What Is a Microgrid Today?

Oct. 15, 2021
There is a large number of proposed definitions of microgrids, some of which present quite different criteria for what constitutes a microgrid.

The term “microgrid” means different things to different stakeholders. Depending upon whether one is a customer, solution provider, regulator, utility representative, or academic researcher, precisely defining the term “microgrid” may or may not matter. For the end-use customer or solutions provider, providing a label for a specific solution is, in many cases, irrelevant. As long as the distributed energy resource (DER) project serves the needs of the client, what label one attaches to the solution is no longer important.

Yet, one can also make a compelling argument that definitions do indeed matter. As DER portfolios grow, and different approaches to aggregation and optimization multiply, having a common language to describe these system solutions becomes increasingly important.

This diversity of stakeholders has resulted in a large number of proposed definitions of microgrids, some of which present quite different criteria for what constitutes a microgrid. This article represents a condensed version of a white paper to be published by the University of Alaska Fairbanks that provides a review of various microgrid and related DER definitions that have evolved over time, with the end goal of coming up with two newly-proposed definitions: regional grids and advanced remote microgrids.

The latter definition is of particular significance since one could argue that today’s microgrid industry was born out of necessity in remote locations such as Alaska, where large interconnected grid networks simply do not exist. How does the concept of an “advanced microgrid” in a grid-tied context compare to a state-of-the-art remote microgrid? Also important is recognizing the role regional grids play in the context of the DER market. These structures often form when multiple remote microgrid “nodes” become interconnected over a defined geographic region but remain isolated or only loosely connected to the central grid. This is in fact the status quo for how the majority of the population in Alaska, Territorial Canada, and the Russian Far East receive electric services.

Ultimately, clearly defining what an advanced remote microgrid is helps the industry move forward by setting the bar higher. Such a definition can also recognize the unique elements that now comprise microgrid deployments today that epitomize what resiliency means in the 21st century.

DOE’s Microgrid Definition: A Starting Point

The most commonly referenced definition of a microgrid was put forward by the US Department of Energy (DOE):

A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island mode.

Interestingly enough, this DOE definition excludes projects that were commonly referred to as microgrids decades ago: systems that operated independent from any traditional utility grid. One could make the argument that these systems, sometimes referred to as “remote microgrids” or “mini-grids,” are “true” microgrids since they must operate in island mode 24/7. To recognize these microgrid pioneers, DOE recently amended its definition to include them. Perhaps the reason why the original DOE definition focused on grid-tied microgrids was that the definition was developed during the hype cycle regarding the smart grid and the interest among policy makers in the U.S. to distinguish microgrids from the broader concept of smart grid. Figures 1 and 2, created by Lawrence Berkeley National Laboratory (LBNL), sum up this view, reflective of thinking during the American Recovery and Reinvestment Act (ARRA) of 2009 investments in smart grid deployments.

These two figures represent vastly different—and in some ways, diametrically opposed—visions for the future build-out of our electric grid infrastructure. The “hypergrid” vision (focused on transmission upgrades rather than distribution line optimization) is still heavily dependent upon centralized power plants, subject to the whims of volatile bulk powermarkets and the shortcomings of an aging transmission system. While they benefit from economies of scale in terms of large wind farms and solar farms, these renewable resources would still be vulnerable to grid outages caused by man-made or natural events, including extreme weather events and secondary consequences such as a higher prevalence of forest fires. Many expect these sorts of events will increase in the coming decade due to global climate change.

In contrast, the “microgrid” paradigm depicted in Figure 2 represents a more resilient grid focused on boosting efficiency at the local level for electricity and heat recovery through small combined heat and power (CHP) plants, providing heterogeneous power quality based on end-user customer needs and minimizing investments in the bulk power transmission infrastructure. But to realize this vision, our entire grid will need to get smarter, including the distribution system that is currently the prime source of outages and unreliability and upon which the “microgrid” paradigm heavily relies.

In a study completed on behalf of the California Energy Commission (CEC) in 2017, Navigant Research identified 17 different definitions of microgrids (see Fig. 3). At the time, CEC was seeking to develop its own definition reflecting California’s focus on deploying microgrids as vehicles to achieve state policy goals such as carbon emission reductions.

