What is a Microgrid? The term is thrown around quite a bit these days, but I’ve heard confusion from industry professionals on exactly what defines a microgrid. The National Renewable Energy Laboratory (NREL) gives a succinct definition.

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. – The National Renewable Energy Laboratory (NREL)

Now let’s elaborate.

The Ingredients

Microgrids consist of:

  • Distributed Energy Resources (DER) such as solar panels, wind turbines, batteries, and generators.
    • Batteries are DERs whey they are available to supply electricity. But they are loads while they are being charged.
  • Loads such as appliances, machinery, computers, and electric vehicles.
    • Smart appliances are not only loads, but also act as DERs.
    • Electric vehicles in the near future will not only be loads, but will also act as DERs.
  • Distribution Infrastructure such as wiring and buses.
  • A Computerized Control System similar to those used to automate factories.

Islanded Microgrids

A microgrid can operate in “island” mode– whereby the microgrid is an isolated, self-contained, and self-sufficient unit. Islanded microgrids operate independent of the grid. That is, they produce, distribute, and consume their own electricity.

By the way, for the purpose of this article we refer to electrical energy and electrical power simply as “electricity” so as not to bog the reader down with literalism and textual hair-splitting. Similarly, we refer to the electrical utility grid (the national infrastructure connecting electrical power generation resources to the loads they supply) simply as the “grid.”

An islanded microgrid uses its own distribution infrastructure to carry electricity from its distributed energy resources (DER) such as solar, wind, batteries, and generators to its loads such as home appliances, electric vehicles, and machinery. It does not use, and does not need, the grid.

Islanded microgrids can be either of these two kinds:

  • Microgrids where no connection to the grid is possible (such as in remote locations the grid does not reach).

An islanded microgrid. A microgrid in island mode.

  • Microgrids where a connection to the grid exists but is switched to the open (disconnected) position.

Electrical schematic symbol for a switch. A switch in the open position on an electrical schematic, diagram, or drawing.

Grid-Connected Microgrids

Grid-connected microgrids can receive their electricity from the grid. If there is a grid disruption due to weather, malfunction, malice, etc., the microgrid quickly switches to its own distributed energy resources (DER) to keep its own loads powered. This means that microgrids have a degree of resilience above that of the grid.

A grid-connected microgrid can also sell electricity to the grid.

An islanded microgrid with distributed energy resources (DER) and loads. A grid-connected microgrid with distributed energy resources (DER) and loads

Left: An islanded microgrid. That is, a microgrid not connected to the grid. Right: A grid-connected microgrid.

Virtual Power Plants (VPP)

The grid as an option (rather than a necessity) is a major differentiator between microgrids and virtual power plants. This is important because microgrids are sometimes confused with virtual power plants.

A virtual power plant is a group of energy resources that supply their electricity via the grid. To a VPP, the grid is not an option. It is a necessity.

A virtual power plant (VPP) including grid transmission towers and lines and distributed energy resources (DER) such as solar, wind, and batteries.

A Close-Knit Group

A microgrid’s distributed energy resources are located geographically close to its loads. For example, a military base’s microgrid will have its DERs and loads located within the geographical footprint of the base. A microgrid, by its nature, covers a smaller geographical footprint than the grid, and owns or controls the wiring infrastructure through which it distributes electricity.

If the grid is a nation, a microgrid is a state within that nation. The state can generate and distribute its own electricity to its own loads (as does an islanded microgrid), or it can choose to import electricity from, or export it to, the larger nation (as does a grid-connected microgrid).

Telangana State in India as an analogy for a microgrid inside a grid.

Telangana State in India as an analogy for a microgrid inside a grid.

In contrast, a virtual power plant’s distributed energy resources might be several states away from the loads they supply, and the VPP’s owner will not likely own or control the wiring infrastructure carrying the electricity generated by the VPP.

Control Your Own Destiny

A microgrid gets electricity from its own distributed energy resources, distributes it on its own distribution infrastructure, and has its own subscribers to consume or store it. It is a self-contained ecosystem that has the option, but not the necessity, of connecting to the grid. In other words, a microgrid is in control of its own destiny.

