The problem with centralized power grids is that they can be crippled at just one point of failure, leaving consumers vulnerable to outages. According to Mark Feasel of Schneider Electric, the cost of such outages for the U.S economy overall is $150 billion a year. An irritating inconvenience for domestic consumers, prolonged outages are expensive, damaging and potentially fatal to businesses of all scales. Insurance may not necessarily cover business that are forced to close due to power outages, just as it may not reimburse damage to property or stock. Given that the question of outages is likely to be when rather than if, it is no surprise that many businesses are looking to augment their power needs with backup systems. While for some that may simply be something like a backup generator, many more are utilising microgrids.

Put simply, a microgrid contains localised energy generation, distribution and in some cases, storage. Microgrids are generally used in discrete locations to provide all of the power needs of that site, but they also work in tandem with a centralized grid, augmenting or providing backup power to that supply.

The main benefits of microgrids are threefold; they are local, independent and intelligent. When energy is produced locally, the grid itself becomes more efficient. Delivering electricity form centralized grids leads to losses of between 8 and 15 percent. This locality also means that the site isn’t susceptible to power outages that affect the central grid. In such an event, the microgrid can take control of the delivery of power before there is any loss, eliminating blackouts and brownouts. The way it does this is by use of intelligent switching. A microgrid can monitor all aspects of the power system, and thereby intelligently switch between the local grid and the wider grid, depending on various factors. It can, for example, monitor price fluctuations and only draw from the main grid when prices are low, switching to local supply when they rise.

The first solar-plus-storage microgrid in Asia to use Tesla’s Powerpack energy storage system is designed to end power reliability issues for a Philippines community, long used to losing light and productivity to brownouts.

The launch of ‘Solar Para Sa Bayan’, an initiative by Solar Philippines founder Leandro Leviste to bring cheaper, more reliable power to areas poorly served by utilities, was marked by the execution of a project utilising 2MW of PV panels manufactured by his company, 2MWh of Tesla’s Powerpack lithium-ion industrial and grid-scale battery storage and 2MW of diesel backup.

It is designed to supply reliable power 24 hours a day, over the entire year, at 50% less than the full cost of the local electric supply. According to Solar Philippines, local energy supply will no longer have to be subsidised by the state to the tune of over PHP30 million (US$577,000) annually.

Since 2014, the National Power Corporation (NPC) has been supplying power to Paluan, but only for 16 hours out of every 24, which was nonetheless a step up from four hours per day previously.

Leviste said that there was no reason this type of solution could not be rolled out to “every other town in the Philippines”. The company has also submitted plans in more urbanised regions to provide power, this time at a potential saving of around 30% on existing electricity costs, it claims.

This includes a 5,000MW proposal to replace all planned coal plants with solar-plus-storage. Solar Philippines has built its own solar panel factory in Batangas with around 800MW capacity, building up to 2GW. As an integrated developer, investor, EPC and now manufacturer, the company has 700 employees and 300MW of PV projects under construction or already completed.

“As utilities sign more contracts with expensive coal and gas power plants, we will continue to energise the Philippine countryside with solar and batteries, which are not only cheaper but now proven to be even more reliable than fossil fuel,” Leviste said.

Micropower generation units, designed by GE’s India R&D centre in Bengaluru over the past two years, are now close to the stage of commercialisation. The units are expected to be hugely beneficial to remote microgrid-dependent communities.

Business Standard reports that the technology is currently being used in two remote Bihar villages, Tayabpur and Behlolpur, some 2,000 km away, and also in some global locations.

They are checking the real-time power demand in these villages at different times using GE’s industrial IoT software platform Predix and are accordingly feeding the grid with energy so that there is no wastage or short supply.

“It’s loaded with our Predix software that forecasts demand and automatically balances between solar, diesel and the battery so that the grid is stable,” says Vinay B Jammu, vice president and head of physical-digital analytics and digital research at GE Global Research. “The only person on the ground is a site engineer who we can contact via an SMS in case the solar panels have become dusty, or to fill diesel for the generator, or for any other maintenance.”

The 15KW hybrid power units in Bihar are two of five such units GE is testing globally to find a viable and cost-effective solution to power microgrids. While two other units are located in villages in Ethiopia, it has another one in a mining town in Australia.

All the locations picked for the pilots are so inaccessible that the company thinks they might never get connected to the grid.

As the world’s demand for energy grows, microgrids are going to become increasingly important — but what are they and why do they matter?

The U.S. Department of Energy (DOE) describes them as localized grids that are able to disconnect from traditional ones and operate autonomously.

This ability to operate independently from a larger grid makes them invaluable tools when the latter, for whatever reason, fail. As the DOE puts it, microgrids can “help mitigate grid disturbances to strengthen grid resilience.”

