency none could do alone. All of this orchestration is managed in a near instantaneous fashion – autonomously. There is no need for human intervention.

Free Resource from Microgrid Knowledge White Paper Library

Microgrid Controller
Microgrid Cybersecurity: Protecting and Building the Grid of the Future
North America was pummeled this year with Hurricanes Harvey, Irma, and Maria. As devastating as these events were, none compare to the threat of a major cyber attack on the American electrical utility grid. Download the new report from Microgrid Knowledge, courtesy of S&C Electric Co., that explores the threat of cyber attacks and why microgrid cybersecurity is crucial to the grid of the future.
What a microgrid is not

It’s important to note here what a microgrid is not. Some people use the term to describe a simple distributed energy system, such as rooftop solar panels. A key difference is that a microgrid will keep the power flowing when the central grid fails; a solar panel alone will not. Many homeowners with solar panels are unaware of this fact and are surprised that they lose power during a grid outage.

Simple back-up generators also are not microgrids. Such systems are only employed in emergencies; microgrids operate 24/7/365 managing and supplying energy to their customers.

How many microgrids and where?

Microgrids have been around for decades, but until recently were used largely by college campuses and the military. So, the total number of microgrids is relatively small but growing. Navigant Research forecasts a $30.9 billion microgrid market by 2030.

But the pace of microgrid installation has picked up and is expected to grow dramatically as distributed energy prices drop and worries heighten about electric reliability, due to severe storms, cyberattacks and other threats.

Navigant expects global microgrid capacity to reach 7.6 GW by 2024, up from 1.4 GW in 2015. The research firm sees North America and Asia as the centers of growth.

Want to learn more about microgrids? See other articles in About Microgrids.

Share Button

Sign up for our newsletter and get the latest microgrid news and analysis.
Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.


  1. this defintion and decription is very paertial and do not reflect any realsitic concern about micro-grids; I wuggest tjhat you classified this as dream but with all elements it will become for the users a nigthmear !!
    How could you define a micro-grid ,out of some very specific places , tas “A microgrid is independent”.The main concern of an electrical grid is to remain stable and efficient for its users/customers/particpants and per exception or in case of accident/requirement to be able to disconnect it self for a limited duration. Otherwise you must assume like at the beginning of the 20th century to have 20% frequency variation, more than 31 days of shutdown per year or a cost of the kW greater than 25US$ !!!The future of microgrids is in the capability to have all the islanded generation and comsumption elements intreconnected together to be able to build and intreconnected grid at HV or MV level with a balanced common management


  1. […] microgrid, which typically has multiple power sources, keeps the electricity flowing during an outage by […]

  2. […] grid in the United States. Rather than promoting technologies that actually do this – like microgrids – the Department of Energy (DOE) is pushing old-style generators that are part of the […]

  3. […] fact, cost comparisons show that developing renewables, storage and microgrids at closed mines can be significantly more economic than siting such projects […]

  4. […] Heritage site. But the historic island also serves as a modern showcase and model for renewable microgrid and distributed energy technology. Its new solar plus storage microgrid was designed and deployed […]

  5. […] Corporations from Google to 3M are buying power directly from newly developed power projects and are even taking part in developing wind and solar projects themselves. In many cases, one of the most cost-effective ways a corporation can invest in a renewable energy project is by investing in a microgrid. […]

  6. […] and boost energy reliability, the U.S. Air Force has awarded a contract to build a renewable energy microgrid on its Wake Island base in the North Pacific […]

  7. […] New York has embarked on an aggressive campaign to foster development of distributed energy and microgrids within its own borders, including offering $40 million in funding for community microgrids through […]

  8. […] lot of disagreement exists about what constitutes a microgrid. But there are two things people generally agree on. First, a microgrid can island or isolate […]

  9. […] Microgrids are categorized most broadly by their grid interface, of which there are two choices. A microgrid is either grid connected or remote (not linked to the grid). […]

  10. […] Wednesday to require that Entergy New Orleans develop a grid modernization plan that would include microgrids, distributed energy, electric vehicle charging stations and energy efficiency […]

  11. […] Shparber, adding that the eventual decision by the Texas PUC on the issue “will likely impact microgrid and storage development in Texas and […]

  12. […] The utility’s actions are being closely watched by the microgrid industry, which sees the world’s busiest airport as a prime location for an advanced microgrid. […]

  13. […] role? What price should customers pay for microgrid power? How green should they be? And what defines a microgrid, […]

  14. […] main benefits of microgrids are threefold; they are local, independent and intelligent. When energy is produced locally, the grid itself […]

  15. […] for the better may be in store – if efforts to fully realize a wind power-battery energy storage microgrid come to […]

  16. […] destroyed by lava — both Hawaii Electric Light (HELCO) and the state are moving toward boosting microgrid […]

  17. […] for the better may be in store – if efforts to fully realise a wind power-battery energy storage microgrid come to […]

  18. […] microgrid will incorporate a 1-MW solar photovoltaic array, an on-shore 2.6-MWh battery storage system, a […]

  19. […] Due to the rise in electricity consumption, major expansions of electricity transmission and distribution networks are foreseen by the report. The report also points out roles for microgrids. […]