Note that the most common element in definitions offered up by governments, institutions, vendors and independent researchers was “multiple loads” (88 percent), followed closely by multiple DER (82 percent.) What is commonly recognized as the key defining feature of microgrids—the ability to island—came in third, although it was included in over three quarters of the definitions reviewed. Interestingly, only 41 percent of the 17 definitions fully aligned or subscribed with the DOE definition, as depicted in Figure 3.

Figure 4 showcases that definitions originating from California-based entities emphasized an “economic link” with the larger grid, clearly a minority view among the entire pool of respondents (18 percent.)

Advanced Grid-Tied Microgrid Definitions

At least two organizations have come forward with qualifying criteria defining an advanced microgrid. The first one is the Smart Energy Power Alliance (SEPA), an organization that morphed from a solar energy advocacy agency to then incorporate demand response and then smart grid organizations. It has created its own microgrid working group, which has published white papers, conducted webinars, and provided other thought leadership, reflecting the viewpoints of its utility constituency.

Despite its advocacy for the concept of “advanced microgrids,” it has yet to clearly define what the term means, other than the ability to provide grid services to the larger grid, incorporate smart grid technology, and provide value to distribution utilities. However, an active participant in SEPA’s working group on microgrids did come up with a definition in 2018 in work being performed for NARUC, and SEPA is scheduled to publish this proposed definition in a white paper in 2019:

Advanced Microgrids are electricity delivery networks that are intelligently managed, energy and resource efficient systems. An Advanced Microgrid interconnects, interoperates, and optimizes the performance of loads, distributed resources, and energy storage, using a layered control scheme, within defined electrical boundaries that acts as a single controllable entity with respect to the macrogrid at the point of common coupling; can island, disconnect from the grid to enable it to operate in both grid-connected or island modes. An Advanced Microgrid balances supply with demand in real time; schedules dispatch of resources; and preserves grid reliability.

A perhaps more rigorous approach to evaluating microgrids has been developed by the Green Building Council, which created the so-called LEED certification program for green buildings. It recently created a new Performance Excellence in Electricity Renewal (PEER) certification for microgrids.

Like the LEED program for green buildings, PEER certification is based on a rating system and score that evaluate a microgrid on the following criteria:

  • Reliability and resiliency
  • Operations, management, and safety
  • Energy efficiency and environment
  • Grid services
  • Innovation and exemplary performance
  • Regional priority

There are four levels of certification, designating how well the project is performing. The first microgrids to achieve PEER status under its updated v2 program was the Ameren utility microgrid developed by S&C Electric in Illinois, which achieved gold certification. Among the noteworthy features of this microgrid was that it was the first to be successfully deployed in North America serving paying customers with live loads on a distribution feeder. The distributed generation incorporated into the microgrid—which includes solar, wind, and natural gas generation—can be delivered directly to customers, routed to the centralized grid, or stored in the microgrid’s battery storage system. The microgrid is also controlled by a military-grade cyber-secure technology and has successfully islanded with a portfolio of 100 percent renewable energy generation.

The View from the Top of the World: Regional Grids and Advanced Remote Microgrids

In some niche markets, centralized grids were never developed due to constraints of geography and distance. The circumpolar Arctic is such a region. The eight nations that have territory bordering the Arctic Ocean are all developed countries and almost all communities have access to some form of reliable electric power services. There are approximately 1,500 settlements that are not connected to a centralized grid system and produce power locally, most often via diesel power stations. But the majority of the population in the Russia Far East, Alaska, and Canada receives electric power services via regional grids that connect various generation sources and load centers via a transmission network but are not connected to a central grid.

Most regional grids in the Arctic are anchored by renewable generation, most notably hydropower or geothermal, or alternatively, some other form of base-load primary energy source such as nuclear or natural gas. In fact, the opportunity to exploit large-scale renewable energy resources often serves as the anchor for regional grid development, connecting these resources to urban centers or export-centered resource extraction (mining, oil and gas development) activities.

Iceland is perhaps the global poster child of a renewable-powered regional grid, with the Landsnet Transmission Grid powered by 14,059 GWh (73.3 percent) hydropower and 5,170 GWh (26.6 percent) geothermal energy in 2017, compared to a negligible 2 GWh (0.01 percent) of fossil energy-based generation. Examples from North America include the Railbelt and Southeast Alaska Power Agency grids in Alaska, and the Yukon, Taltson, and Snare Grids in Territorial Canada. Each of these regional grids relied heavily on hydropower. In fact, regional grids are often formed when one or more local dispatchable energy resources, such as hydropower, geothermal, or a fossil fuel resource, are developed to serve several nearby population centers or industrial users within a defined geographic area to create economies of scale. A large area of extremely low population density often surrounds this regional grid, making further interconnection to a distant centralized grid uneconomic.

