According to the National Renewable Energy Laboratory (NREL), a microgrid is “a group of interconnected loads and distributed energy resources that acts as a single controllable entity with respect to the grid. It can connect and disconnect from the grid to operate in grid-connected or island mode. Microgrids can improve customer reliability and resilience to grid disturbances.”1 Today, microgrids are most commonly used to serve a discrete geographic footprint, such as a neighborhood, hospital, college campus, or military bases. Microgrids draw power from one or more sources of energy, most often from renewable resources such as solar, wind, or hydropower, and is considered a form of distributed energy.
As the United States continues to decarbonize the electric grid and grid mix, microgrids can enable the deployment of more zero emission electricity sources and incorporate other technologies, like energy storage, into the system to provide maximum benefit. Resiliency is also one of the benefits of microgrids. Its ability to island itself and keep the power flowing when the traditional grid goes down keeps critical infrastructure running, which is of growing concern as climate change continues to impact the frequency and intensity of natural disasters.

Key Technologies

Within a microgrid are one or more types of distributed power generation to provide power to the local area. Today’s microgrids are intelligent to enable an efficient system that meets demand flexibility needs. They also contain energy storage technology and often electric vehicle charging infrastructure to meet growing demand for resiliency and the electrification of everything.


  • Diesel internal combustion engines: Provide instant backup power for extended periods of time as needed to a microgrid when renewable energy is not available and/or when energy storage capacity is not great enough for demand.
  • Microturbines: Small combustion turbines that generate electricity, ranging in size from 30 to 330 kW, with integrated packages available up to 1,000 kW. Microturbines can run on a variety of fuels, including natural gas and diesel.2
  • Fuel cells: Fuel cell batteries convert the energy from hydrogen into electricity and can improve the performance and decrease emissions of microgrids.
  • Renewable generation: Renewable power generation can be integrated into a microgrid to decrease emissions. Without sufficient energy storage capacity, renewable power must be backed up with a non-intermittent energy source to ensure uninterrupted power supply.


  • Batteries: Energy storage using battery technology, most often lithium-ion batteries, is the fastest growing segment of the storage market. Further innovation for longer duration and higher capacity is necessary, as well as improvements in cost.
  • Flow batteries: Promising new technology that benefits from longer life cycles and unlimited energy capacity.
  • Hydrogen: Electricity can be stored as hydrogen by conversion through electrolysis. The hydrogen can be re-electrified in a fuel cell or burned in a combined cycle gas power plant.
  • Flywheels (kinetic energy storage): Relative to other energy storage methods, flywheel energy systems have a longer lifetime and require little to no maintenance. They provide load leveling capability for large battery systems, providing short-term reserve for changes between supply and consumption.
  • Renewable generation: Renewable power generation can be integrated into a microgrid to decrease emissions. Without sufficient energy storage capacity, renewable power must be backed up with a non-intermittent energy source to ensure uninterrupted power supply.

Hardware / technology / software3

  • Hardware such as converters, circuit breakers, transformers, inverters, and switchgears are necessary for seamless integration.
  • Supervisory Control and Data Acquisition (SCADA) system to collect data and distribute instructions, also referred to as the nervous system of the microgrid is essential to control the system, monitor the amount of energy produced and store sufficient energy for seamless operation.
  • Energy management software: Often an artificial intelligence system that allows for the software to better anticipate load from consumers, generation from energy sources, and optimize the system to run in the most efficient and cost-effective ways as possible.

Potential Market Size & Timing

Microgrids have been used at military installations and at facilities like university campuses for decades. However, the market for microgrids is expected to expand as the costs for distributed energy resources improve and concerns related to reliability grow as a result of severe weather and cyber security. A key benefit of microgrids is that they will continue to provide power to the local area even if the central grid were to fail.

  • According to IMARC Group, “the North America microgrid market size reached US$10.8 billion in 2021. Looking forward, IMARC Group expects the market to reach US$19.8 billion by 2027, exhibiting a growth rate (CAGR) of 10.5% during 2020-2027.”4 While the total global market will approach $40 billion by 2028.5
  • Global microgrid capacity is projected to reach nearly 20 GW by 2028, up from just over 3 GW in 2019.6, 7
  • Microgrids can be an attractive option to companies committed to reducing their carbon emissions, as it enables control over generation source, emissions, and energy use.


  • Limited availability of capital: Microgrids require the integration of multiple types of technologies, vendors, and regulatory requirements, making them complicated and challenging for developers and investors. Each project is unique to the end-user or local community.
  • Regulatory uncertainty and outdated energy policy: Policies impacting microgrids vary across jurisdictions, thus the support for their deployment ranges and requires customized financial solutions for each project.
  • Microgrids are viewed as a public utility in some service areas.
  • Uncertain utility support: Microgrids are owned by various entities – some are owned by local communities, some venture capitalists/investors, and others are owned by existing utility providers. In some instances, utilities see microgrids as a way to diversify and increase the resiliency of their grid while increasing customer value and revenue.
  • High technical and financial risk: Microgrids rely on a number of technologies to run smoothly, efficiently, and cost effectively. Emerging technologies and technology advancements will eventually enable widespread deployment, but will require cost improvements for economics.


  • Global trends towards decarbonization: As companies and communities commit to decarbonization, microgrids offer a solution to ensure low-carbon electricity while maintaining reliability and energy independence.
  • Financial incentives from the government (ex. Inflation Reduction Act): The Infrastructure Investment and Jobs Act, Inflation Reduction Act, and the CHIPS and Science Act provided significant support to advance the range of technologies necessary to enable microgrid deployment.
  • Updated energy policy and regulatory action: Policies to support the technologies that are integrated into low-carbon microgrids will enable cost improvements and deployment across the economy.

Relevant NEMA Technologies

  • Power electronics
  • Switchgears
  • Transformers
  • Utility & product systems
  • Electrical measuring equipment


  1. https://www.nrel.gov/gridmicrogrids.html#:~:text=A%20microgrid%20is%20a%20group,and%20resilience%20to%20grid%20disturbances.
  2. https://www.epa.gov/sites/default/files/2015-07/documents/catalog_of_chp_technologies_section_5._characterization_-_microturbines.pdf
  3. https://www.nrel.gov/docs/fy19osti/74625.pdf
  4. https://www.imarcgroup.com/north-america-microgrid-market
  5. Guidehouse Research. Q 2019 Microgrids Overview: Market Drivers, Barriers, Business Models, Innovators, and Key Market Segment Forecasts
  6. Guidehouse Research. Q 2019 Microgrids Overview: Market Drivers, Barriers, Business Models, Innovators, and Key Market Segment Forecasts
  7. https://doe.icfwebservices.com/microgrid