Renewable Energy Resilience

Nanogrids, Microgrids and Virtual Power Plants

Expert on new energy business models such as nanogrids, microgrids and virtual power plants, covering cutting edge energy and environmental issues for over 25 years.

The Microgrid Revolution...

Microgrids have a long history. In fact, Thomas Edison’s first power plant constructed in 1882 – the Manhattan Pearl Street Station – was essentially a microgrid since our centralized grid was not yet established. By 1886, Edison’s firm had installed 58 Direct Current (DC) microgrids.

Shortly thereafter, however, the evolution of the electric services industry evolved to a state-regulated monopoly market, taking away incentives for microgrid developments.

Today, however, a variety of trends are converging to create promising markets for microgrids, particularly in the U.S. it has been become increasingly clear that the fundamental architecture of today’s electricity grid based on the idea of a top-down system predicated on unidirectional energy flows is now obsolete. With the election of Barack Obama as President of the U.S. in 2008, and the subsequent passage of government stimulus funding packages in 2009 to respond to the economic recession, significant new federal funds are being earmarked for the “smart grid,” positioning the U.S. as the global market leader in microgrids.

The fundamental concept of a “microgrid” can be summed up this way: an integrated energy system consisting of distributed energy resources and multiple electrical loads operating as a single, autonomous grid either in parallel to or “islanded” from the existing utility power grid. In the most common configuration, distributed energy resources are tied together on their own feeder, which is then linked to the grid at a single point of common coupling. Microgrids can be viewed as the building blocks of the smart grid, or as an alternative path as the much hyped smart “SuperGrid.”

Perhaps the most compelling feature of a microgrid is the ability to separate and isolate itself – known as “islanding” – from the utility’s distribution system during brownouts or blackouts. Under today’s grid protocols, all distributed generation, whether renewable or fossil fueled, must shut down during times of power outages. This fact is galling to microgrid advocates, who argue this is precisely when these on-site sources could offer the greatest value to generation owners – as well as society – by providing power services when the larger grid system has failed consumers and owners of distributed energy generation systems.

The prospect of local control of one’s energy services is threatening to politically powerful incumbent electricity utilities, whether privately or publicly owned. To date, these utilities have helped stall widespread growth of microgrids throughout the U.S. However, new inverter technologies may be assuaging utility opposition to microgrids due to fears about unintentional islanding, a traditional safety concern.

According to the Galvin Electricity Initiative (GEI), our current U.S. electricity grid represents a $360 billion asset and features 500,000 miles of distribution lines. Over the next 25 years, an estimated $6 trillion will be needed to upgrade and expand grid infrastructure around the world. GEI maintains the “pacing items” for microgrids are time-of-using pricing (TOU) and net metering for DEG in localities with high retail electricity rates.

Just how big will the microgrid market be over the next five years?  Between now and 2015, over 3 GW of new microgrid capacity is projected to come on-line worldwide, representing a total market value of $4.6 billion (B). North America captures $3.7 B or 80% of this market. The U.S. is the current capacity leader with at least 623 MW currently operating today, and that capacity will increase to 2,474 MW by 2015.

Microgrids could offer solutions to utilities as carbon caps and renewable energy requirements become a standard way of doing business in the U.S. and around the globe. Some utilities, such as American Electric Power (AEP), recognize that microgrids may be an inevitable technological advance that could help utilities retain customers by providing premium, uninterruptible power supplies and offer ways to manage DEG resources that increasingly populate their distribution grids.

Among the benefits of microgrids identified by Lawrence Berkeley National Laboratory (LBNL) -- as a complement to existing grid infrastructure -- are the following:

  • Autonomy: Microgrids allow generation, storage and loads to seamlessly operate in an autonomous fashion, balancing out voltage and frequency issues with recent technology advances.
  • Stability: Control approaches are based on frequency droops and voltage levels at the terminal of each device, allowing the entire network to operate in a stable manner, no matter whether the larger grid is up or down.
  • Compatibility: Microgrids are completely compatible with the existing centralized grid, serving as a functional unit that helps build out the existing system, helping to maximize otherwise stranded utility assets.
  • Flexibility: Expansion and growth rates do not have to follow any precise forecasts, since lead times are short, and build-out incremental. They are also technology neutral, able to tap a diverse mix of renewable and fossil fuels.
  • Scalability: Microgrids allow many small generation, storage and load devices in a parallel and modular manner in order to scale up to higher power production and/or consumption levels.
  • Efficiency: Energy management goals – including economic and environmental – can be optimized in a systematic fashion.
  • Economics: Droop frequency control techniques allow for economic decision making to be programmed into standard operating protocols.
  • Peer-to-Peer Model: Microgrids represent a new paradigm, a true peer-to-peer model that does not dictate size, scale, peer numbers or growth rates.

A counter force that could frustrate the move to microgrids, oddly enough, is the current buzz about smart grids and the need to upgrade the entire grid instead of differentiating services based on customer cost, reliability and environmental needs. Some see microgrids and an intelligent grid as a continuum, with microgrids serving as the building blocks to tomorrow’s interactive, two-way and self-sustaining grid infrastructure, starting with aggregation of multiple loads, then feeder lines, substations, and so on.

To go more in-depth, please consider purchasing the full report I produced with the help of Adam Cornelius, a green MBA graduate:


©2016 Peter Asmus. Photo credit: David Clites. Website by: