The idea of a centralised power system took root in Europe during the Industrial Revolution, spread to America and over a century later has been adopted in many countries. But is it past its best, and what’s the alternative?

In a centralised system, electricity is generated in a large, central station, transmitted to substations and then distributed out to those that use it, like houses and commercial buildings. Yet despite enduring for decades, are centralised power systems still suitable, given innovation, deteriorating infrastructure, and evolving environmental needs?

The traditional grid system, known as the macrogrid, has its problems: not only is it costly and inefficient to transmit power across great distances, but the nature of a single, fixed system increases the risk that a localised incident disturbs the whole, resulting in widespread reliability consequences.

This occurred in 2003 in the northeastern United States, and again in 2006 in Western Europe, when millions of households were without power for hours or even days. To address these shortcomings, grid architects are exploring the best ways to take advantage of advanced technologies that can be used to address infrastructural deficiencies (like old, inefficient coal plants) and environmental risks (like increased extreme weather). Microgrids are one promising solution.

A microgrid is a smaller scale version of the traditional macrogrid system. It consists of a combination of power generation, load management, and energy storage assets that are controlled in a coordinated network, and either connected to the central grid or operating in isolation as an electrical island.

The size and energy assets of microgrids can vary greatly, depending on the physical and economic conditions of the region in which they operate. Connected microgrids can provide power services to the central grid.

In cases of emergency, such as a terrorist attack or extreme weather event, in which the macrogrid may be compromised, microgrids can ‘island’ themselves to continue providing the necessary energy services within a confined region. Military units, hospitals, and other institutions that require reliable and secure power supplies use microgrids for this purpose.

This islanding capability is what kept Princeton University supplied with power during Hurricane Sandy. The University’s system includes a combination of co-generation, back-up diesel, solar PV, and thermal energy storage, totaling more than 25MW of installed capacity. The co-generator and back-up storage systems were able to provide heat and electricity to part of the campus for nearly two days.

On top of this, it also reduces the University’s energy costs, which are very high due to heating and cooling demand in research, dining, and housing facilities. It also helps the University work toward its goal of reducing campus emissions to 1990 levels.

Microgrids have the ability to provide electricity access to regions where a robust central grid does not exist or a large portion of the population lives in rural, disconnected areas. While reliability is still a driver in situations like this, the main value they add is accessibility to cleaner, less expensive energy.

India’s Chhattisgarh Renewable Energy Development Agency (CREDA) has been working to expand and improve energy services to its communities through microgrids, solar home lighting systems, improved biomass cookstoves, and household biogas systems.

CREDA has installed more than 500 solar PV microgrids serving 30,000 households in Chhattisgarh, a rural Indian state with a low electrification rate. These microgrids are made of power distribution networks, which cover 80-90% of households in the connected villages, as well as battery storage to regulate supply and store excess electricity.

By supporting the use of efficient or renewable energy, microgrids can help reduce greenhouse gas emissions which contribute to climate change. Nearly two-thirds of capacity installed for the 35 proposed microgrid projects in the United States will be solar PV. And their shorter transmission and distribution networks result in less energy lost between generation and consumption.

Given climate change’s effect in increasing the extremity of weather events, microgrids’ islanding characteristics – which disconnect their energy services from the central system so it can continue to provide power to a community – are clearly advantageous. Additionally, as climate change makes water scarcity in electricity-generating regions an increasingly bigger issue, microgrids can offer a solution by using more efficient or less water-consumptive energy sources.

Solar PV being installed by Mera Geo Power. Image courtesy of DIV at USAID via Flickr (CC)

There’s more. Many components needed for microgrid systems are falling in price. In many cases, the efficient and low-carbon energy options used in microgrid systems have become cost competitive with the fossil fuels that currently dominate the central grid. Microgrids can also reduce or shift energy loads away from high-demand times, which is better for grid infrastructure and for customers who could benefit from lower, consistent energy prices.

Microgrids in the developing world offer even more basic benefits: microgrid installation, operation, and maintenance provides job opportunities; switching from wood and kerosene to higher-quality energy sources is healthier, safer, and less expensive; and greater access to electricity increases education levels and worker productivity.

Still, microgrids continue to face a variety of physical, economic, and legislative barriers. Transitioning from grid-connected to island mode remains a challenge, as it requires expensive and specialised equipment in order to disconnect. Likewise, technical difficulties and cost barriers arise when reconnecting to the central grid. And because microgrids are still a relatively new concept, their functions have been largely undefined or unsupported in current policy, which hinders project financing and scaling opportunities.

But these barriers can be easily overcome: as more microgrids are implemented, the installation and operation costs will decline, while the benefits of avoided costs (for fuel, peak demand charges, and risk/outage avoidance) will increase. Around the world, new legislation is being proposed, and existing legislation modified, to support microgrids. As of 2013, nearly 3.2GW of microgrid capacity had already been installed around the world, generating over $8 billion in revenue. It is estimated that, by 2020, capacity will triple to reach 10GW, while microgrid revenues will nearly quintuple to $40 billion. There is massive value in microgrid systems, and they have the potential to make a significant and beneficial contribution to the global energy landscape.

– This is a guest blog by Hallie Kennan from Energy Innovation, and may not represent the views of Please see for more details.