Move Towards Microgrids

Ensuring access to reliable electricity supply

There is little doubt about the importance of electricity for the economic and social development of an economy. Yet, more than a billion people across the globe do not have access to electricity and many of those who do, suffer from poor quality and unreliable supply. The majority of the people without access to electricity reside in African or other developing countries, especially in the rural areas. Meanwhile, grids in the developed world are well connected and provide electricity to almost the entire population. However, due to this very interconnectedness, in case of a breakdown the outage can be widespread and lead to unavailability of electricity supply for long durations. In both these scenarios, microgrids come to the rescue.

Microgrids provide access to electricity in regions where either the grid cannot reach or where extending the grid would entail unreasonably high costs. Micro-grids can operate in parallel with the main grid and provide support to the grid in case of outages and during periods of peak demand. They have already started to make a difference in various parts of the world with several companies developing and implementing microgrid technologies that provide quality power and at the same time, reducing greenhouse gas (GHG) emissions by integrating more renewable energy.

What are microgrids?

A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity. A microgrid can be connected to or disconnected from the main grid to enable it to operate in grid-connected or island mode respectively. In other words, microgrids are local power networks that use distributed energy resources, and manage local energy supply and demand.

Although microgrids have always existed, their popularity and usage have increased in recent times. Problems such as difficulties in extending the main grid to remote areas, ageing infrastructure and widespread outages due to interconnectedness have increased the need for microgrids. Also, they have evolved over time and become much smarter while making extensive use of renewable sources and advanced technologies.

In order to derive the maximum benefit from microgrids, it is necessary to complement them with energy storage and control systems for streamlining intermittent electricity flows from all energy sources. Energy storage systems play a significant role in addressing the issues of grid stability in renewable energy generation and are an attractive option for both grid-connected and off-grid renewable sources. It is a much cleaner means of synchronising renewable energy as compared to carbon dioxide (CO2) emitting diesel generators. Besides remote off-grid areas, microgrids are very useful in supplying power to military bases, hospitals, large data centres, and research-driven colleges and universities, which have a high energy demand and where loss of critical operations poses a significant risk of revenue and/or data loss, or impacts safety and security.

Benefits of microgrids

Microgrids serve two main purposes – providing access to electricity in areas where the main grid cannot reach and complementing the main grid in hours of need. It is estimated that of all the rural areas that remain unelectrified, more than 40 per cent are suitable for electrification through microgrids.

By improving access to electricity, microgrids become important catalysts for the economic development of a region. They provide an avenue for the integration of renewable energy, thus mitigating GHG emissions and enabling sustainable development. Microgrids also offer better demand management and energy efficiency, and leverage the storage of energy. In developed countries where the grids are perhaps too interconnected, microgrids help by avoiding widespread outages and blackouts.

Further, while centralised grids have been able to cater to the growing demand over the years, future grid expansion in already populated areas is difficult in view of right-of-way issues and public resistance. Microgrids can support the main grid in such cases and also during times of peak demand. In this respect, they can be installed in industrial complexes, commercial hubs, residential societies and even individual buildings to provide local energy supply and also supply surplus energy to the grid, if any.

Another key benefit of microgrids is that they are much more suited to integrating renewable energy sources, which are intermittent in nature, as compared to a centralised grid. With growing emphasis on reducing GHG emissions and increasing the share of renewable energy, microgrids are the way forward. They help reduce transmission and distribution losses as power does not have to be wheeled over long distances.

Global deployments

As per a recent report by Navigant Research, more than 1,400 microgrid projects have been identified worldwide (spread across over 100 countries), representing around 13,400 MW of operating, under-development and proposed capacity. Most of these microgrids are in remote locations.

The key players executing microgrid projects across the world include ABB, Schneider Electric, Siemens, General Electric and Chevron Energy. Most of these companies provide advanced power and automation technologies, and clean energy solutions.

In terms of energy resources, the maximum capacity is fuelled by diesel. However, with increased emphasis on climate change mitigation and the declining cost of renewables, greater integration of renewable energy sources like solar, wind and biomass is being observed. This is also evident from the fact that solar photovoltaic (PV) and wind have already become the leading resource choices for microgrids.

With renewables playing a bigger role in generation, consumers are also adding storage in order to mitigate intermittency issues. Storage options give an added advantage of better demand management. According to a study by GTM Research, more than 40 per cent of microgrid installations in the US have integrated battery storage options. However, various other technologies for energy storage such as flywheel, thermal, pumped hydro, compressed air and hydrogen are also being tried.

In India, approximately 125,000 rural households are connected to microgrids. The majority of the microgrids are located in Chhattisgarh, one of the least developed regions in the country, covering more than 1,400 off-grid habitations. Renewable energy sources, including solar and biomass, account for the majority of generation in microgrids in India. However, their potential remains underutilised due to the absence of appropriate financially feasible energy storage technologies.

The following are some examples of microgrid projects that have been implemented or are being implemented across the world.

Marble Bar, Australia

This microgrid project was installed in 2010 by the ABB Group in Marble Bar town, located in the Pilbara region of north-western Australia. The project includes one of the world’s first utility-scale, high penetration PV-diesel hybrid power stations along with flywheel-based power storage, and integration and control solutions. The Marble Bar power station consists of four 320 kW diesel generator sets and a 300 kW solar array with 500 kW power storage flywheel capacity. The system supplies Marble Bar and Nullagine (also located in Pilbara) with close to 60 per cent of their average daytime energy through solar generation, helping save approximately 400,000 litres of diesel and 1,100 tonnes of GHG each year.