  20. […] energy storage solutions are flexible – they can be deployed by electric utilities, a private microgrid, or in residential solar installations. Lithium ion (Li-ion) batteries are scalable and can be […]

  21. […] If the proposed rule, which Morelli called a stop gap measure, does go forward, it could affect the benefit-cost analysis of developers pursuing projects that sell into PJM’s frequency regulation market, whether the project is a standalone energy storage device, an energy storage device that is part of a microgrid, or is a generator, either standalone or part of a microgrid. […]

  22. […] Microgrids with combined heat and power (CHP) are often the most cost effective means of providing affordable resiliency for campuses, blocks and neighborhoods. High efficiency, environmentally superior and economically advantageous CHP systems can serve a large portion of the normal electric and thermal loads for multiple buildings and customers who are in close proximity. The economic savings of providing both thermal energy and electric power from a single source, rather than separately purchasing power, heating and cooling can deliver a lower total cost of energy to the microgrid’s connected customers. CHP systems operating at total system efficiencies that are 50% or better than the status quo, typically deliver significant reductions in greenhouse gas and other harmful air pollutant emissions. […]

  23. […] percent of those surveyed listed services related to microgrids, energy storage and data as top drivers of earnings growth beyond […]

  24. […] microgrid helps protect the health of hundreds of thousands of cattle at the ranch, located in Waimea. The […]

  25. […] are turning to small-scale microgrids and distributed energy solutions that use renewable resources and hold out prospects of high levels […]

  26. […] the newly installed microgrid, Direct Relief can run its warehouse “as a self-contained power island for months on end,” […]

  27. […] where people could shelter in place. Design could range from traditional grid hardening “to microgrids that combine distributed energy resources, energy storage, and innovative consumer technologies,” […]

  28. […] was to see if ultracapacitors can provide a more cost-effective energy storage system for microgrids—and better response time—than […]

  29. […] Microgrids can vary widely in size. A microgrid may generate enough power for a few homes or an entire community. Some begin small and later add more generation resources. Hence, a microgrid can easily scale to its host’s needs. […]

  30. […] Microgrids and DERs have come of age, offering sophisticated technology and services that energy users both need and want. It is now a matter of regulation, markets and business models catching up. As we’ll see in the next three chapters, this is already happening. […]

  31. […] expanding the mandates of green banks to include financing of resilience measures, most notably microgrids. This is going to be one of the things we are going to focus on in our annual industry report […]

  32. […] shifts to long term low or no-carbon power sources. These goals can and are being delivered by microgrids and distributed renewables, which can also increase the resilience of our electric power system and […]

  33. […] terminal at New York’s JFK Airport — one that focuses on ultra modern energy technologies: a microgrid, on site electric generation and battery […]

  34. […] are already seeing advanced microgrids, such as the ones operated by Ameren and North Bay Hydro, using natural gas in place of […]

  35. […] of the total energy consumption by the federal government, has been one of the key proponents of microgrids among federal agencies, emphasizing continuity of operations for mission-critical activities. A […]

  36. […] the Bronzeville clusters, one microgrid is designed for ITT (Illinois Institute of Technology), and the second is being built for the […]

  37. […] chose to build a renewable microgrid on Mount Sterling in Great Smoky Mountains National Park. Comprised of 10 kW of solar and 95 kWh of […]

  38. […] So, how can college campuses, in particular, even afford to implement a microgrid? […]

  39. […] that use fuel cells  — all part of Duke’s efforts to provide on-site generation with microgrids to customers with critical […]

  40. […] of the microgrids Russelectric worked on in the past used diesel generators and cogeneration. In the last year or […]

  41. […] to prolong the life of these assets and defer their replacement costs. Thus, many are turning to  microgrids to promote resiliency, sustainability and stability, as well as to address capacity […]

  42. […] Control covers power import/export to the main grid and to other microgrids. Both Secondary and Tertiary Control Levels can also be implemented using central or […]

  43. […] manufactured custom enclosures, and packaged and installed the individual Butler Farms microgrid components into a fully functioning battery storage system and separate […]

  44. […] How should organizations react? Ameresco focuses on organizations’ growing ability to leverage their own infrastructure and energy assets to avoid future outages and become more resilient. Think distributed energy and microgrids. […]

  45. […] Energy, a leading player in Sub-Saharan Africa’s fledgling, but fast growing markets for microgrids, minigrids and micro-utilities, acquired the Tanzanian microgrid assets of another emerging market […]

  46. […] There was water, but no electric grid at the site Themar Al Emarat chose for its new hydroponic farm in the United Arab Emirates (UAE). The agricultural company found the solution in a 5.94 MW off-grid microgrid. […]

  47. […] There was water, but no electric grid at the site Themar Al Emarat chose for its new hydroponic farm in the United Arab Emirates (UAE). The agricultural company found the solution in a 5.94 MW off-grid microgrid. […]

  48. […] communities don’t even start to think about microgrids until after a disaster, giving rise to the adage ‘follow the carnage’ to describe a common […]

  49. […] answer is microgrids, a big idea in the form of small, efficient and flexible energy systems. Microgrids are […]

Leave a Comment