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What is a microgrid?

A microgrid is a local energy production and distribution network that can function independently when it is disconnected from the main electricity grid in the event of a crisis such as a black out or a storm, or simply to supplement peaks in demand from the microgrids users and thereby avoid higher energy costs. These small grids serve a defined set of nearby users such as a housing complex, business center, a hospital, or a manufacturing plant. Microgrids are powered by generators or renewable energy sources like solar panels or wind, and are generally combined with energy storage units such as batteries.

Low environmental impact microgrids that integrate renewable energy generation and electricity storage systems are becoming increasingly widespread thanks to:

  • Their benefits in terms of environmental sustainability
  • The falling costs of energy storage technologies and renewable energy generation systems (e.g. photovoltaic systems)
  • Their benefits in terms of environmental sustainability
  • The falling costs of energy storage technologies and renewable energy generation systems (e.g. photovoltaic systems)

How does a microgrid work?

Electricity grids connect central power sources to homes and buildings over long distances through a network of underground or overhead cables. A microgrid works on the same principle, connecting distributed energy sources like generators, renewable resources like solar panels and batteries to nearby end users such as homes, communities, businesses or factories.


In order to a better understanding of what a microgrid is, it's useful to specify that microgrids can operate independently of the main power grid and are often managed by sophisticated software systems that that increases and decreases the resources and production as needed. The microgrid will also include the hardware necessary to distribute the energy it self-produces.

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What are the benefits of microgrid systems?

Microgrid energy system benefits include:
  • Savings on electricity costs by taking power from the grid only when it is cheaper, thanks to distributed generation and batteries to boost self-consumption
  • The creation of an additional source of income by providing remunerated ancillary services to the national grid (where regulated/permitted)
  • The achievement of targets relating to sustainability and the reduction of polluting emissions
  • Improvements in safety and resilience thanks to the option of disconnecting from the grid in case of power outages in order to safeguard the continuous supply to critical loads even during potential blackouts
  • Cost optimization concerning the use of energy from the national grid, the generation of distributed sources and the charging of any storage systems, thanks to the microgrid’s own advanced management systems

Off the grid or microgrid?

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Being off the grid means not being physically connected to an energy utility. Off-grid homes, buildings, or communities therefore rely completely on their own energy sources, which can often be renewable energy sources such as the sun and the wind.


A microgrid can operate when connected to the main power grid, or also function in a stand-alone “island” mode. Therefore, the latter operate completely off the grid, and are not connected to a central power source at all. These are known as “remote microgrids” and usually run in areas that lack access to an affordable power source nearby.

How much power can a microgrid generate?

Microgrids commonly range in size from 100 kilowatts (kW) to multiple megawatts (MW), typically enough to serve a group of residential or office buildings, or a manufacturing facility. In New York City, for example, Enel X installed a microgrid at a housing complex of 625 units in the Brownsville area, which combined a 400 kW photovoltaic solar power system, 300 kW/1.2MWh energy storage, and a 400 kW fuel cell. On a larger scale, Enel X installed a bigger solar-plus-storage microgrid for Eaton Electrical’s factory in Las Piedras, Puerto Rico that will integrate nearly 5 MW of solar photovoltaic energy and approximately 1.1 MW/2.2 MWh of battery storage into the facility’s onsite power generation systems. It was Enel X’s second project for Eaton on the island. Establishment Labs, a Costa Rican producer of the latest generation medical devices, opted for a microgrid powered by a rooftop 276 KW photovoltaic system combined with lithium ion batteries of 500 kW/1 MWh.

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