The difference between a regional grid and a large microgrid is that multiple low-voltage distribution nodes (i.e., population centers or industrial sites) are interconnected to one another and/or distant power generation stations via a high- or medium-voltage transmission network (typically 69 kV–230 kV) over a large geographic area. The system is either entirely isolated from a larger national or trans-national transmission network or is only weakly connected. Individual nodes within this regional grid are often microgrids, capable of islanding from the regional grid. For example, Alaska’s Railbelt Grid, which serves customers from south central Alaska (Anchorage and Kenai Peninsula) to the interior region (Fairbanks area), has at least 9 nested microgrids ranging from a 20 MW system (the University of Alaska Fairbanks) to 220 MW or more system (Golden Valley Electric Association’s service area).

Here is a proposed working definition of a regional grid:

A regional grid is a high voltage transmission network connecting multiple distribution nodes/load centers and power stations, but that is either entirely isolated from a larger national or continental central grid or is only weakly connected.

Note that these regional grids align with yet another common term that has come forward over the past few years: distributed energy resource management systems (DERMS). This shows how, in many cases, remote areas have been at the forefront of DER markets and out of necessity serve as early adopters of new aggregation and control technologies. The best example relates to remote microgrids, where innovation continues to occur at a steady rate prompting the need for a new definition—that of an advanced remote microgrid.

Defining an Advanced Remote Microgrid

Remote microgrids, especially in the circumpolar Arctic and some island nations, have been in existence for decades. One could argue, as does HOMER Energy, that the smart grid began in remote microgrids out of necessity. Since the largest and most mature microgrid segment is remote microgrids, and technological advances continue to permeate this market, perhaps it is time to define what an advanced remote microgrid looks like today. Since they provide the most fundamental energy services for the most difficult projects to develop due to client base (often the Bottom of the Pyramid), in the harshest environments (extreme cold or extreme heat) in a space often ignored by well-capitalized private sector vendors, the demands placed on successful microgrid implementation are tremendous. While there are clearly advanced features that are common across remote and grid-tied microgrids, the definition for remote systems does address some unique features.

The following attributes are proposed to qualify a system as an “advanced remote microgrid,” with the first two prerequisites being mandatory requirements, and the remainder as preferred attributes.

  • High penetrations of distributed/local renewable energy resources: At a minimum, the remote microgrid should be able to achieve instantaneous penetration from renewable generation of 100 percent of the load or higher, with an annual average penetration of 50 percent or higher.
  • At least one non-firm renewable energy resource should be incorporated into the system. Managing high penetration levels of variable renewable resources such as wind or solar is much more complicated than achieving similar levels of penetration from resources capable of providing baseload power, such as hydropower or geothermal.
  • If the system uses a diesel generator, the system is capable of operating with the diesel turned off when adequate renewable resources are available.
  • The controls platform will usually feature state-of-the-art technology capable of managing high penetrations of renewable resources. This controls platform would lean toward a distributed grid edge intelligence, with auxiliary components required to regulate voltage and frequency, and leveraging smart inverters or direct current modular technologies to achieve 24/7/365 reliability and resiliency.
  • Smart meters or some other form of advanced telemetry are used for billing so that individual energy costs are allocated according to tracking of actual energy consumption. This is vital for energy access remote microgrids in the developing world operating under mobile-phone-enabled pay-as-you-go business models.
  • The system will likely incorporate some form of energy storage. Typically, this will be some form of battery but could also include flywheels, ultra-capacitors, thermal storage, and pumped hydro storage. Hybrid energy storage solutions would be ideal.
  • The advanced remote microgrid would not be limited to the provision of electricity. It would also provide thermal energy—both heat and cooling—and ultimately could also serve as a platform for other essential services, including delivery of clean water.
  • While capable of integrating the latest technology advances in DER, energy storage and controls, the design would take into account operations and maintenance (O&M) challenges that recognize local labor force constraints, and which leverage remote monitoring, training and trouble-shooting opportunities.

