The Role of Microgrids in America’s 21st Century Power System

 Solar project at Fort Hunter LiggettOne of the most exciting things happening in energy today is the way governments are addressing the challenges of rising energy demand, coupled with the increase in theuse of renewable energy sources. The smart grid has become a topic of great interest for business and government, and the more you consider the potential benefits, the more the potential for smart grids becomes clear. Smart grids will allow consumers, businesses and governments to make increasingly data-backed and detailed decisions with regards to their energy usage.

However, one related technology to smart grids is beginning to get more publicity and interest. Microgrids allow businesses, authorities and consumers to tap into energy resources without having to rely as much on the wider grid. The advantages of this are manifold: more reliable power supply, more detailed consumption analysis, more ability to use renewable energy and a more flexible network where consumers can become prosumers (a term referring to the ability for consumers to sell some energy generated in their homes back to the grid).

The Basics of Microgrids

The basics of microgrids are not new, and have in fact been used since a century ago. Microgrids are especially commonly encountered in educational establishments, and a good example of the success of a microgrid is that of Princeton University, which survived as energy-supplied and operational during a hurricane when the local area experienced a blackout.

Microgrids are essentially a miniaturized version of the wider grid – they usually involve a source of power generation along with a means to distribute power efficiently across the grid and allow for energy to be stored locally. They can interface with the wider power grid, but importantly can function standalone, as well. The loads, transfers and demand are managed by a microgrid controller.

So,microgrids allow independent managing of energy in a similar way as is done by the wider grid. While most of the technology and the concept for this is not new, there are new developments in this space that are making it even easier to set up microgrids, catalyzing their diffusion.

Alternative-energyEnabling Technologies

Smart metering is what paved the way for the smart grid, and it is also paving the way for microgrids. It allows micro-level measuring, management and allocation of energy. This is essential for microgrids, which cannot rely on official management from thegovernment.

Another development aiding microgrid expansion is the wave of new technology in the energy storage industry. Several startups are making energy cheaper and easier to store with greater precision, and allowing for storage of multiple energy sources, as well as enabling efficient storage on a lower level (i.e. on the level of the individual home).

The Blockchain

And one of the most important developments for energy storage is that of distributed computing. Blockchain technology is a form of cryptographic data storage that allows users to store information in a public ledger or continuous record that can be consulted or viewed by others. So, it makes information publicly accessible, but where this goes beyond existing technology is how this becomes fraud-proof since the information is encoded with other pieces of information in the ledger, meaning that it cannot be tampered with.

But another benefit of the Blockchain is that it is very amenable to cryptographic data – meaning that although data can be stored or embedded in the ledger, it does not need to be publicly decipherable – basically allowing others to check that a piece of information or transaction took place, without knowing the sensitive details of that transaction.

BlockchainAnd the other aspect of the Blockchain that makes it relevant to microgrids is the use of smart contracts. Since the information of the Blockchain is publicly available, you can program a transaction to only take place or be implemented, based on a trigger clause that is dependent on something happening in the Blockchain. An example is a grain transporter making a smart contract with a customer that if any sensors detected any temperature rises in the shipment in transport the payment for the transport would be nullified – protecting the recipients of the grain from having to pay for a product that could be bad.

One of the reasons for these possibilities with the Blockchain as opposed to other information technologies is that the ledger is also used to operate a currency called Bitcoin. This is an electronic currency not tied to any country, and is based on mathematical calculations as its unit of currency. The processing of these calculations is the main purpose and foundation of the Blockchain ledger, and since the people making these calculations and transactions are motivated to keep the data flow of the ledger moving (since it’s fundamental to their business), the integrity of the ledger can be relied upon.

This works with microgrids by documenting energy flow and usage across the grid, providing the transparency, detailed information and reliability necessary for managing a grid. This goes a long way to solving the issues mentioned earlier about operating a grid without the supervision of a government entity.

One startup has shown how this might work in practice, and the benefits of microgrid technology. Brooklyn Microgrid is a project that enables residents to directly sell theenergy they produce to residents using blockchain verification, totally bypassing any need for government involvement.

This makes the network resilient to any power failures or even price crises. And one overlooked benefit of microgrids like these is their ability to reduce energy costs of transportation over long distances, which also makes it less likely that wide-reaching power failures will happen in the first place.


There are many obstacles to microgrid development. Each microgrid can be said to be more vulnerable in some ways, since they rely on smaller organizations for management and setup. This could lead to trust issues, with some consumers possibly being put off by thelack of government involvement.

There is also the issue of compatibility. Since there are many actors in an extensive ecosystem of microgrids, there could be problems with integrating power from external sources into the microgridand between microgrids.
Then there is the challenging of developing new tools to model and measure energy flows in microgrids. With any energy innovation, there is always technical problems that arise during the startup period.


This is an exciting time for the energy industry, especially since microgrids and smart grids look set to take the focus and management of the grid away from central direction and into the hands of the consumer. Once management of a service is opened to more actors and innovation, the offerings available become even more tailored to the consumer’s needs. Thus, the developments in microgrids look set to create substantial value for the American consumer.


Carl Babb is a retired Electrical Engineer from Massachusetts who blogs about the Industry for He is passionate about Green Energy and building practices. Now retired he enjoys writing, spending time with his grandchildren, and staying current (pun intended).

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