[BETA] Fortnightly

The growing push for microgrids in the United States over the last five years has generated a lot of excitement. Those worried about our aging transmission and distribution infrastructure hope microgrids can reduce demands on that grid, while increasing reliability.

Environmentalists and energy efficiency advocates think microgrids can help us both decrease reliance on fossil fuels and improve the way we utilize waste heat. Academics love the concept, because microgrids—an out-of-the-box approach with far-reaching implications on user-utility relationships—provide great fodder for research and commentary. Perhaps most significantly in this struggling economy, a growing number of companies have invested millions in developing software, equipment, and configuration models that will generate even more economic investment if microgrids ever take off.

At the same time, however, microgrids have raised a lot of questions—mostly related to law and public policy—about implementation on the ground. Two of the biggest questions are these: First, how can microgrids with different configurations be integrated into our existing regulatory framework? And second, should utilities resist or embrace microgrids? These questions aren’t easy to answer.

Microgrid Drivers

Generally speaking, a microgrid is a small-scale, low-voltage system for sharing distributed generation among several facilities or end users. The most pertinent legal questions today involve microgrids connected to the macrogrid, which are located behind the meter, are interconnected to one or more end use facilities, and can operate in island mode during grid outages. Each customer of a macrogrid-connected microgrid usually remains connected to the local utility system.

Microgrids can include one or more energy generating technologies, including conventional generators, fuel cells, or renewable energy systems such as solar panels or wind turbines. They might or might not integrate combined heat and power; cogeneration, of course, makes a microgrid more efficient because it enables the microgrid owner to capture and effectively utilize waste heat. One or more customers or a third party—such as an electric cooperative, corporation, or nonprofit association—owns the electricity-generating equipment and the dedicated wires linking the loads.

As this description suggests, microgrids offer several benefits for users. Designed with the capability to operate in island mode during grid outages, microgrids dramatically improve reliability. ¹ Microgrids also can appeal to customers who want to share the output of a distributed renewable resource. Moreover, microgrids are adaptable and can be easily reconfigured to meet users’ changing needs. Depending on the ownership rate structure for energy production, microgrids can also be economically beneficial to customers, helping them save money. Finally, microgrids provide users the opportunity to choose their own devices—much like we consumers choose our own mobile devices and TV