The issue of access to power is an important one. According to the International Energy Agency (IEA), 1.2 billion people do not have access to electricity. In rural communities, where electricity access can be difficult, microgrids can also prove to be very important.

San Francisco-based Dynamic Energy Networks owns and operates microgrids and distributed energy resources. “The excitement around internet technology and internet innovation enables these microgrids to be deployed faster and transform the electricity markets,” Karen Morgan, its president and CEO, told CNBC in an interview broadcast this week.

Morgan highlighted their importance in a changing world. “We can’t rely on the infrastructure of today, so we have to… think about the opportunity to be independent of the grid whenever we can,” she said.

“We’ve had, in the United States, several incidences of security breaches in the utility markets,” Morgan added.

Four years ago the electric utilities were roiled by predictions they would collapse before an onslaught of solar panels and windmills and batteries at homes and businesses that wouldn’t need utilities anymore.

They pulled themselves together by rallying around the idea that they were uniquely positioned to reinvent themselves as energy-services providers: they have the equipment, the expertise, the personnel, all the convenient connections of the existing grid to serve as exchange networks for all those individual “prosumers.”

But there are signs afoot that microgrids are developing without those utility services, and investors seeking clean-energy opportunities may be pouring money into the new alternatives.

“When you have a microgrid conversation, the people who come to the table aren’t even the utilities,” said Ed Krapels of Anbaric Development Partners, a Boston-based developer of microgrids. “It’s typically the technology companies like Google, like Amazon, that have a completely different idea of how to digitally control an energy system than the utilities have. So it really is the beginning of an enormous change in how the electric system is organized, and it’s a real problem for the utilities that don’t get on board.”

Originally a developer of interstate transmission lines, Anbaric broadened to microgrids because of a convergence of technological forces: distributed generation of solar and wind, cheaper batteries and blockchain cryptocurrencies that allow microgrid participants to buy and sell electricity faster and cheaper than they can through utilities.

Anbaric’s major investor is the Ontario Teachers Pension Plan.

“They own airports and roads and all kinds of infrastructure,” Krapels said. “They would like to be your electricity supplier. And that competition between sources of capital means that the monopoly position of the utilities is coming to an end, and we’re going to have a much more competitive and much more disruptive market.”

When Stone Edge Farm Estate Vineyards & Winery looked to build out a new property in the Mayacamas Mountains straddling Napa and Sonoma counties, the owners found themselves in a multimillion-dollar quandary.

The secluded spot made it an excellent site for a vineyard, but it would cost Pacific Gas & Electric a lot of money to run the 480-volt 3-phase power lines to the property to run the necessary winery equipment. In order to make it work, Mac and Leslie McQuown had to find a more economical way.

Stone Edge isn’t the typical farm. It’s a 16-acre property that uses 10 different kinds of inverters, a fuel-cell “hive,” and seven battery systems, with another on the way. The property was recently in the news for its microgrid system that held up during the devastating fires in Northern California. In January, the microgrid project won a Governor’s Environmental and Economic Leadership Award from the state of California.

The plan to bring power to Stone Edge’s remote vineyard has become another test case for off-grid technology: the Silver Cloud microgrid project. This time, unlike at the original Stone Edge site, there will be no grid backup.

“In the case of Silver Cloud, if the design is not robust enough, we have no failsafe,” said Craig Wooster, general contractor and project manager for the Stone Edge Microgrid Project and CEO of Wooster Energy Engineering. “We’ve got to be able to stand alone.”

Wooster took lessons from the “living laboratory” that is the Stone Edge farm and built out a design for the Silver Cloud microgrid that also incorporates learnings from the fires.

Stories are just beginning to emerge about microgrids and distributed energy systems that are keeping critical services up and running despite Hurricane Harvey’s best efforts to do them in.

Twenty-one convenience stores and gas stations in the Houston area remained open thanks to an unusual microgrid system designed by Enchanted Rock (ERock). The Texas-based company installs natural gas generators at commercial sites, which it aggregates into virtual power plant microgrids.

During normal operations, the virtual power plant provides support services to the central grid. When an outage occurs, the generators island from the grid and provide back-up power for their host sites. Buc-ee’s and H-E-B stores are participating in the program.

“We placed a lot of our operational sites in island mode Friday evening and Saturday morning, disconnecting our customers from the grid to ensure power stability and continuity,” Thomas McAndrew, ERock president and CEO told Microgrid Knowledge.

The stores and fuel stations are providing essential products and services — including water, food and fuel —  that are helping residents survive and cope with the hardship. McAndrew added that one store is being used as a National Guard home base.

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