What is a Microgrid?

Definition of a Microgrid

The Electrical Grid is defined as “the electrical power system comprised of generating plants, transmission lines, substations, transformers, distribution lines and end-use customers.” A Microgrid can be viewed as a miniature version of the Electric Grid. Specifically, a Microgrid is defined as “a localized group of interconnected generation resources and end-use customers that operate as a single controllable entity.” For more technical details on Microgrids see Microgrids at Berkeley Labs.

Some Microgrids consist of only a single electric user’s distributed generation and consumption. An industrial site, an educational institution or a hospital would be a good site for a single user Microgrid. Other Microgrids consist of the distributed generation and consumption of a community of electric users. This second type of Microgrid is often referred to as a milligrid. The important point, however, is that Microgrids must be controlled and operated as unified systems.

The following video describes how a Microgrid works:

Benefits of a Microgrid

The critical feature of a Microgrid is that the operator monitors and controls all of its distributed generation and electric customer usage. Microgrids are interconnected to the larger electric grid and viewed by the interconnecting utility as a single customer point of interconnection. Microgrids can purchase back-up power from the utility and it can sell excess generation to the utility. However, in the event of an outage on the utility system the Microgrid can disconnect and operate as an “electrical island”.

Electric customers participating in a Microgrid receive the benefits of a secure source of electric supply, efficient operation of their distributed generation and reduction in transmission line losses. The benefits available from Microgrid operation are similar to those that a utility might gain from installation of the Smart Grid.  However, it is easier to implement a Microgrid because of its smaller scale and the voluntary interest of the participants.

While utilities are starting to get into the business of operating Microgrids many are now being operated by non-utilities. The ability to operate the Microgrid as an electrical island raises the possibility that the operator may, at some point, opt to simply disconnect from the utility system if they no longer see advantages from further connection. This potential for disconnection is one of the concerns raised in the Post entitled What is the Smart Grid?


I. David Rosenstein worked as a consulting engineer and attorney in the electric industry for 40 years. At various times during his career he worked for utility customers, Rural Electric Cooperatives, traditional investor owned regulated utilities and deregulated power generation companies. Each of his posts in this blog describes a different aspect of the past, present or future of the electric industry.