Marsabit, Kenya

The microgrid system in Marsabit oasis town, located at the edge of the desert in a windy area of northern Kenya, includes diesel generators and two wind energy turbines of 275 kW capacity each. The project, installed by Socabelec East Africa Limited, provides electricity access to about 5,000 people residing in the town. ABB is currently installing a 500 kW flywheel-based microgrid stabilisation solution to help stabilise power supply from the wind-diesel hybrid plant. The project, which is likely to be completed soon, will be the first flywheel storage project in Kenya.

Ross Island, Antarctica

Located on Antarctica’s Ross Island, New Zealand’s Scott Base and the US’s McMurdo Station are both important research bases. The microgrid system here consists of diesel generators (9×125 kW) and wind turbines (3×330 kW) along with a flywheel storage system and a frequency converter. The integration of wind energy with the microgrid has led to savings of around 463,000 litres of diesel per year for power generation, and avoided 1,242 metric tonnes of CO2 emissions per year.

Kodiak Island, USA

The Kodiak Electric Association operates a microgrid on Kodiak Island, located on Alaska’s south coast, with a population of around 15,000. The grid generates 28 MW of electricity from hydro and wind power units. The system also incorporates two 1 MW grid stabilisation generators that are based on a spinning flywheel with inverters to store short-term energy, and inject both real and reactive power into the microgrid.

El Toqui, Chile

Nyrstar, an integrated mining and metals company, generates energy for its El Toqui zinc-gold mine in southern Chile through a hybrid power system. The system consists of four diesel generators (aggregating 5.6 MW), six small wind turbines (aggregating 1.5 MW) and two hydropower generators (2.3 MW in total). To integrate the diesel, wind and hydro generation, grid stabilisation and controller systems have been installed to reduce power fluctuations and increase energy yield (by about 29 per cent). An additional hydro generator (1.9 MW) has also been planned.

Johannesburg, South Africa

An integrated solar-diesel microgrid has been installed at ABB’s Longmeadow headquarters in Johannesburg, which houses medium voltage switchgear manufacturing and protection panel assembly facilities. The system includes a rooftop solar PV plant and a grid stabiliser that helps to maximise the use of clean solar energy.

Bihar, India

Greenpeace International has installed a microgrid to supply reliable, low-cost solar power in Dharnai, a small village in Jehanabad district in Bihar, India. The project, co-implemented with BASIX and the Centre for Environment and Energy Development, involved the installation of 100 kW of solar panels, and provides electricity to more than 450 households and 50 commercial establishments. It was implemented at a cost of Rs 30 million, making Dharnai India’s first fully solar-powered village.


Advanced microgrids have already been deployed in developed countries. While several initiatives have been undertaken to promote microgrids in the past, impediments such as high capital costs, uncertain revenue streams, lack of awareness, limited financing and business models, inadequate investments and the lack of appropriate regulations have hindered growth.

With several microgrids already in place, the technology and equipment are available. However, their costs are very high. Apart from infrastructure costs, logistics costs too are typically high due to the remoteness of the areas covered. Moreover, since people in remote areas generally have low paying capacity and no commercial loads, there is always uncertainty regarding the revenue stream, which is important for recovering the capital expenditure, and operations and maintenance costs. This creates a challenge for the microgrid business case. However, it can be overcome through the use of anchor loads. Telecom towers, for example, can serve the purpose of anchor loads. While on the one hand, microgrids ensure reliable power supply to tower operators, on the other, tower operators provide a stable revenue stream to microgrid developers. However, the cost of setting up a microgrid has dropped significantly over time, making it a viable option in many scenarios.

Further, inadequate investments and financing options lead to fewer microgrid projects than desired and hinder the growth of microgrids in developing countries. Policy-level impediments also restrain the growth of microgrids. The lack of clarity in the current policy frameworks regarding interconnection standards (with the main grid), tariff determination for off-grid systems and the requirement of microgrid infrastructure to be grid-compatible are some of the factors that adversely affect the development of microgrids. Along with enabling policies, regulatory and utility acceptance is also important for the development of microgrids.

The way forward

Microgrids are emerging as a key solution for various global and national initiatives aimed at enhancing energy access and ensuring sustainable development. In November 2016, the Paris climate change agreement, signed by 195 nations to combat climate change, became legally binding.

Further, the “Sustainable Energy for All” initiative was launched in 2011 to provide universal energy access and double the share of renewables in global generation by 2030. Even at the national level, governments of developing countries have been focusing on increasing access to electricity. For instance, in India, the government has launched the “Power for All” initiative under which it is supporting the state governments in achieving the objective of supplying 24×7 quality, reliable and affordable power to all consumers. In light of such initiatives and campaigns, microgrids will certainly have a greater role to play in the near future. Moreover, some areas in Africa and South Asia offer conditions conducive for generating wind and solar energy. These areas, which are otherwise out of the reach of the main grid, are ideal sites for the development of microgrids and renewable energy integration.

While North America leads the microgrid market today, according to industry experts, going forward, the Asia-Pacific region is likely to emerge as the global leader for microgrid deployment owing to the large and growing population that does not have access to electricity through the main grid. With all these developments taking place, there is little doubt that microgrids will not only coexist with the main grids, but will also be deployed in greater numbers in the future.


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