Having worked in the Energy, Utilities and Resources (EUR) sector for most of my career, I have been fortunate to witness some amazing changes in the way we power the world, but nothing compares to the state of the industry today.

As technology advances, EUR organisations are under increasing pressure to support a path forward that is critical to the survival of the planet and the people who live on it. The ever-shortening timeframe we face, while stressful, has accelerated the pace of innovation and generated ideas and possibilities that were unthinkable just a few years ago.

Lately, I’ve been thinking a lot about microgrids and the role they will play in modernizing how we generate, distribute and use energy. In this article, we explore the different ways this decentralized energy model will help us in the race to sustainability.

The rise of microgrids

The amazing potential of microgrids for a clean energy future is only just being realized, but in fact these miniature versions of traditional grids marked the origin of electricity supply and distribution.

The first microgrid was designed by Thomas Edison in the early 1880s as a generation and distribution system for electricity. It was self-contained and powered by coal-fired steam engines that fed a series of large generators. Over time, the model expanded and evolved into the monolithic, centralized power grid that is commonly used today.

In the 1930s, electric cooperatives were formed to serve rural areas where nine out of ten households had no electricity. With federal funding, rural electrification progressed rapidly. Today, there are over 460 microgrids in operation in the United States, reliably delivering 3.1 gigawatts of electricity to the communities they serve.

The ability to generate and store energy locally has gained significant momentum, and new use cases for microgrids are emerging. In 2021, automaker Nissan announced its intention to build a microgrid at its electric vehicle (EV) plant in Sunderland, UK. The microgrid will provide Nissan and its suppliers with 100% renewable energy.

In Neenah, Wisconsin, Bergstrom Automotive is implementing off-grid microgrid units powered by solar energy and supported by an on-site natural gas generator. The system will provide a clean energy infrastructure solution for charging electric vehicles.

These early advances are just a harbinger of the full potential of microgrids.

Why are microgrids important?

If microgrids are merely miniature versions of our existing monolithic grid system, how can they make such a difference in our pursuit of sustainability?

It boils down to decentralization. A traditional network is incredibly inefficient due to its consolidated design. Here are some examples:

• Energy loss during transmission

Transmitting electricity through transmission lines is not an efficient method. In fact, according to Wikipedia, 5% of the energy generated in the United States is lost during transmission. In 2022, U.S. utility power plants generated 4.24 trillion kilowatt hours (kWh). With a national average electricity price of 23 cents per kWh, we waste over $48 billion worth of energy each year.

In comparison, microgrids generate and distribute energy locally. Since there is no need for transmission over long distances, energy loss is reduced.

• A single point of failure = a system-wide blackout

In technology, the most agile and responsive systems are composable, a design principle that allows systems to be assembled from smaller, independent components. This model is flexible and allows organizations to easily contain and remove inefficient elements without impacting the overall system.

Conventional grids are monolithic. Everything is interconnected. And as the people of Texas discovered in the winter of 2021: If individual components fail, the entire grid fails.

Microgrids are independent of a larger system. If a microgrid fails, even if it is one of many microgrids serving a larger model, the impact is limited to the local service area.

• Risks for workers and the environment

Traditional power grids are huge, with lines hundreds or even thousands of kilometers long. Employees who must maintain and repair the infrastructure travel long distances, often to remote locations, to perform dangerous work. Injuries are common due to working at high altitudes and in remote areas.

The environment is also risky, especially in bad weather when power lines fall. Contact between ground vegetation and fallen high-voltage lines often starts a fire, and response times are longer due to the distance. A fatal lesson we learned in recent years with the tragic wildfires in California.

Microgrids do not distribute energy over long distances. Maintenance and repairs are performed locally while controlling environmental conditions at the moment.

A future for all

Microgrids not only serve as a source of sustainable energy, but also make access to electricity democratic for all. Rural areas where the expansion of traditional infrastructure is unaffordable can generate energy locally and inexpensively.

Indigenous and aboriginal communities, often remote and overlooked, will be able to control the production and supply of electricity themselves, reducing dependence on diesel generators (and a never-ending supply of diesel).

Here are some additional insights to consider for a microgrid future:

• Flexible: Microgrids work with all energy sources. In addition to more common options such as solar and wind, other sources such as hydrogen and tides also support the model.

• Safe: Resilience and redundancy measures can be easily implemented by setting up multiple microgrids to ensure continuous access to energy.

• Backup strategy: In the event of disruptions to the power supply (e.g. when it is cloudy or there is no wind), the excess energy stored in batteries serves as an independent backup.

The role of utilities

With a decentralized grid, utilities will shift from their role as energy suppliers to service providers. As subject matter experts, these organizations must implement a more flexible business model that leverages their expertise in energy generation, storage and distribution.