A growing number of organizations are looking into microgrid technology to control energy costs, improve resiliency in the event of a power outage caused by natural disaster or cyber attack, and demonstrate environmental responsibility.

A microgrid is a localized power system that is connected to the larger utility company grid in a highly optimized two-way flow of energy. In case of an emergency, the microgrid can operate independently from the utility grid in what’s known as island mode.

The benefits of microgrids extend beyond saving money, providing reliable backup and helping a company reach its green objectives. Microgrids can become revenue generators, enabling companies to sell power back to the utility company. Microgrids can work synergistically with other corporate initiatives, such as switching to fleets of electric vehicles, by helping to power onsite charging stations. And having an efficient, low-cost, resilient energy infrastructure can help attract tenants to a business park or corporate campus.

What is a microgrid?

The definition of a microgrid varies, but the basic components are onsite energy generation, an onsite storage and distribution system, as well as advanced metering and data analytics.

  • Energy generation: The most common type of alternative energy source is solar power, but it can also include wind, hydroelectric, biomass or natural gas stored onsite.
  • Energy storage and distribution: The other key piece of a microgrid is the ability to store energy onsite, typically using battery technology, and then distribute it when needed.
  • Data analytics: With a technology called advanced metering infrastructure (AMI), organizations can use smart meters to establish real-time, two-way communication with the utility company so they can switch back and forth from onsite power to grid power, based on which one is cheaper at that moment.

According to Jessie Mehrhoff, an analyst at Navigant Research, interest in onsite energy is surging, but there aren’t many fully integrated, turnkey offerings available today, which means that most organizations are taking a piecemeal approach to building a microgrid. Mehrhoff has four key recommendations for companies investigating onsite energy.

  • Have energy managers analyze all of the available data to determine a baseline for the cost of energy and use that data to develop a strategic approach that addresses ROI.
  • No matter where an organization starts on its journey toward energy self-sufficiency, it’s important to keep things modular and keep the technology agnostic, so that all of the pieces can interoperate down the road.
  • Explore financing arrangements that don’t involve a major capital expenditure, such as working with an energy-as-a-service provider or negotiating a performance-based energy contract with the utility company.
  • Think about creating value streams and revenue opportunities, such as selling solar power back to the utility grid or offering charging stations for employees who drive electric vehicles or for the general public.

Use cases span public and private organizations

Microgrid technology can be successfully applied across a wide variety of use cases. Hospitals, which use two and a half  times more energy than a commercial building of the same size, are prime candidates for microgrids, both to cut costs and to protect patient lives in the event of an outage. A power outage at a university research lab can ruin years of work, so college and universities often deploy microgrids to protect investments into cutting-edge research.

Smart city initiatives are starting to focus on microgrids for resilience, particularly in areas of the country that have been hard-hit by natural disasters. Retailers are embracing rooftop solar power and are moving toward microgrids in their stores.  Even utility companies are starting to look at microgrids as an opportunity to meet peak demand and cut costs, while avoiding the massive expense associated with building a new power plant.

Businesses of all stripes are under pressure to slash energy costs, to maintain uptime and to address environmental concerns. Microgrids can address all of those issues. And while the technology that underlies microgrids is still evolving, companies would be well advised to begin researching microgrids to determine how the technology can be applied to their energy needs.