Five Biggest Reasons Commercial and Industrial Energy Customers Should Invest in Microgrids
As the everyday editorial voice for Microgrid Knowledge, I am always on a journey, seeking knowledge and enlightenment. I must keep striving to keep the lights on, both at home and upstairs, if you know what I mean.
These days chasing stories for Microgrid Knowledge are exciting times, full of hope for the future of sustainable, decentralized power which also makes the macro grid stronger at the edge. They also are uncertain, looking at an energy landscape we could not have envisioned 10 years ago.
What does it mean? Where will it end up? Maybe we can have it all and artificial intelligence, too.
I was AI before AI was cool, meaning that I don’t really know anything on my own and get it from smart people by asking questions. That’s exactly what a good AI does.
My bosses want me to see around corners of the future, unveiling the golden promise of microgrid adoption. Will it grow? Will we grow? Will they even be called microgrids by then?
So, I asked AI, because that’s what a modern reporter does, right? Just kidding, but truthfully, I did ask AI this question, “What are the biggest reasons commercial and industrial customers should choose microgrids?”
This gets to the heart of what I do and why you might read it. So, c’mon, AI, and be helpful please. Google’s AI mode replied with some acceptable stuff I already knew. And then I was thunderstruck by this notion: Who needs AI when I have direct access to some of the best minds in the microgrid and distributed energy industries. Duh! Why don’t I ask them for the insights?
All these folks are veterans in DER and microgrid project development, design, logistics and, most importantly, delivery. They know how to get it done.
Here’s what I truly learned from RI (reality intelligence) from real people. They answered the call, considered carefully and delivered some insights on what could motivate microgrid adoption across C&I.
In random order, I feel that these might be the five biggest reasons that C&I energy customers should consider microgrids for their on-site and often prime power.
1) Resiliency is not a business plan afterthought. You cannot build your business faster than you can get power
“Access to the electric power grid is becoming oceanfront property,” Mark Feasel, a longtime microgrid leader who is now leading sales for integrator Mission Critical Group. “In many markets, the biggest constraint on growth is no longer whether a company wants to expand, but whether there is enough grid capacity to support that expansion and how long it will take to get it.
“On-site generation gives customers another path to power,” Feasel, whose career includes leadership stints at Schneider Electric and Fuel Cell Energy, added. “Time to power is becoming a business issue, not just an engineering issue. If a company has the customers, capital and plans to expand but cannot get enough electricity to the site, power becomes the constraint on the entire business.”
In the old days, meaning like 10 years ago, utilities took care of nearly all of that. Fast forward into the Industrial Compute Age and interconnection queues can wedge a project into an interminable vise grip of delay and sometimes even abandonment.
As Schneider Electric’s Ryan Zimmerman pointed out, electricity used to be treated as a fixed utility expense without an array of deeper options. In today’s faster load growth and limited grid infrastructure environment, a microgrid changes that relationship.
Having multiple resources at your disposal and integrated with microgrid controls harmonizes that choice.
“By coordinating solar, battery storage, distributed generation and flexible loads, customers can manage energy as a portfolio rather than simply buy power,” Zimmerman, who is Schneider Electric’s director of its North American microgrid business, said. “Depending on the site, tariff structure and market, this approach can help reduce peak demand charges, shift consumption away from higher-cost periods, capture available program revenue and make better use of existing infrastructure.
“It also connects energy decisions more directly to operating schedules, expansion plans and business risk.”
For intensive manufacturing operations such as steel, bulk chemicals, refining and cement, energy expenses can consume more than a third of operating budgets, according to UGI Energy Services and other industry experts.
Throw in the rise of data centers, accelerated automation focus and deeper in-house electrification within production sectors and you have the triple threat which cries out for decentralized, near-site power generation.
“Power used to be treated like another operating expense; that’s no longer true,” e2 Companies CEO James Richmond said. “For a modern commercial and industrial facility, power is one of its most important operational assets. As energy costs rise and electricity demand grows, the question isn’t just whether there’s enough electricity. It’s whether you can affordably get the power you need, where and when you need it. If you can’t, power becomes a constraint on how quickly your business can grow.”
Electricity demand is outpacing supply growth from the utility side, so that age-old dynamic naturally gets imbalanced, raises prices and threatens affordability for all. As Richmond noted, inability to access cost-effective energy becomes the key constraint on growth.
