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What is a Microgrid and Why is it Essential in the Transition Toward Sustainability?

For many businesses, the pursuit of sustainable energy solutions is undeniably gaining momentum and a multitude of creative models and solutions are popping up for consideration, including alternative energy distribution models, such as microgrids. It’s worth examining how renewables can be integrated into microgrids and the place of microgrids within alternative financing solutions such as Energy as a Service (EaaS).

Energy as a Service and Microgrids

Many renewable energy developers and EaaS companies have started offering microgrids as an option within their EaaS platforms. It is a natural fit. Energy as a Service platforms work by aggregating innovative clean energy technologies to create an ecosystem that can be drawn upon to design a turnkey energy solution customized to meet the needs of the customer. Instead of investing in each individual technology to build their own solution, the customer pays a fee to the energy developer to access their clean energy technologies.

In a way, microgrids could be seen as a microcosm of EaaS platforms with the capacity to combine several clean technologies to serve a single localized area, as we discuss further down.

Understanding Microgrids and Renewable Energy

What are Microgrids?

Microgrids are local energy networks with their own electricity sources, energy storage, and sometimes also conventional generators. In recent years, microgrids have used intermittent energy sources, solar or wind, alongside batteries, to cover periods of low electricity generation, increase energy resiliency, and reduce energy costs. Another use case considers using renewable energy and microgrids to produce green hydrogen.

As a single controllable entity, a microgrid can operate independently, in conjunction with the main power grid, or flip between the two. What’s crucial to keep in mind is that microgrids work to decentralize the grid as local energy sources are distributed across the grid. As such, they enhance the utility grid’s reliability, resiliency, and efficiency.

Microgrids consist of three main components: power sources, power storage, and loads.

  1. Power sources are the different ways that electricity is generated with the microgrid and can include solar panels, wind turbines, or other renewable energy sources. These sources produce electricity to power the microgrid.
  2. Sometimes the electricity that the microgrid generates exceeds the immediate demand of the community, so this extra power can be stored in batteries or other energy storage systems to be used later, which is the power storage component of the microgrid.
  3. Loads refer to the devices and appliances that consume electricity within the community it is powering (homes, buildings, streetlights, etc.).

How do Microgrids Work?

Microgrids have come a long way since their initial development and have advanced to support renewable energy sources as well as have their own control system. Microgrids with their own control system are called smart microgrids, which use software to seamlessly manage the complexity that comes with multiple and, or intermittent energy sources while working to reduce costs, increase resiliency, and generate revenue. More critically, microgrids help to keep the local area powered when there are disruptions or outages in the utility grid1.

During normal operating conditions, microgrids can generate and supply power independently, ensuring a stable and reliable energy supply regardless of the condition of the utility grid. In the event of a power outage or disruption in the main grid, microgrids can seamlessly transition into island mode, operating autonomously and providing continuous power to the connected facilities.

There are 5 key steps involved in the operation of a microgrid:

  1. Generation: The power sources within the microgrid generate electricity.
  2. Energy Management: The energy management system controls the flow of electricity within the microgrid and decides how much electricity should be supplied from each source to meet the current demand.
  3. Power Distribution: The electricity generated by the power sources is distributed out to the loads and the energy management system ensures that the electricity flows to where it is needed most efficiently.
  4. Energy Storage: If there is excess electricity generated that is not needed currently the energy management system directs it to the storage systems to be used later on.
  5. Connection to the Main Grid: In some cases, microgrids can be connected to the main power grid, which allows them to import electricity from the grid when needed or export excess electricity back to the grid.

The Benefits of Microgrids

Microgrids offer a wide range of benefits that contribute to the overall sustainability and resilience of our energy systems. Here are some key advantages:

  1. Energy Reliability: Microgrids provide a reliable source of electricity, especially in areas prone to power outages or with limited access to the main grid. By incorporating local energy generation and storage, microgrids can ensure a continuous power supply, even during disruptions. As power outages continue to become a problem in the modern world, microgrids provide stable, reliable energy, independent from the main grid.
  2. Integration of Renewable Energy: Microgrids are just one piece of the puzzle in integrating renewable energy sources into our energy mix. By harnessing solar and other clean energy technologies, microgrids contribute to reducing greenhouse gas emissions and combating climate change.
  3. Localized Energy Production: With microgrids, energy generation occurs locally, reducing transmission losses and improving overall energy efficiency. This localized approach also reduces the need for extensive infrastructure and long-distance energy transportation, contributing to the overall resiliency of the grid through decentralizing power generation, while working to minimize the environmental impact.
  4. Energy Independence: Microgrids empower communities and organizations to become self-sufficient in meeting their energy needs. By generating electricity on-site or using nearby renewable resources, they can reduce dependence on external power sources and have more control over their energy supply and costs.

