Microgrids are small localized electric grids that can operate without being connected to the utility grid but can also operate interconnected into the utility grid. They comprise distributed energy resources including storage, demand response, and distributed generation. Also necessary is local control software that balances supply and demand and manages system frequency and voltage.
Microgrids are often confined to single premises such as a campus, military base, or large industrial facility as shown in the above diagram. But they also may be integrated into the utility distribution system, creating a portion of the distribution grid that can be isolated from the rest of the grid and still maintain service for customers within the microgrid.
Why may a microgrid be chosen over the traditional utility supply? A few reasons include:
- A microgrid's potential for higher reliability: microgrids can be built to deliver the level of reliability required by customers on the microgrid rather than the level of reliability applicable to generic utility customers.
- Microgrids may provide economic benefits by allowing multiple facilities to interact with utilities and wholesale markets as an aggregated entity and to self-provide energy when economical. In this case, opportunities unavailable or uneconomical for smaller customers may become available when loads and distributed generation are aggregated.
- When integrated into the utility distribution system, microgrids may be able to substitute for other costlier reliability solutions such as distribution upgrades, new substations, or duplicative transmission lines.