This next priority builds on the first:
2) So how fast do you need that electricity? Speed to power becomes speed to revenue
Earlier this month, the S&P Global Manufacturing Purchasing Managers’ Index (PMI) hit a four-year high of 57.0, which essentially means expansion is pushing production growth to records for this decade so far. Onshoring and tightening the domestic supply chain are key drivers.
Something’s got to feed that gnawing economic hunger, and nothing hits the spot like electrons. Delaying that is not healthy.
“We’re seeing it all over the country,” Todd Jackson, vice president of strategic development at DER and microgrid developer PowerSecure, told Microgrid Knowledge. “Customers are ready to expand, but utility capacity isn’t always available when they need it. The reality is that waiting on power means waiting on production, hiring and revenue. A microgrid can help bridge that gap by providing capacity on-site, allowing projects to move forward while the grid infrastructure keeps up.”
The rise in use cases for battery energy storage systems (BESS) is also making that speed-to-power option more feasible. Batteries are versatile in direct-current and on-site power applications, smoothing out voltage frequency, renewable intermittencies and handling transient load shifts.
“A battery energy storage system is the gold-medal Olympic decathlete of the energy world,” Bobby Butler, director of sales at ELM Microgrid, said. “It can support peak shaving, demand response, grid services, backup power and many other applications. A BESS is not deployed for just one reason, but for a multitude of reasons. The potential value stack is significant.”
Butler’s last point is key. Valuing microgrids purely for resiliency and sustainability is high-minded and all, but deepening the payback and return-on-investment proposition will attract greater levels of commercial and industrial buy-in.
Customers have more choices in all phases of economic and social life. The commercial and industrial sectors are no different, so offering a variety of generation resources at ever more competitive prices and uniting that with solid and positive business-case impacts makes microgrids even more attractive.
“The advantage of a microgrid is that it enables the customer to make those choices and adjust as their needs change,” Mission Critical Group’s Feasel said. “That is a significant shift from the traditional model of simply taking whatever power the grid provides.”
3) Taking greater control of day-to-day energy operations
With the aforementioned expansion in choice comes power. And with greater power, as SpiderMan’s uncle told Peter Parker in that movie, comes greater responsibility. Bringing prime power closer to the load requires more decision-making but also empowers quicker responsiveness for businesses.
“A microgrid gives operators more influence over how power is generated, stored and prioritized across a facility,” Schneider Electric’s Zimmerman highlighted. “The real value comes from orchestrating the entire energy system, connecting generation, storage, electrical distribution and flexible loads around the needs of a business. That makes energy control a practical operating capability rather than an abstract benefit.”
Energy is never noticed more than when it’s not there. The threat and impact of long-duration outages, or even short ones, is immediate and potentially devastating to the bottom line for the end user whether it is a cement manufacturer, data center or police station. All see their place in the fabric of their communities as mission critical, providing jobs or protecting people. Power must be as steady and critical as they are.
Keeping the lights on, the conveyors humming and safe places open becomes easier when the energy supply is co-located rather than miles away.
“Grid-interactive microgrids enable critical operations to remain on-line during utility disruptions, delivering clean, reliable and resilient power when it is needed most,” said Darrin Simon, national business development manager at PowerSecure.
Bringing power closer also gives the customers more control. They can’t help but like that.
“With better visibility and control, organizations can align energy use with immediate operating needs and longer-term business plans,” Zimmerman said.
4) Microgrids turn power infrastructure from a cost center into an asset
Let’s get back to that value proposition point. Resiliency was Job No. 1, sustainability a lofty second goal. Installing a few diesel generators out back can help serve the first issue, but have you seen pump prices lately? Focusing purely on on-site renewables can raise the decarbonization profile, but they cannot provide baseload power needed at the manufacturing and digital infrastructure levels demanded by reshoring and the latest AI training models.
Resiliency and sustainability still deserve their focus, but bottom-line considerations weigh into the decision equation. Customers and developers, especially in the energy-as-a-service sector, both want additional paybacks on the investment.
“Businesses have traditionally thought about power infrastructure as something they have to pay for,” e2 Companies CEO Richmond said. “A microgrid empowers the customer and creates the opportunity to generate revenue over time. If you can control when you use the grid, when you use your own resources and then you reduce the load, you can make energy decisions based on both operational needs and economics.
“In the right markets, that flexibility can even create new earning opportunities while helping reduce strain on the grid,” he added.
