Microgrids provide distributed power for smart buildings and cities

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A microgrid is a self-sufficient energy system that serves a discrete geographic footprint, such as a college campus, hospital complex, business center, or neighborhood. Within microgrids are one or more types of distributed energy that produce their energy. Many newer microgrids contain energy storage, usually from batteries. Some also now have charging stations for electric vehicles. Interconnected to neighboring buildings, the microgrid provides electricity and possibly heat and cold to its customers, via software and control systems.

Some people use the term to describe a simple distributed energy system, such as rooftop solar panels. A key difference is that a microgrid will maintain power in the event of a central grid failure; a solar panel alone will not do it. Simple standby generators are also not microgrids. Such systems are used only in emergencies; microgrids operate 24/7/365, managing and delivering energy to their customers.

Large centralized grids have provided most of our electricity for the past century, pushing electricity from power stations long distances via transmission and distribution lines, which can lose up to 8% to 15% electricity in transit. A microgrid uses energy more efficiently by generating it close to those it serves.

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A smart microgrid relies on a microgrid controller as the central brain of the system, which manages the generators, batteries and energy systems of nearby buildings. The controller orchestrates multiple resources to achieve the energy goals set by customers – such as the lowest prices, the cleanest energy, or the greatest electrical reliability – by increasing or decreasing the use of any combination of the resources of the micro-grid.

An example of an advanced capability is tracking real-time changes in central grid electricity prices. Wholesale electricity prices fluctuate with electricity supply and demand. If power prices are cheap at all times, the system may choose to buy electricity from the central grid to serve its customers, rather than using power from, say, its own solar panels. Solar panels could instead charge battery systems. Later in the day, when grid electricity becomes expensive, the microgrid can discharge its batteries rather than using grid electricity.

Microgrids can contain other energy resources – combined heat and power, wind power, reciprocating engine generators, fuel cells – which add even more complexity and nuance to these permutations. Working together via complex algorithms, the resources of the microgrid create a whole greater than the sum of its parts, managed almost instantaneously and autonomously.

The total number of microgrids is relatively small but growing. Market research firm Guidehouse predicts the market will approach $39.4 billion by 2028. Growth areas include hospitals, government facilities, military bases, retail/gas stations, commercial buildings, educational campuses, and municipal sector applications in residential areas as well as smart cities. Increasingly, utilities see microgrids not as an adversary but as a solution. In 2016 alone, utilities implemented at least $1.2 billion to pursue microgrids and related distributed energy.

Visit our partner publication Knowledge of microgrids to view the original content that forms the basis of this piece (bit.ly/393OW25 and bit.ly/3M5RriX).

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Meet our expert

ELISA WOOD is an award-winning writer and editor specializing in the energy industry. She is editor-in-chief and co-founder of Knowledge of microgrids part of Endeavor Business Media and co-hosts the publication’s popular lecture series. She also co-founded RealEnergyWriters.comwhere she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.


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