The community of Kongiganak in Western Alaska is an example of an advanced remote microgrid. This traditional Yupik community has around 400 inhabitants, many of whom participate in a subsistence lifestyle. There are no vehicles in the community (the village is interconnected with boardwalks that protect the fragile tundra), and the only means of transportation is via plane or seasonally via snow machine or boat.

Kongiganak has an average load of 130 kW, and 475 kW of installed wind power (approximately 3 times the average load), and 250 kW Li-ion battery bank coupled with an ABB PCS 100 inverter. The system was designed by Intelligent Energy Systems (IES), an Alaska-based developer, and includes dozens of dispatchable ceramic electric heaters installed in individual residences that act as diversionary loads during high wind events. These electric heaters are programmed to respond to grid frequency and communicate with each other and the powerhouse using a mesh radio network.

In January 2019, Kongiganak was able to operate in diesel-off mode for 7 consecutive days and displaced 65.3 percent of diesel for electric generation for the month. Residents also reported up to a two-thirds reduction in heating oil consumption in 2018. Community members conduct all regular maintenance on the system, including the wind turbines. Interestingly, the system relies on somewhat outdated, refurbished 95 kW Windmatic turbines that require regular maintenance to keep online.

Based on the attributes described above, here is the proposed definition of an advanced remote microgrid:

An advanced remote microgrid can achieve greater than 100 percent instantaneous renewable penetration and 50 percent annual renewable generation while incorporating at least one non-firm renewable energy resource. It can also run in diesel-off mode. Among other preferred features are distributed edge controls, robust telemetry and the ability to deliver cost effective electricity, thermal energy and other critical infrastructure needs (including clean water), while recognizing appropriate levels of sophistication so that the local labor force can operate the system in an efficient manner.


Some argue that trying to attach labels to DER projects is a largely meaningless chore. What does it really matter if one describes a project as a microgrid, virtual power plant, DERMS, or an Internet of Things (IoT) deployment? As long as the customer meets its needs—whether that be renewable integration, lowering of costs or carbon reductions—solution providers have done their jobs.

Regardless of what one thinks of this argument, this white paper attempts to make the opposite argument. What one calls a project does matter, specifically to policy makers and researches chronicling the evolution of DER aggregationand optimization platforms, allowing the market to segregate and tally up project successes based on a set of clearly defined attributes. True, engineers may debate the nitty-gritty details about whether a microgrid’s islanding capability is equivalent to another microgrid based on factors such as incorporation of renewable resources in island mode, whether disconnect and reconnect are truly seamless, and whether the DER can really operate in parallel to a larger grid. Note that these considerations all revolve around issues facing a grid-tied microgrid.

The burden facing a remote microgrid are nearly identical when discussing the aggregation and optimization of diverse DERs to provide reliable and high-quality power service. Nevertheless, the debate about “advanced” microgrids has tended to focus on the relationship to a larger grid, contributions to overall grid reliability, and the capability of providing grid services. The focus of a remote microgrid instead is internal. Good performance can often make the difference between life and death (particularly in cold climates such as the Arctic).

Microgrids were born in an off-grid environment. That’s where the earliest innovation occurred within these small, independent grids that emerged out of pure necessity, often with limited funding and the inability to afford state-of-the-art technology. Ironically enough, these pioneers often pushed the envelope and developed solutions that ultimately migrated over into the grid-connected world. A great example is when ABB purchased Powercorp of Australia; the latter of which had developed a flywheel linked to a distributed controls inverter-based paradigm to accommodate the unique needs of wind/diesel hybrids. ABB realized this distributed architecture made more sense than its own controls and adopted—and have continued to refine—it for all of its future projects going forward, whether they interconnected with a utility grid or not, including in a remote location like Kongiganak, Alaska.

Navigant Research shows that remote microgrids comprise over 40 percent of the total global market, by far the largest market segment. These systems perform vital functions to communities as well as industry and the military. The lessons learned from remote microgrids can shape the future of the entire microgrid space. Setting goals to meet for advanced microgrids—whether remote or grid-tied—helps the industry move forward, spurring innovation and thereby delivering essential services to a global population. DE

Author’s Note: The research on microgrid definitions was developed under a contract with the California Energy Commission and was supported by Adam Forni, principal research analyst at Navigant Research, and Laura Vogel, associate director at Navigant Consulting.