Common Uses for Microgrids

Microgrids have diverse applications across various sectors. Some of the most common use cases include:

  1. Remote Communities: Microgrids provide an excellent solution for powering remote communities that are geographically isolated or lack access to the main power grid. Traditionally these microgrids were fueled by diesel, however as clean energy technology, microgrids, and their management software advances, these communities can transition to renewable energy.
  2. Industrial and Commercial Facilities: Microgrids are increasingly adopted by industrial complexes, commercial buildings, and campuses to improve energy efficiency and reduce costs. These entities can integrate renewable energy sources, implement demand response strategies, and optimize energy consumption within their premises. OYA Renewables’ Energy as a Service (EAAS) solutions provide industrial and commercial facilities with the opportunity to seamlessly integrate clean energy technology with one turn-key solution.
  3. Emergency and Disaster Response: Microgrids are crucial for emergency services, hospitals, and disaster response centers, providing uninterrupted power during critical situations. They ensure that essential services and facilities can continue operating even when the main grid is compromised.
  4. Military Installations: Microgrids are extensively used in military bases to enhance energy security and operational resilience. By incorporating renewable energy sources and energy storage, microgrids enable military facilities to reduce their reliance on vulnerable fuel supply chains.

Who Can Benefit from Microgrids?

Microgrids offer benefits to a wide range of stakeholders, including:

  1. Communities and Residents: Local communities can benefit from microgrids by gaining control over their energy supply, reducing electricity costs, and promoting clean energy consumption. Microgrids also enhance the reliability and resilience of the local energy infrastructure, ensuring a more sustainable and secure future.
  2. Businesses and Industries: Industrial and commercial sectors can achieve cost savings, improve energy efficiency, and demonstrate environmental leadership by implementing microgrids. These systems enable businesses to optimize their energy consumption, integrate renewable sources, and reduce their carbon footprint. By combining microgrids with other renewable energy technologies, like EV charging infrastructure and on-site solar in one energy transition solutions platform, businesses can optimize their value and reduce emissions.
  3. Public Institutions and Services: Public institutions, such as schools, hospitals, and government buildings, can rely on microgrids to ensure continuous operation during power outages or emergencies.

Learn more about how your business can benefit by combining microgrids with a wide variety of other renewable sources.

The Importance of Microgrids in the Transition Toward Sustainability

Enhancing Energy Resilience

One of the key advantages of microgrids is their ability to enhance energy resilience. Traditional power grids are susceptible to various vulnerabilities, including extreme weather events, natural disasters, and cyberattacks. In contrast, microgrids offer localized energy generation and distribution, reducing the risk of widespread outages. By diversifying energy sources and decentralization, in addition to being integrated into an Energy as a Service platform, like OYA Renewables, microgrids contribute to a more resilient energy infrastructure that can withstand disruptions and ensure uninterrupted power supply to critical facilities.

Enabling Renewable Energy Integration

As we strive to transition toward a sustainable energy future, the integration of renewable energy sources is paramount. Microgrids are an important player in the facilitation of this integration by providing a platform for renewable energy generation and distribution. Combining microgrids with a turn-key clean energy solution, like an EaaS platform, can reduce reliance on fossil fuels, decrease greenhouse gas emissions, and promote a cleaner and greener energy ecosystem that allows businesses to meet their sustainability goals.

Empowering Local Communities

Microgrids empower local communities by offering greater control and autonomy over their energy supply. With the ability to generate and store electricity within their vicinity, communities can reduce their dependence on distant power plants and energy transmission lines. This decentralization fosters energy independence, enabling communities to make informed decisions about their energy sources, consumption patterns, and overall sustainability initiatives.

Facilitating Energy Efficiency and Cost Savings

Smart micrgorids that have intelligent energy management systems are designed to optimize energy efficiency and reduce wastage. By leveraging these advanced monitoring and control systems, microgrids can efficiently manage electricity generation, storage, and consumption to help minimize losses, improve efficiency, and ultimately, enable cost savings for both end-users and grid operators. Furthermore, the integration of energy storage systems within microgrids enables the capture and utilization of excess renewable energy, mitigating the need for curtailment. By incorporating microgrids with clean energy technology like EV charging infrastructure and on-site solar, and packaging it into a EaaS platform, we can foster important, impactful, sustainable energy solutions.

As we transition away from traditional energy systems and embrace renewable sources, microgrids emerge as a vital component of our energy infrastructure. The U.S. microgrid market has seen a 47% increase in solar and storage capacity in 2022 compared to 2017, and in 2022 alone, the market reached 10 gigawatts (GW), with more than 7 GW in operation2. The capacity of microgrids to enhance energy resilience, integrate renewable energy, empower local communities, and promote energy efficiency makes them indispensable in our journey toward a more sustainable future.

OYA Renewables seamlessly integrates several clean energy technologies with our EaaS solutions, helping businesses and industries optimize their value and reduce carbon emissions to reach their sustainability goals. Contact us today to learn more about how you can harness the power of clean energy technology

  1. https://www.nrel.gov/grid/microgrids.html#:~:text=A%20microgrid%20is%20a%20group,and%20resilience%20to%20grid%20disturbances
  2. https://www.tdworld.com/microgrids/article/21259806/us-microgrid-market-capacity-reaches-10-gw-in-2022


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