Microgrids in Practice

Mayfield RenewablesIndustry Topics, Winter 2022 Industry Topics

The majority of the U.S. electric grid was built in the early 20th century. It was initially designed for the one-way transfer of electricity from large fossil-fuel power plants directly to consumers. The grid of that era delivered power from rural areas, where power was generated, to cities, where much of it was consumed. 

Much has changed in the energy landscape, especially over the last 10–15 years, with the accelerated adoption of variable renewable energy sources (VREs) and distributed energy resources (DERs) such as rooftop solar and electric vehicles. These newfound energy flows are much more complex than the existing grid was designed to handle, and redesigning our electric infrastructure will require significant innovation and investment.

As we shift toward rapid, widespread expansion of VREs, the grid is evolving to become more responsive. Integrated advanced control systems and other digital technologies work with existing equipment to respond more quickly and accurately to electricity supply and demand changes. But the scale of these solutions has not met the scale of the problem — yet.

Alternatively, some of the world’s electrical systems are pivoting to decentralize, decarbonize, and democratize driven by the need to lower electricity costs, improve resiliency and reliability, reduce CO2 emissions, and expand access to electricity. Microgrids, in particular, have emerged as flexible, scalable solutions that can integrate and manage the many distributed VREs required to meet many of the world’s climate goals.


The term “microgrid” is not well understood. If you ask five people to describe a microgrid, you will likely get five different answers. For our purposes, we will use the Department of Energy’s definition:

A group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in grid-connected and island mode.

This definition specifies three distinct differences from a standard macrogrid:

  1. An easily identifiable boundary from the rest of the grid
  2. Resources within the microgrid controlled together
  3. Microgrid function whether connected to the larger grid or not


A microgrid can be broken down into three key components: generation, load (demand), and storage, all within the same controlled network (Figure 1).

Figure 1: Microgrid Components

The microgrid must have at least one generation source to meet onsite electrical demand. Historically, fast-starting, robust diesel generators have been the dominant power generation sources for most microgrids. But with the falling cost of solar PV and energy storage, many microgrid developers are either skipping the diesel generator entirely or reducing its fuel burn by installing a solar-plus-storage system. An energy storage system (ESS), like a fossil-fuel generator, can respond quickly to changes in demand. Unlike a generator, the ESS does not need to burn costly, dirty fuel while idling around the clock.

Beyond generation and storage components, sophisticated control systems act as the brains of a microgrid. A typical control system includes many distributed controllers and sensors and a central supervisory control and data acquisition (SCADA) system to collect data and distribute instructions. The software behind the controls can balance the load by increasing generation or decreasing demand elsewhere on the microgrid, maximizing renewable energy usage and minimizing other electricity costs. Microgrids also contain many of the same critical components required for the standard grid, such as transformers, inverters, switchgear, and protective devices, but scaled down to the appropriate size for the system.


Microgrid development is a force multiplier for grid reliability, resiliency, security, and control. As more microgrids go online, the existing grid gets broken into smaller components that can be added together or isolated on demand.

The existing grid connects homes, businesses, and other buildings to central power sources. This interconnectedness has one major downside: Everyone is affected when part of the grid goes down. A microgrid generally operates while connected to the grid, but more importantly, it can also decouple itself and operate on its own using local energy generation in times of crisis like storms, power outages, or even peak-rate periods. This ability to become an energy island is useful for many applications, including:

  • Emergency backup. Microgrids can become electrically isolated from the rest of the grid in the event of an outage while continuing to produce and use electricity onsite.
  • Energy independence. A microgrid can connect to a local resource that is too small or unreliable for traditional grid use, allowing communities to be more energy independent and, in some cases, more environmentally friendly.
  • Extended islanding. A microgrid can be powered by distributed generators, batteries, or renewable generation resources like solar modules. Depending on how it’s fueled and how the connected load controls are managed, a microgrid may be able to run on its own for weeks at a time or even indefinitely. The system can be designed with any specific period of autonomy. 

As microgrid deployment becomes more common, understanding what they are, how they are built, and how they can be used will become increasingly important.


