So, What is a Microgrid, Exactly?

what is a microgrid

Extreme weather events, environmental concerns, and energy economics are bringing microgrids into public discourse in the grid-connected world. The energy landscape is suddenly changing very quickly, and microgrids are a big part of that change. The entire world — every corner of it — is finally looking at the potential for microgrids to fill many needs.

But what is a microgrid?

A microgrid can be defined as an independent power network that uses local, distributed energy resources to provide grid backup or off-grid power to meet local electricity needs.  At the most basic level, microgrids are “micro” (small) and offer a “grid” (an interconnecting system of links).

The “micro” part of the equation means simply that it is “smaller than the utility-scale grid.” It could be anything from a single building to an island or isolated village of substantial size. To be a grid, a system must generate electricity via one — or a combination of — fossil fuels and renewable resources, including diesel generators, wind turbines, solar photovoltaic (PV) panels, hydro, geothermal, etc. The system must have controls to make all its parts work together. It must offer a distribution method to get power to where it is needed. It must also have a method of dealing with excess energy produced, ideally using storage, or a way to provide that energy back to the grid. Finally, it must have one or more consumers for its electricity.

‘Microgrid’ means different things to different people

Around the world, and even in the same room, different people use the word “microgrid” to describe different things. There is no single size or configuration for microgrids – they can range over many orders of magnitude in size. They can be simple or complex. They can be attached to a power grid or completely independent from it.

“Although microgrids are becoming more and more prevalent in both the press and in the energy world,” explains HOMER Energy Founder and CEO Dr. Peter Lilienthal, “there is no common definition of exactly what constitutes a microgrid, or how to differentiate among types of microgrids. The term microgrid is not well defined or distinguished from other terms, such as mini-grids. As microgrids become a more well-established part of our global electrical system, the need for a common set of definitions will become increasingly important.”

To address the confusion and provide a common language around microgrids, HOMER Energy recognizes four major market divisions for microgrids. We also offer additional parameters that should be defined for each individual project to ensure a shared understanding.

Categorizing microgrids: 4 system types serve unique purposes

The intersection of size (large or small) and grid connectivity (connected or remote) results in four main microgrid types:

Energy access: small off-grid projects

Energy access, “village power, or “rural electrification” microgrids are designed to serve the 1.3 billion people worldwide who currently have no access to electricity. HOMER software has been modeling microgrids in the developing world for several decades. A growing number of publicly and privately funded projects are being developed in India, Asia, and Africa.

Unreliable grids: small grid-connected projects

In much of the world, electrical “access” is based on a very unreliable set of wires. Middle-class households and businesses may have to provide their own power. These grid-connected microgrids are usually smaller than their resilient cousins in better-served on-grid locations. They are typically used in developing countries with unreliable grids where backup generators are frequently in use.

Islands: larger off-grid projects

Smaller islands that aren’t connected to the mainland power system have always been powered by microgrids, and this has been discussed a great deal recently in the wake of Hurricane Maria’s destruction in Puerto Rico. Along with remote villages, islands have more complex issues than most village power systems, because they often have multiple diesel generators and substantial distribution.

Resilience: large grid-connected projects

Another application that’s been in the press lately is using microgrids for “resilience” in the face of large-scale or prolonged power outages in a grid-connected area. Large grid-connected microgrids, such as those on military bases, on university campuses, or in neighborhoods, are connected to a traditional utility, but they are also capable of operating in island mode. They have multiple generators and may have substantial distribution and sophisticated controls within the microgrid.

Project ownership

Once the 4 basic categories are defined, we can drill down and further define specific microgrids using additional criteria. For example, understanding the ownership model provides useful insight into a given microgrid. Bloomberg’s research group divides microgrids into five ownership categories that include commercial or industrial, community or utility, campus or institutional, military, and off-grid or remote. In addition, there may be one project owner or several. And some microgrids have different entities owning various pieces of the system, such as generation, storage, and the connecting infrastructure.

Understanding microgrids is critical for the planet’s energy future. With microgrids properly categorized, very necessary conversations based on a shared understanding become possible in this critical time when the world is moving away from the centralized grid toward a more distributed energy model.

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The following blog posts were used to compile this article:

Microgrids are Grabbing the ENTIRE World’s Attention

What Exactly is a Microgrid?

How to Classify Microgrids

Will the Real Microgrid Please Stand Up?