The 10 Questions to Ask When You Hear the Word “Microgrid”

Aug. 27, 2015
As microgrids grow in popularity, suddenly all kinds of projects are described as microgrids, even if they are not quite. To figure out out if a microgrid is a microgrid, ask these questions outlined by Kaitlyn Bunker of the Rocky Mountain Institute.

As microgrids grow in popularity, suddenly all kinds of projects are described as microgrids, even if they are not quite. To figure out out if a microgrid is a microgrid, ask these questions outlined by Kaitlyn Bunker of the Rocky Mountain Institute. 

Both SDG&E’s demonstration project in Borrego Springs, Calif., (recently heralded for keeping the lights on during a transmission line problem) and Konterra’s solar-storage project at its Maryland corporate headquarters have made headline news as microgrids. But in ownership, scale, design, and operation they’re very different. Which raises a fundamental question about a word too-often thrown about in electricity circles: What, exactly, is a microgrid?

The electricity grid is evolving, moving away from the traditional centralized grid and toward a more-distributed grid utilizing local sources of generation, resulting in more and more microgrids. At the same time, islands and remote communities around the world operate grids that are completely separate from any larger grid, and these are also often referred to as microgrids.

In general, microgrids are small power systems that use local generation resources to meet local electricity needs. However, since different people use the word “microgrid” to describe different things, it can be difficult to have a clear understanding of what is meant in specific situations. More important than agreeing on a standard definition of a microgrid is having a shared understanding of the specific microgrid in question in a particular situation.


1. Who owns it?
One way to learn more about a microgrid is to understand who owns it. 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. For example, the Borrego Springs microgrid mentioned above serves that community and is owned and operated by the local utility, SDG&E. The U.S. military has been implementing microgrids, both at stationary bases in the U.S., and at forward operating bases overseas. Understanding the ownership type for a given microgrid can provide useful insight into the microgrid being discussed.

2. Are there multiple owners?
Along with the question of which type of entity owns the microgrid, it can also be useful to understand if there are multiple owners. For example, in military microgrids there is usually just one owner, the military. Other microgrids however may have different entities owning various pieces of the system, such as the generation, the storage, and the connecting infrastructure. At the Philadelphia Navy Yard, which is a 1,200-acre former naval shipyard that has become a modern business campus, several partners including Penn State and Alstom have come together to further advance microgrid technologies.

3. Does it interact with the larger grid?
Many microgrids are connected to the larger grid, with an option to disconnect and become an electrical island. Alternatively, some microgrids may not interact with the larger grid at all, but instead operate as completely separate electricity systems. These types of systems are operating today on many islands and in remote communities around the world. While these are really just smaller versions of the grid, they are often referred to as microgrids.

4. What is the size?
Another key defining aspect of each microgrid is size. Size can be expressed in terms of installed generation capacity, peak load, number of people served, or amount of land covered. Some might consider a smart home that includes distributed energy resources such as solar PV and battery storage to be a microgrid, while others might suggest that something as small as a home is really more of a nanogrid, or even a picogrid. Meanwhile, many island systems such as those in the Caribbean are considered microgrids, even those that have several MW of peak load. The lines between what size fits into the pico, nano, micro, and macrogrid categories are blurry, so asking about the size can bring clarity to the conversation quickly.

5. What is the main purpose?
As another distinction, microgrids may be built to serve varying purposes. In some cases, the main purpose may be to provide emergency backup power to critical loads. On the other hand, some microgrids (like those on islands and in remote communities) are built to operate normally at all times. Other microgrids might fall somewhere in between; for example at theUniversity of California, San Diego, the campus microgrid provides power in parallel with the grid during normal operation, but can also meet most campus loads during a grid outage (such as the 15-hour outage that occurred in 2011).

6. How much load does it cover?
Along with its general purpose somewhere on the spectrum between emergency backup and continuous operation, another key question is how much load the microgrid is designed to cover. Will it cover just the critical loads, or all of the required loads? For example, themicrogrid being considered in Hoboken, NJ, (one of the teams at RMI’s recent eLab Accelerator event) would provide critical support in the event of another storm like Hurricane Sandy. Meanwhile, a microgrid on an island or in a remote community is likely designed to meet all of the loads from residences and businesses.

7. How long can it provide power?
Given the mix of generation and storage resources included in a microgrid, it may be designed to provide power for a certain amount of time. Again in the example of islands and remote communities, many microgrids are designed to provide continuous 24/7 power using local generation resources (and possibly some storage). On the other hand, microgrids built for emergency backup, such as those that power critical substation equipment when the grid goes down, may rely more heavily on storage, or have a fixed amount of fuel available for generation resources. This means that they are designed to provide backup power for a fixed period (say 48 hours) during an emergency, just until the main grid can be restored.

8. Does it share infrastructure with the grid?
Microgrids can also differ in their physical infrastructure. They may be built utilizing some of the actual grid infrastructure that already exists. Alternatively, they may be physically separate, and built in parallel to the grid. The microgrid planned in Hoboken, mentioned above, will be built with all new infrastructure in parallel to the grid, in order to increase the city’s resilience in an emergency event that disables the main electricity grid.

9. How “smart” is it (technically)?
Different microgrids may have different degrees of “smartness,” both in how they operate and in how they interact with the larger grid. Some microgrids require a manual operation to disconnect from (or reconnect to) the rest of the grid. Others are able to do this dynamically, using smart controls that ensure the microgrid frequency and voltage match the rest of the grid. In addition, there may be smart controls included within the internal operation of the microgrid. Peter Lillienthal, CEO of HOMER Energy, explains how controls can differentiate microgrids as there may be controls for load management and demand response, as well as for handling the parallel operation of multiple generation resources.

One interesting example is the system on King Island, Tasmania, a utility-owned microgrid without a connection to any outside grid. In this system wind, solar, and diesel generators are combined with a battery, flywheel, and dynamic resistor to provide electricity to the 2,000 residents, with a peak load of 2.5 MW. King Island’s microgrid includes smart controls with a centralized energy management system to optimize the use of the renewable and storage resources, and also includes residential smart meters, which allow the system operators to monitor and control interruptible loads (water heaters, and heating and cooling systems) in participating homes.

10. How “smart” is it (economically)?
Along with various ways to add technical “smarts” to a microgrid, there are also options for dynamically exchanging services, value, and money across the point of interconnection between a microgrid and the main grid. These types of microgrids are called transactive. For example, the microgrid at the U.S. Food and Drug Administration’s White Oak facility operates in parallel with the grid, and can also operate as an electrical island during a grid disturbance or blackout. In addition, the microgrid participates in demand response events as needed by the local utility, and has the ability to make power-purchasing decisions.


The word “microgrid” can mean many things to different people. The above examples show the range of possible definitions. As more microgrids are developed around the world, it’s important to have a clear understanding of exactly what is meant whenever there is a conversation about this important topic. The next time you hear about a microgrid, consider asking about the ownership, how it interacts with the larger grid, its size, its purpose and timeline, its infrastructure, and its “smartness.” Digging a bit deeper will give you a better understanding of what people are talking about when they say “microgrid.”

Kaitlyn Bunker is an associate at the Rocky Mountain Institute.  This article originally appeared on the RMI blog.

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