In addition to being flexible and scalable, microgrids provide additional benefits.

Ease of Connection for Efficient, Low-Cost, Clean Energy

The microgrid manager (e.g., local energy management system) can balance generation from non-controllable renewable power sources, such as solar, with distributed controllable generation, such as natural-gas-fueled combustion turbines. They can also use stationary energy storage and the batteries in electric vehicles to balance production and usage within the microgrid.

Improved Operational Efficiency and Stability of Regional Grid

When sited strategically within the electricity system, microgrids help reduce or manage electricity demand and alleviate grid congestion, thereby lowering electricity prices and reducing peak power requirements. In this manner, microgrids may support system reliability, improve system efficiency, and help delay or avoid investment in new electric capacity.

Provide Ancillary Grid Services: Energy Storage or Spare Capacity

A microgrid in grid-connected operation can provide frequency control support, voltage control support, congestion management, reduced grid losses, and improved power quality. Usually, some kind of energy storage system is used to provide these services to the regional grid, but the microgrid can be used as either a load or a generator, if needed, and in some places can actually be financially compensated for ancillary services.


The evolution of microgrid technology presents new challenges.

Lack of Geographical Diversity, Inertia to Compensate for Variability in Generation

Microgrids lack geographical diversity, so relative variability, like increased demand or reduced generation from weather, will have a much larger impact on the system’s performance. Most microgrid generating sources also lack the inertia used by large synchronous generators on the macrogrid for frequency and demand response. Energy storage in the microgrid can help alleviate the effects of variability, but this is also part of the reason for staying connected to the larger regional grid.

Increased Equipment Costs, Energy Losses

Extra protective devices can add up to as much as 50% of the total microgrid cost, depending heavily on local regulations and the microgrid design. Microgrids give up the economy of scale that is so advantageous to the macrogrid. Additionally, DC-AC conversion can waste more than 15% of total energy produced, depending on the number of inverters in the design. Some of this energy loss is compensated for by the lack of transmission distance required, but should still be taken into consideration in any microgrid.

Remaining Legal and Regulatory Questions

Microgrids face three types of legal hurdles:

  1. Laws that prohibit or limit specific activities
  2. Laws that increase the cost of doing business
  3. Uncertainty, including the risk that new laws will be implemented to regulate microgrids and impose restrictions or costs not anticipated at the time of development or construction

Finally, a number of regulatory questions remain before the widespread adoption of microgrids is even possible:

  • Should microgrids count as “utilities” and be subject to state/federal regulation?
  • Will microgrids be subject to consumer protection laws like utilities?
  • If not a utility, what are the laws for buying/selling excess electricity and other ancillary services?
  • Who determines minimum, maximum, and appropriate size for microgrids?
  • Who is responsible for operating and maintaining a microgrid?


The benefits often greatly outweigh any potential risks involved with the microgrid, so what are some real-world examples where microgrids have proven to be beneficial?

  • During wildfire season, many of the power outages in California are planned outages. A microgrid is a solution to many homeowners’ power problems by enabling them to produce and store their own power via solar panels and batteries and disconnect from the main grid, staying totally self-sufficient until the main grid is back online. 
  • When Hurricane Maria tore through Puerto Rico in 2017 causing the longest power outage in U.S. history, microgrids would have been much easier to restore, especially to hospitals and emergency responders. In fact, one of the major benefits of a microgrid is that it can extend beyond a single house or building and create a tiny electricity-isolated island within a community. A perfect example of this would be a microgrid between a fire department, a school, and a senior center for emergencies, or even between multiple resorts on an island community.
  • The University of California San Diego (UCSD) microgrid now powers a campus that covers 1,200 acres and serves a community of about 45,000 faculty and students living and working in 450 buildings. Two high-efficiency 13 MW natural gas turbines, a 3 MW network of solar resources, a 2.8 MW fuel cell, and a 2.5 MW advanced energy storage system allow the university to generate about 85% of its own energy at about half the price utility power would cost. The microgrid earns money for USCD by helping the utility meet peak demand by reducing campus loads upon request. They also generate a high excess of electricity from the PV array, so that local energy costs go negative to around minus 2¢/kWh during midday.
  • A heat wave and storms led to power outages that affected hundreds of thousands of New York and New Jersey electricity customers during June 2019. Through it all, Home Depot stores in the New York area remained open thanks to microgrids that provided all of the critical power needs for each store during their outages and eliminated the need for any back-up generators. With a combination of solar PV, fuel cells, and other energy storage on their microgrids, Home Depot has been able to meet sustainability initiatives in New York and elsewhere. This supports the retailer’s goal to ensure that stores remain available to the communities they serve in the event of a natural disaster or grid power failure.  

