Today’s microgrids are often associated with solar panels and battery storage, but they are versatile and can be powered by virtually any energy source.
Microgrids may seem like a modern innovation, but the concept has been around for decades. The recent rise in prominence is driven by a global push for renewable energy adoption and the growing need for reliable backup power, especially for critical infrastructure and remote communities. As energy resilience becomes a top priority, microgrids are stepping into the spotlight for both businesses and consumers.
At their core, microgrids are relatively straightforward. The National Renewable Energy Laboratory (NREL) defines a microgrid as a small, localized energy system capable of operating independently or in conjunction with the main power grid. While today’s microgrids are often associated with solar panels and battery storage, they are versatile and can be powered by virtually any energy source.
The modern microgrid
Microgrids have evolved significantly from their early deployment in energy systems. Today, they are increasingly deployed to enhance energy resilience and reliability, serving as both primary and backup power sources. In a world where energy markets are becoming more volatile, microgrids offer commercial and industrial facilities a way to maintain operations and secure long-term energy cost stability.
In recent years, falling costs for solar and energy storage assets have collided with rising energy prices to create an ideal environment for commercial microgrid deployments. For many businesses and critical infrastructure sites, microgrids offer a multi-faceted solution: they help mitigate energy costs, reduce exposure to extreme weather events, and future-proof operations against an unpredictable energy landscape. Solar-powered microgrids also support sustainability goals and help organizations comply with emissions regulations at the state or regional level.
For commercial entities that demand uninterrupted, reliable powers such as data centers, hospitals, cybersecurity hubs, and military installations, microgrids are a strategic investment. These facilities often have the physical space to support solar installations, whether on rooftops, unused land or over parking structures. While the primary driver for microgrid adoption in these sectors is typically energy resilience, the maturing solar and storage market has made long-term cost savings an increasingly compelling factor. By maximizing on-site clean energy consumption, especially during peak demand periods, businesses can significantly reduce their reliance on the grid.
Beyond critical infrastructure, microgrids are also being deployed with success in regions prone to volatile energy prices and frequent extreme weather. Hawaii, for example, has emerged as an ideal market for microgrid projects. Hawaii’s Clean Energy Initiative set a bold goal of achieving 100% clean energy by 2045. In 2021, Hawaii’s Public Utilities Commission also approved a microgrid services tariff, designed to support the deployment of microgrids in support of the state’s grid. Besides being an isolated land mass in need of resiliency, these initiatives are critical as Hawaii is also known for its volatile and expensive energy market.
According to the U.S. Energy Information Administration, Hawaii has the highest electricity bills in the nation. High prices are also often compounded by power instability. Frequent instances of extreme weather across Hawaii can cause blackouts and brownouts, whether as a direct result of storms and wildfires or as preventative measures to mitigate further infrastructural damage. In a market like Hawaii, microgrids can serve as a community backup power source or support resiliency in a consumer-facing industry like hospitality, where disruptions to power and – as a result, service — would be financially and reputationally damaging.
Case study: Brigham Young University-Hawaii
In 2022, Brigham Young University–Hawaii completed a campus-wide renewable energy system that includes three rooftop solar installations, five solar carports and 7,325 kWh of battery energy storage. Designed to meet an estimated 39% of the university’s energy needs each year, the project significantly reduces the university’s carbon footprint and dependence on the grid. The addition of battery storage also allows the university’s campus to continue operating during utility power outages. The university also financed the project through a 20-year power purchase agreement (PPA).
What’s next
In 2023, Wood Mackenzie reported that the U.S. microgrid market is expected to grow by an estimated 19% on average through 2027. That same report noted a 47% increase in solar and storage microgrid capacity from 2017 to 2023. With prices for solar and battery technologies falling, this trend is expected to continue in coming years.
As the clean energy landscape evolves, more business and community leaders are open to innovations like microgrids as a solution for price uncertainty and energy resilience. However, developing and installing a microgrid can be a complex task. To respond to this growing demand, many solar developers have also evolved their services to support microgrid development and deployments. There is no simple, repeatable microgrid design or deployment model that works for every site. Developers can assess a site’s goals and specifications — including identifying critical loads — to suggest the appropriate technologies. This includes identifying the right size solar array and energy storage and an adequate energy management system as well as ensuring its compatibility with local utility/regulatory requirements.
Critical industries and communities prone to energy instability and volatility need affordable, reliable clean energy solutions more than ever. With these factors driving demand and the business case for solar microgrids well-established, the future is bright for these technologies.
Lukas Sheild is general manager, Hawaii at REC Solar.
