Microgrids are small, localised grids that produce, distribute and consume electricity. They have the autonomy to disconnect from the traditional grid to operate independently. Microgrids can utilise different forms of energy sources including, but not limited to, solar, combined heat and power, natural gas, wind, diesel generators and batteries. The scale and capacity of microgrids could be very small, catering to a single building, industrial unit or village, or large enough to cater to an entire island. A major advantage of microgrid solutions is that they are primarily based on sources of renewable energy. They enable the integration of clean energy sources such as solar and wind power into the electricity grid.
Renewables are the reason developing countries are rapidly building microgrids as this will help them meet their climate commitments and clean energy targets. Countries such as India also often witness unstable and erratic supply of power from the grid due to limited availability of fuel, poor grid management and high demand. Such challenges are driving industries, private players, the government and communities to create microgrid solutions.
Microgrids are an effective and reliable source of power. They help reduce transmission losses while improving the efficiency of electricity distribution, especially in remote areas. Their ability to operate amidst the breakdown of the main utility grid can also significantly improve grid resilience and help mitigate grid fluctuations and instability. Microgrids may also enhance system recovery and response amid grid disturbances. In terms of their fundamental operation and functioning, microgrids are not very different from large-scale grids. They differ in terms of their smaller load size, consumer base and geographical span. That said, the constraints of power generation, load management and distribution are the same for both microgrids and large-area grids.
Renewable Watch takes a look at the different forms of microgrids, recent developments, challenges and the way forward for the segment…
Classification of microgrids
A microgrid can function in different capacities, depending on whether it is connected or disconnected from the main grid. The type of microgrid determines the additional equipment, communication tools and control applications that may be required for its smooth functioning. Microgrids can be broadly classified as remote, grid-connected and networked.
Remote microgrids, largely known as off-grid microgrids, function independently from the main utility grid. These are physically isolated grids that permanently operate in island mode. These microgrids are particularly suitable for regions where there are restrictions on mobility, lack of affordable transmission and limited infrastructure for distribution. Typically, renewable energy sources such as solar and wind are utilised in remote microgrids as they are relatively economical and environmentally safe. More recently, several remote grids have been resorting to battery energy storage as a means to provide additional grid stability and backup power.
Grid-connected microgrids are physically connected to a main utility grid using a switching mechanism at the point of common coupling. These grids have the freedom to operate with the main grid or independently. An effective advantage of this type of microgrid is that, in case of a pow-er outage, it can disconnect from the central grid. In this case, the microgrid functions using its own generators and energy storage mechanism. Owing to advanced technologies, it can function without any physical human intervention. As a result, the consumer remains unaffected throughout the period of power outage. Grid-connected microgrids are more economically viable for areas spanning across a small geographical location such as industrial units, educational campuses, hospitals, buildings and agricultural farms.
The third category of microgrids is networked microgrids. These systems consist of several microgrids connected to the same utility grid circuit. Such microgrid circuits are developed to typically serve large geographical areas. These microgrids require an advanced control system to coordinate the functioning of the various connected microgrids along the same grid circuit. Networked microgrids are fast be-coming an effective source of electricity in developing smart cities as well as community microgrid systems.
Several recent developments have taken place in the microgrid space in India, given the improved focus of the government and the industry towards the segment. In January 2021, TP Renewable Microgrid, a subsidiary of Tata Power, commissioned the 100th 30 kW solar plus storage microgrid, located in the remote rural village of Ratnapur bordering Nepal in the state of Uttar Pradesh. With this development, the total installed capacity of solar microgrid projects under TP Renewables has reached 3 MW. The first 100 microgrids were added over a span of 10 months, with an additional 61 microgrids added subsequently.
In April 2021, the government’s e-governance services arm Common Service Centre (CSC) announced its collaboration with Tata Power to set up solar-powered microgrids and water pumps in rural areas across the country. The collaboration is expected to involve over 0.375 million CSCs for supplying solar water pumps to farmers. The CSCs will also provide support in setting up microgrids in residential and commercial establishments in rural areas. Initially, Tata Power has proposed to roll out 10,000 microgrids to support rural consumers through CSCs. This is expected to generate employment for at least two persons in each panchayat. As a result, a total of 20,000 jobs are expected to be created under the partnership.
Under Smart Power India, a programme launched in 2015 by the Rockefeller Foundation, over 160 microgrid solutions have been established in the country so far. These are spread across four states – Bihar, Uttar Pradesh, Odisha and Rajasthan. Over 80 per cent of the microgrids are solar powered, and their power capacity ranges from 10 kW to 70 kW. The programme has invested Rs 1.5 billion in electrification over the past five years and aims to provide renewable microgrid solutions to at least 25 million Indians across six states.
In September 2021, Delhi’s first urban microgrid system was set up at Shivalik in Malviya Nagar. The system is expected to save 115 tonnes of carbon dioxide annually. The microgrid has been set up under the Indo-German Solar Partnership Project and is based on solar and battery energy. The project entails an investment of roughly Rs 55 million and consists of a microgrid system with a 100 kWp solar capacity and a 466 kWh lithium-ion battery energy storage system.
The Tripura government has also laid out its plan to build solar microgrids in 23 rural villages, with an investment outlay of Rs 23 million. The Tripura Renewable Energy Development Agency will install microgrid systems in these villages, such that each system will provide electricity to roughly 14 households. This is expected to help meet the growing electricity demand of the villagers. Earlier, a 2 kW solar microgrid was also inaugurated in the state, situated at Sarkipara in Khowai district. The microgrid segment can expect to witness more such developments over the coming months as the government and industry collectively lay greater emphasis on renewable power generation and electrification.
What makes microgrids attractive?
Microgrids offer several benefits and advantages to both producers and consumers. They allow significant flexibility in optimising energy costs. Microgrids developed in recent times meet their energy demand using multiple sources of energy such as solar and wind power along with battery storage, or a renewable source connected to the main electrical grid. As a result, changes in electricity demand can be met more effectively, with minimal disturbances. With microgrids, the operator can ensure continuity of power supply at minimal costs. Solar microgrids also enable the creation of jobs, reduce energy poverty, and improve the quality of power supply. They can complement various electrification programmes being undertaken in India, with a special focus on meeting the rural electrification demand. As a result, many renewable energy providers have adopted innovative business models that build upon the capabilities of local communities and integrate solar power into microgrids. Community solar microgrid programmes are gaining immense traction. These models foster local economic activity and improve livelihood generation in local communities. Therefore, when complemented with effective skill development, community solar programmes can be expected to generate greater incomes and improved livelihoods for local rural communities.
Challenges and the way ahead
Several challenges continue to remain unaddressed in the microgrid segment. These include theft management, lack of trained personnel, demand fluctuations, poor maintenance, tariff design and collection mechanisms, and lack of institutionalisation. Furthermore, the success of microgrids is significantly dependent on the policy and regulatory support it receives from the government. Since the off-grid market is still in the budding stage, producers and developers are expected to face high initial costs. The presence of supportive price policies can foster greater producer confidence and rapid development of microgrids in the country.
Technological advancements such as artificial intelligence, advanced grid management software and blockchain technologies may also serve as effective tools for grid management, governance and optimisation of electricity supply. The benefits of these technologies may translate into lower bills for consumers and lower costs for developers.
As renewable sources such as wind turbines, solar panels and storage batteries are becoming more cost effective over time, their integration into microgrids can be expected to become more economical and sustainable for power generators in the future. Further, since microgrids serve as an emergency backup power source using battery storage, they are anticipated to be rapidly developed by the government and industries alike, in the coming months.