There are pros and cons for microgrids, but a microgrid can be a great solution for many applications. The next section discusses the stages of a microgrid design, how to make it a successful project, and some of the challenges of developing a microgrid.


Many variables affect the overall results of the microgrid, including site-specific weather and infrastructure data that will determine the total output potential. From that data, estimated total output, along with local utility rates and available incentives, can be used to help calculate the economic benefits. Finally, economic feasibility, along with any other standards for the microgrid’s performance (load response, resiliency, energy arbitrage, etc.) can be used to calculate a more comprehensive picture of the microgrid’s potential benefits (Figure 2).

Figure 2: Steps to Modeling Renewable Energy

A number of microgrid modeling software packages to simulate the success of a microgrid in a given location are available. They range from free online academic tools to paid downloads, and they offer a variety of different features.

Table 1: Microgrid Modeling Software Comparison


Obviously, there are many options out there for microgrid modeling. So how can you differentiate these software solutions and find the best one for your business? Several key features can be used to distinguish them from each other based on the needs of your business and your clients.

  • Price. Price will always be something to keep in mind for your business, but it shouldn’t be the first or only thing you consider. While paid licenses like HOMER or XENDEE definitely have more advanced user interfaces, others still yield the same quality of results for free, but may be less intuitive to use or contain fewer reporting features. Cost will vary greatly depending on the number of users in your organization, and a single license for your resident microgrid expert could more than pay for itself.
  • Modeling capabilities. There are a number of different performance measures and reports that can be used to define the feasibility of a microgrid, so you will need to ensure your software can handle the analyses your clients are most interested in. Some of the available reports in microgrid software include system resiliency studies, energy arbitrage modeling, peak-shaving or load-response analyses, probability of exceedance analysis (P50/P90), and reliability/coverage probability reports. The reports generated by some programs are good enough to send straight to the client, but others will require you to take some tables and figures and create your own customer-facing report. 
  • Utility tariffs/complex rate analysis. Presumably, the most important part of any microgrid modeling for your clients will be the economic analysis, including total system cost and potential savings after construction. In most modeling software packages, you can at least manually enter utility tariffs/rates and incentives, but this information isn’t always readily available. The paid programs typically include this information in the software, making it much easier to accurately model the financial side of the microgrid, beyond just upfront system costs, especially for those with less experience with utility rules and regulations.
  • Ease of use. Finally, ease of use could be the biggest priority to your business, especially if your team has limited experience or expertise with microgrids. Some programs focus more on the technical side, some more on the user experience, but at the end of the day, your team members need to be able to use it accurately and efficiently. While all the programs above offer user manuals and video tutorials, paid software often offers training sessions or one-on-one consultations to help you get the most out of the software.

Microgrids are definitely an up-and-coming technology, and some more advanced training in microgrid modeling and design could help prepare your team for the future of renewables.


As you can see, there are plenty of free and paid options for modeling microgrids. The user interfaces and features vary greatly between the various platforms, but for most businesses, it comes down to a combination of four factors:

  1. Price
  2. Modeling capabilities
  3. Rates/tariffs/incentives
  4. Ease of use

Beginning designers may find the paid software easier to get the hang of, but some of the less complicated microgrid designs and reports can be done just as effectively and efficiently with free software. Ultimately, all of these modeling software programs can elevate your business and help sell projects to current and future clients. It will be up to you to decide between price and performance.

Mayfield Renewables is a team of solar + storage experts that offers many microgrid development services, including feasibility studies, component selection and sizing, and full permit set development.