We recently presented a vision of a global supergrid: a gigantic interconnected power network spanning continents and oceans. But to solve the trickiest of energy puzzles, we can’t just focus on macro-level concepts, we also have to take a look at a technology on a much smaller scale but with an even greater impact: the microgrid.
A microgrid is more than just a small grid. It’s a self-contained network that can operate independently, generating, storing and distributing electricity within a defined local area whilst keeping the microgrid in balance.
Microgrids are not here to defeat (or replace) the big public grid. In fact, connected to the main grid they have the potential to help resolve the energy trilemma: providing reliable sources of green energy while keeping costs down.
The local underdog
A microgrid is small and local, serving a defined geography such as a campus, community, office park, or industrial facility (or small island like T'au. ;) But that's in the next article!). And it has to provide everything needed to support the loads of this area:
Generation: A combination of sources such as solar, wind, combined heat & power units and backup diesel or gas generators ensure sufficient supply.
Storage: Battery storage provides fast response and short- to medium-duration needs. Thermal storage can also be used as a source of demand flexibility for balancing and cost minimisation.
Grid connection: Switchgear, relays, inverters and protection systems allow safe and compliant interconnection with the main utility grid for providing energy and/or balancing services to the grid and receiving backup energy and/or balancing from the grid.
Control and communication: An energy management system (EMS) acts as the brain, monitoring, forecasting and optimizing overall operation. It schedules generation, manages supply and demand and may sell excess power to the grid or buy and import power from the grid, ensuring that pre-defined security, sustainability and economic goals are met, while providing a seamless transition between grid-connected and island modes.
Small but mighty
Microgrids can play a strategic role in the energy transition. As renewable supply grows, so does the variability in power generation. Microgrids address this challenge by enabling smart local balancing, reducing the need for large-scale interventions in the central grid and potentially reducing overall costs.
For TSOs and DSOs, microgrids can act as modular building blocks of a smarter, more decentralized grid. For suppliers and traders, they open new revenue streams in an increasingly flexible, digitalized market. And for consumers, they represent a tangible path toward resilience, cost control, and sustainability.
The energy trilemma - delivering energy that is reliable, affordable, and sustainable - is a growing challenge for modern power systems. Microgrids are, perhaps uniquely, suited to address all three dimensions.
Reliability
Decarbonization is driving the build-out of renewable generation as well as the retirement of dispatchable power plants. But solar and wind are by nature intermittent and cannot ensure security of supply 24/7. And they are often located far from population centers, leading to grid congestion. At the same time, electrification and data centers are leading to a massive upswing in demand. Together, this is putting intense strain on the grid.
However, microgrid technology was designed for reliability. First intended for remote locations without main grid connection, these systems are built with multiple levels of redundancy, an abundance of generation and storage, and clever optimization to make the most of available resources. Consumers connected to the grid also choose microgrids for reliability purposes; critical loads remain powered during grid outages, while advanced control systems allow for real-time optimization of supply and demand.
This also helps the public grid, translating into improved resilience and less need for grid expansion. During peak times microgrids supply part or all of their own load, reducing strain on transmission and distribution systems, and can even supply energy back to the grid. They can also provide ancillary services such as frequency regulation and voltage support.
Affordability
The energy transition requires significant investment in renewables generation, storage, transmission and smart control systems. Meanwhile, intermittent renewables cause extreme market volatility, often swinging from negative to very high prices in the course of a single day. In the end, consumers end up bearing these costs.
While microgrids require upfront investment, they can significantly lower lifetime energy costs for their operators and consumers. By optimizing local generation and demand management, taking advantage of off-peak tariffs, and participating in ancillary services, wholesale or flexibility markets, microgrid owners can substantially reduce operating expenses. Studies and trial projects have shown savings of anywhere from 14-21% for simple residential scenarios to nearly 60% in a more complicated shopping center concept.
From a system operator’s perspective, peak shaving and congestion relief can defer costly infrastructure upgrades. In order to meet projected demand growth and RePowerEU objectives, the European Commission estimates that €584bn in grid investments will be needed by 2030. Reducing the load on the transmission grid could cut these costs significantly. Peak shaving also lowers energy costs by minimizing the need for more expensive fossil fuel-based generation.
Sustainability
Despite the challenges the energy transition presents, decarbonization is necessary to protect the environment and combat climate change.
By generating power from renewable sources and pairing it with storage and demand management, microgrid operators increase the share of renewables in their own consumption.
They also enable a higher share of renewable energy on the greater grid by flattening demand so that traditional plants aren’t needed as often. And by providing generation close to the point of consumption, microgrids contribute to greater system efficiency by reducing transmission losses as well as wear and tear on transmission infrastructure.
Goliath’s shield
The blackout that plunged Spain and Portugal into darkness in April was a stark warning of the vulnerabilities: frequency and voltage oscillations, combined with outdated protection rules for renewable generators, led to a rapid cascade and shutdown. In a similar situation, the presence of a number of microgrids could have greatly reduced the scope of the blackout, potentially keeping the outage localized and thus enabling a much faster restart. Here’s how:
Localized Buffering: Microgrids with smart, grid-forming inverters, capable of actively supporting voltage and frequency, can continue operating through disturbances rather than disconnecting. They act like shock absorbers in their local area.
Distributed Inertia: Modern microgrids increasingly incorporate virtual inertia with advanced control of inverter-based sources. This capability enhances local stability and delays cascading failure.
Demand-Side Flexibility and Load Shedding: Microgrids can dynamically shed or shift non-critical loads, helping maintain balance during systemic stress and reducing strain on regional transmission.
Controlled Islanding: In the event of a wide-area disturbance, microgrids can rapidly go into island mode, isolating themselves from the failing wider network, preserving critical loads and enabling localized restoration even as the larger system remains unstable.
New heroes point the way
Retrofitting existing developments can face a multitude of challenges, particularly around the integration of electricity, gas, heat and other utility networks. Large scale new developments do not face these challenges and can design in optimal configurations from day 1. A good example of this can be seen in the UK, up until now a laggard in district heat networks, at the London King’s Cross development, which combines electricity, heat, gas and power networks with on-site and remote renewable generation to deliver a 100% renewable microgrid for its commercial and residential customers.
A stronger giant
Essentially, widespread adoption of microgrids could create a network of resilient “cells” within the grid, capable of responding rapidly to local disturbances. Rather than relying on a massive monolithic structure, the grid becomes a more adaptive, fault-tolerant system. In this way, David doesn’t topple Goliath; he helps him stand strong.
