So What is a Microgrid, Exactly?

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So what is a microgrid, exactly?

The term has been used for years, yet those who attend microgrid conferences joke that much of the event is spent in debate over the definition. As is often the case with a popular technology, many would like to package their products as microgrids. Hence, we see the term’s meaning broadening in the marketplace.

This is the second article from our special report, Think Microgrid.

Let’s start with what a microgrid is not. Rob Thornton, president and CEO of the 105-year old International District Energy Association, often says that microgrids are “more than diesel generators with an extension cord.” In other words, a microgrid is not just back-up generation but should be a robust, 24/7/365 asset that provides primary energy services to a market  A microgrid can provide back-up generation, but it offers additional, more intricate services as well.

For the purposes of this article series, and our report, “Think Microgrid: A Discussion Guide for Policymakers, Regulators and End Users,” we focused on advanced, grid-connected microgrids with the following characteristics.

  • Produce onsite generation and optimally thermal energy to be economically competitive
  • Serve a distinct, interconnected load, usually with multiple buildings or meters, within a defined geographical boundary or business district
  • Can act as a single, controllable entity within the central grid
  • Can operate in parallel to the grid, as a grid collaborator not competitor
  • Can connect or disconnect (island) from the central grid during interruption events with black-start capability
  • May participate in demand response, and buy power from the grid or sell energy, capacity and ancillary services to the grid, depending on economics/pricing
  • Provide energy 24/7, 365 days a year
  • Often incorporate advanced controls and communications and automation software for transparent and intelligent energy management and demand response
  • Include distribution wires
  • May use any form of fuel, but are likely to run on CHP/natural gas, fuel cells or solar energy, and sometimes wind power.
  • May include thermal and electric storage

No set size exists for these microgrids; some generate power in the kilowatt range, while others produce more than 100 MW. Most existing microgrids in North America are customer-owned, although models are emerging for third-party ownership. A handful of utilities also are actively developing or operating microgrids. Some have rate-based microgrids, such as San Diego Gas & Electric, a model that is increasingly under discussion.

Several college campuses have operated microgrids in the United States for years. These are large and complex facilities that serve as models for the emerging era of the microgrid. The University of Texas at Austin, for example, operates a microgrid that provides 100 percent of the power, heating and cooling to 150 campus buildings encompassing 20 million square feet. It has done so for more than 40 years with 99.9998 percent reliability.

These campuses use combined heat and power and district energy, two tried-and-true technologies characterized by their high efficiency. CHP puts to good use the heat that is typically wasted in conventional power production. Rather than dumping waste heat to a nearby river, lake or ocean or simply letting the heat dissipate into the sky, a CHP plant reuses it for heating, cooling and steam production.  District energy systems pipe water or steam from a central plant to heat or cool multiple buildings. This creates efficiency and cost savings because the buildings can forego installing individual boilers, chillers and air conditioners in each building. (See more details here on other ways CHP and district energy increase energy efficiency.)

 “Having a microgrid allows you to marry the thermal side along with electrical and manage the whole thing together as a unit for your greatest benefit. That is really the power of microgrid.” – James Adams, director of utilities at Cornell University

Remote or mobile microgrids, too, are increasingly being adopted worldwide. Remote microgrids can be found on islands and isolated locations that are not connected to a grid.  The US military uses mobile microgrids in places like Afghanistan where fuel transport is inherently dangerous and difficult. Some remote microgrids operate on fossil fuels, but increasingly they are incorporating wind power, solar energy, or other forms of renewable energy. By using energy storage, remote microgrids are able to accommodate the intermittency of renewable energy, a task that may be difficult for an energy facility that is not part of a larger, central grid.

But it is the grid-connected microgrid that is provoking the most discussion among US decision-makers, and is the focus of this article series. This type of energy facility could profoundly influence generation, distribution and transmission planning in the US. The microgrid also could become an increasingly important player in wholesale power markets, as we’ll discuss later in this series.

Free Resource from Microgrid Knowledge Library

How Microgrids Enable Optimal Cooperation Among Distributed Energy Resources
Many facility operators need increased resiliency, efficiently, and sustainability. Distributed Energy Resources (DERs) like wind, PV and energy storage can address these needs. Yet also introduce many other challenges. To learn how microgrids can help you optimize the integration of these assets, download this white paper.
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Come back next week for the third article in this series, or immediately download the full report, free of charge: Think Microgrid: A Discussion Guide for Policymakers, Regulators and End Users, courtesy of the report’s underwriters: the International District Energy Association, Schneider Electric and Microgrid Knowledge




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About Elisa Wood

Elisa Wood is the chief editor of She has been writing about energy for more than three 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. terry hill says:

    I read this report last week and was disappointed in that, while I think I saw one reference to Direct Current (DC), there was no expansion on the issue rather the report just seemed to be a SOP with a little twwek for the existing grid, no real innovation.

    The innovation will come when we face the fact that we waste 70% of the energy on the grid before we get to turn on the light. Once we absorb that fact we need to acknowledge that our homes and buildings leak like sieves and that tremendous savings are sitting there waiting to be retrieved. Additional savings are available if we revert, as a first step, to DC inside the building envelope and run those appliances directly from PV on the roof. Now add some batteries (Tesla anyone) and a DC micro grid linking these energy efficient buildings and we have made prosumers out of consumers, moved generation from the center to the edge thus dramatically cutting wastage and, by replacing the existing distribution grid with a series islandable DC micro grids, dramatically improved resiliency.

    • I am 100% behind you on this one Terry, but unfortunately the energy providers and government aren’t. Revenue is more important to them. I am developing a home management system where all aspects ofgenerations, storage and use is brought together to work in unison. This needs a battery system and once this is in place DC is on tap. The battery system allows for reduced peak demand, off peak storage, renewable generation with excess being stores as hot water. However, if you read around the world givernments are now legislating that renewable generation be taxed (Germany and Spain are two) and Florida has just passed a law that it is illegal to have an off grid system. Waste is there to be saved and used but this doesn’t make extra revenue.

  2. I enjoyed reading the information about micro grids. I have some questions. How do micro grids apply to Private Use Networks, Franchise Rights, Stranded Costs/Charge backs and Redundancy in connection with cross utility easements and restrictions by the local TDU.

    • Elisa Wood says:

      Thanks Randy. We get into these issues in our new report Think Microgrid, downloadable here or at We also have a LinkedIn Group, Microgrid Knowledge, where you can reach out to microgrid experts for further discussion.

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  4. Thanks for this article Elisa and clearing up the what is & what isn’t. As is present here, the term ‘microgrid’ is often co-opted by the electric only side, specifically PV & battery providers, in let’s just call it a hatred of the big G grid in the USA and their desire to tear it down now that they no longer benefit from it at their homes.

    Irony being, they like to reference specifically Germany’s success with PV, but with little acceptance how completely different general infrastructure is designed between the U.S. & Germany or Europe for that matter. Just looking at residential concentrations, not just cities or villages vs suburbia & sprawl between the two, and one can barely compare. The microgrid in the US becomes a single residency unit, unlike how you point out the ‘campus’ setting with both heating/cooling & electricity… Basically how European cities & villages have been built for ages or campuses (educational or industry) in the US.

    Or if we look at the intertied electrified railways, that are nearly seamless with European grid & distribution systems.

    Then ask a European if they would ever consider tearing down the [electric] grid, and you’d get a dumbfounded look as they all appreciate its value.

    I did note there is no direct reference to either ownership or generators, which again is code in the US for utilities, the big, bad monsters that they apparently are in the USA. And again another key difference, the individual vs communal grey area of what is best or acceptable or completely taboo.


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