Protocol Labs Research
2018-12-21 / Report


Microgrids are local installations typically connecting one or multiple generation sources with some set of loads. They range in size, from tiny off-grid solar home systems (SHSs) to power infrastructure spanning a university campus or military base. Many are grid connected, enabling owners to consume inexpensive electricity from the larger Generation, Transmission, Distribution and Retail (GTDR) power system while providing redundancy in the case of outage. Many such systems also allow local generation sources to sell power into the GTDR system. Microgrids offer their owners control over their own electrical destiny in exchange for the cost of installing and maintaining parallel electrical infrastructure. They are deeply connected to the proliferation of distributed energy resources (DERs), as they offer DER owners the ability to optimize energy use in order to monetize distributed assets. As DERs continue to become cheaper, along with improvements in the interoperability of microgrid components, the extra cost associated with microgrids should fall. If this coincides with more expensive or less reliable centralized power, the value proposition of a microgrid is likely to appeal to an ever-increasing circle of users. In such a future, the power system may transform from today’s centralized GTDR model into a decentralized network of local microgrids.