All About Microgrids

Find out why the energy industry needs microgrids, how they work now and how they could work in the future…


The rapid move toward using distributed renewable energy resources as a replacement for large fossil fuel power stations is enforcing a major re-think on the existing distribution and transmission models used by the energy industry.

One increasingly popular solution is to connect up distributed resources in local microgrids – whether in urban areas, which are rapidly adopting rooftop solar, or in remote locations, where solar and wind can power off-grid networks.

But what is the history of microgrids, what do they do and how do they work?


The first microgrid was invented by Thomas Edison


Edison strategically located the station in the densely populated area of lower Manhattan. (photo credit: ConEd)

The Manhattan Pearl Street Station, built by Thomas Edison in 1882, was the USA’s first commercial electricity power plant and was essentially a microgrid. The coal-fired station initially served 82 customers in a few blocks, powering 400 lamps. Two years later it was up to 508 customers with 10,164 lamps.

Incidentally, it also pioneered two other solutions that are being re-explored in the modern age – it was the world’s first CHP plant (as the steam used to power the generators was also used by local manufacturers to heat nearby buildings) and it used batteries to store power.



Modern microgrids are all about multiple resources


The Edison 1,500 light 110-volt Steam Dynamo “Jumbo” installed in Pearl Street Station.

Edison’s 19th Century invention was actually just a small version of what grew to become the traditional energy grid design, with a centralized power resource serving a large number of consumers – in the same way a diesel generator supplying back-up power can be defined as a microgrid.

The modern meaning of a microgrid, however, is a collection of multiple smaller energy resources of different types (including renewables like solar panels and wind turbines but also natural gas generators, CHP systems and energy storage) owned by local ‘prosumers’, small businesses or small power operators connected up to supply that local area with self-sustaining power.



Hurricane Sandy has driven their uptake


The potential of modern microgrids was flagged to the wider public by the devastation caused by Hurricane Sandy in 2012 – and since then policy makers and energy utilities have started to embrace their potential.

Superstorm Sandy’s surging tide knocked out a Con Ed substation, darkening the City. Photograph by Iwan Baan

Sandy was the largest Atlantic hurricane on record at the time and left 8.5m people without power with some 1.3m still not re-connected one week later. Images of Manhattan swathed in darkness were a stark display of how much we rely on power while estimates of $1.1bn in lost revenue directly due to power outage revealed just how costly it is to be without.

Six months after Sandy, a report from Navigant Research revealed the number of modern-style microgrid projects was 480 worldwide. Last year, four years later, the same company reported 1,842 projects worldwide.



Microgrids are environmentally friendly


The modern microgrid is not just about reducing the risk of blackouts during a storm – in fact, their far more important role is in supporting a move to reduce the effects of climate change.

They do this by…

• Improving energy efficiency by using local generation, reducing through-the-wire losses incurred by transmitting power from far-away sources
• Driving the adoption of renewable resources, as these are the most cost effective and convenient energy sources to install at small scale
• Encouraging the use of combined heat and power, which is 70-80 percent efficient – twice the efficiency of the most efficient centralized power plants



Microgrids don’t have to work in isolation


Modern microgrids can involve anything from a small group of houses to a whole community – but joining one doesn’t mean you have to cut yourself away from the grid. In fact, a microgrid can work in a number of ways…

• Off-grid: where it is totally self-sufficient and enables remote areas to get connected more cheaply and quickly than connecting to a larger grid.
• Virtual: where it uses the already installed physical grid and cannot be de-coupled but is operated within the energy market as if independent.
• Grid connected: where it uses its own infrastructure and can be ‘islanded’ to run on its own, but is also embedded in the wider grid to enable other power sources to balance out the loads if required.


Microgrid can be smart – and put power in the hands of the consumer


Not all microgrids are smart, but they can be.

Just connecting up local resources and operating them through metering systems is the basic form of the modern microgrid. The next step is what LO3 Energy is working on – the smart, transactive microgrid.

New smart home devices – from smart lighting to internet kettles – allow energy usage to be measured like never before. By providing that data to the microgrid network through smart meters, a marketplace can be created where price-driven triggers determine where and when energy is used and how it is traded.

Not only does that put more choice in the hands of the consumer, it also enables the integration of systems that can balance fluctuations in the grid and create a more efficient energy future for everyone.