Resiliency, sustainability, financial value and control are four great reasons to influence the huge commitment needed to install a microgrid. Are they enough to justify the investment risk and long-term duration play? Good question which brings us to the fifth and final reason in this story.
5) The future grid needs future proofing. The future begins at home
The old joke about microgrids is not really a joke but rather an observation about the uniqueness of each new project, It goes something like this, “If you’ve seen one microgrid, you’ve seen ... one microgrid.”
Microgrid humor is an acquired taste.What’s serious is standardizing a process that makes sense for customers. Creating a modularity to on-site power only increases the scalability across industries. At the same time, right-sizing those in the moment will be appreciated by customers in the long run.
“Energy demand is changing too quickly for customers to confidently build a system today based on what they think they will need years from now.” Feasel pointed out. “Overbuilding can leave you with stranded capacity, while underbuilding can create another constraint.”
As the microgrid sector grows—which many financial forecasters say it will by an average 18% annually—it needs to grow carefully and with the broader context of the interconnected utility grid in mind. Knowledge is power and a sense of control can deliver peace of mind.
“A microgrid helps customers gain resilience, get power when they need it, make better use of their energy assets, meet business goals and ultimately have more control over their future,” PowerSecure’s Jackson said.
Sums it up nicely. Also, the future for commercial and industrial planners is always now.
“New businesses, and existing businesses looking to expand or electrify, may be unable to obtain utility interconnections or infrastructure within an acceptable timeframe,” ELM Microgrid’s Butler said. “These projects can take years and, in some cases, seven years or more. A microgrid with on-site generation and battery storage can provide a bridge to power in significantly less time.”
Electrification is also clearly the path to greater operational and environmental efficiencies. Have you experienced the accelerative capabilities of an EV motor lately? AC or DC, the electrons are the carrier to prosperity and have been since Edison.
Microgrids are the only proven path to integrate generators, renewables, e-mobility charging infrastructure and battery storage within a co-located situation.
“Electrification, EV charging, automation, AI-related infrastructure and sustainability goals are placing new demands on energy systems,” Zimmerman said. “The issue is not only how much power a facility will need, but whether that power can be available when the business needs it.
“A microgrid provides a flexible framework for adding generation, storage, EV charging and other electrical loads in phases as needs evolve,” he added. “Coordinating those resources around a long-term energy plan can reduce repeated redesign work and help facilities expand in step with operational priorities.”
One thing about covering the energy industry is you are not limited to one segment of the economic ecosystem. It unites manufacturing, public safety, customer service, national security, jobs and homes.
This fact is what drove expansion of the macro grid into the 20th century’s ultimate connective machine. What drives commercial and industrial energy demand in the 21st century sincerely might be of a more decentralized and locationally strategic kind.
Call it what you want. For now, we’ll call it microgrids.
More than Five Reasons
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About the Author
Rod Walton, Microgrid Knowledge Managing EditorRod Walton, Microgrid Knowledge Managing Editor
Managing Editor
For Microgrid Knowledge editorial inquiries, please contact Managing Editor Rod Walton at [email protected].
I’ve spent the last 18 years covering the energy industry as a newspaper and trade journalist. I was an energy writer and business editor at the Tulsa World before moving to business-to-business media at PennWell Publishing, which later became Clarion Events, where I covered the electric power industry. I joined Endeavor Business Media in November 2021 to help launch EnergyTech, one of the company’s newest media brands. I joined Microgrid Knowledge in July 2023.
I earned my Bachelors degree in journalism from the University of Oklahoma. My career stops include the Moore American, Bartlesville Examiner-Enterprise, Wagoner Tribune and Tulsa World, all in Oklahoma . I have been married to Laura for the past 36-plus years and we have four children and one adorable granddaughter. We want the energy transition to make their lives better in the future.
Microgrid Knowledge and EnergyTech are focused on the mission critical and large-scale energy users and their sustainability and resiliency goals. These include the commercial and industrial sectors, as well as the military, universities, data centers and microgrids. The C&I sectors together account for close to 30 percent of greenhouse gas emissions in the U.S.
Many large-scale energy users such as Fortune 500 companies, and mission-critical users such as military bases, universities, healthcare facilities, public safety and data centers, shifting their energy priorities to reach net-zero carbon goals within the coming decades. These include plans for renewable energy power purchase agreements, but also on-site resiliency projects such as microgrids, combined heat and power, rooftop solar, energy storage, digitalization and building efficiency upgrades.