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Microgrid Basics

Today's regional power grids leave power consumers vulnerable to widespread power outages, impacting businesses and residences, and also resulting in potentially dangerous and insecure circumstances in applications where power reliability is critical.

Microgrids are not a renewable energy technology, but rather a concept that proposes clusters of small on-site distributed power generators, which could utilize different technologies such as solar PV, wind, hydrogen fuel cells and others, and which would provide its customers access to the regional power grid as well as safe, reliable power from the microgrid itself. The microgrid would be the customer of the regional power utility, and would be capable of connecting and disconnecting seamlessly from the regional grid. Alternatively, in remote areas, a microgrid would serve as a self-contained, local electric utility.

The benefits to using microgrids include power reliability and security, as well as efficiency and cost savings. When power from the regional grid is cheap, the microgrid would purchase power from the regional utility provider, passing those low costs on to the customers of the microgrid. However, when regional power is costly, the microgrid would produce its own power more cheaply- the customers of the microgrid pay the lowest cost of energy production. Any excess power that the microgrid produces is sold back to the regional utility, assisting the utility in meeting its renewable power requirements and lowering costs further.

Also, because the microgrid produces power using partly, if not completely renewable technologies, there is an overall benefit in that the consumers of the power are using clean power, reducing the need for traditional, dirty power. Microgrids offer better efficiencies as well by utilizing combined heat and power, capturing heat that would normally be wasted in traditional power generation and utilizing it on-site for heating water or heating or cooling air for building climate control.

Economics and Future Prospects

There are added economic benefits of the microgrid concept. Costs of power transmission and distribution are lower than regional grid-supplied power because of proximity and lower power losses. As previously mentioned, there is great potential for greater efficiencies. Also, the small scale of individual investments in a microgrid reduces capital exposure and risk by closely matching capacity increases to growth in power demand. Finally, the low capital cost potentially enables low-cost entry into a competitive market.

While microgrids are still largely in the experimental and conceptual phase, the vulnerability and inefficiency of the traditional, regional energy grid model will make the conversion to a network of microgrids not only attractive, but necessary. The renewable energy technologies discussed above will play a major role in composing the power generators in microgrids, as regulatory and environmental pressures gradually make fossil fuel-based energy production less of a viable option, and as manufacturing costs of clean energy systems make renewables more competitive.