A virtual power plant is not in control of its own destiny and is at the mercy of the grid. The grid connects the virtual power plant’s distributed energy resources to the loads supplied by these resources. If the grid goes down, the virtual power plant goes down.

Delivery To Your Microgrid’s Doorstep

A microgrid can be a complex ecosystem of DERs, loads, controllers, and distribution infrastructure, but this complex ecosystem is not visible to the grid. The grid only sees the meter to the microgrid and is not involved in what’s behind the meter.

Electric utility meter.

As an analogy, think of a modern home that has solar panels, a wind turbine, and battery storage. The grid does not have an individual connection to each of these energy resources. It is connected to the home through the meter. In effect, this home is a small microgrid. The home’s (and the microgrid’s) distributed energy resources and loads are “behind the meter.”

When the home’s distributed energy resources supply the electricity it needs, the meter registers none of the grid’s electricity passing into the home. When the home’s DERs do not supply the electricity it needs, the meter registers electricity from the grid passing into the home. The grid does not need to individually connect to each device behind the home’s front door (the meter). It only cares that it gets paid for the electricity it delivers to the front door.

A box delivered to the front door of a home. This is an analogy for electricity delivered by the grid to the meter (front door) of a home or microgrid.

A box delivered by a shipping service to the front door of a home as an analogy for electricity delivered by the grid to the meter of a microgrid.


Batteries chemically store the energy solar panels produce when it is sunny, and wind turbines produce when it is windy. Batteries convert this chemical energy to electrical energy so they can supply electricity to loads on days that are neither sunny nor windy. Yes, batteries are distributed energy resources that supply electricity to the microgrid. But while they are being charged, they are loads.

A battery with electrical energy going to and from. This demonstrates a rechargeable battery acting as a load in a microgrid when charging, and a distributed energy resource (DER) in a microgrid when discharging.

A Penny (or a kW) Saved Is A Penny (or a kW) Earned

Energy saved is energy earned. Whether solar panels on a home provide energy, or smart appliances in a home save energy, the result is the same– energy available for consumption in the home. The same applies (on a larger scale) to a community (campus, military base, housing development) on a microgrid, wherein there are smart appliances. Those appliances save energy, making that energy available for consumption elsewhere in that community.

Smart appliances in the kitchen of a modern home. Smart appliances can save energy in contrast to older "dumb" appliances that do not have the ability to alter their energy consumption based on varying circumstances. Smart appliances can be part of the distributed energy resource (DER) portfolio of a microgrid.

So, even though smart appliances do not provide energy the way a solar panel or wind turbine does, they do conserve energy (use energy wisely, smartly). Therefore, energy is available for use elsewhere. Just as saving money is (in effect) the same as getting a pay raise, saving energy is (in effect) the same as generating more electricity.

This means that devices consuming energy smartly are part of a microgrid’s distributed energy resource (DER) portfolio along with solar, wind, batteries, and generators.


The charging system of most electric vehicles (EVs) right now is a one-way street. It can only accommodate electricity moving from the grid (or microgrid) to the vehicle. But V2G, or “vehicle to grid,” will become a more prominent feature of EVs as time goes on. V2G enables an EV, when not being driven and not needing all the electric charge it contains, to sell electricity back to the grid (or microgrid). This makes an EV a distributed energy resource along with solar, wind, batteries, etc.

Electric vehicles (EV) charging at a housing complex that can be part of a microgrid. Solar panels are also seen.

Although EVs might not be a significant member of the microgrid DER portfolio right now, look for that to change in the near future.

In Summary

The owners/controllers of a microgrid control their own destiny because they produce and distribute their own electricity. They are not at the mercy of the grid.

Islanded microgrids can supply electricity to communities in isolated places the grid does not reach.

When a microgrid is grid-connected, it has the option of receiving electricity from the grid (or selling electricity to the grid), and then switching to its own DERs for electricity if the grid goes down. Virtual power plants (which are sometimes confused with microgrids) must connect to the grid. It is not an option for them.

Because grid-connected microgrids can fall back on their own distributed energy resources for electricity if the grid goes down, microgrids have a degree of resilience above that of the grid.

Although smart appliances do not produce electricity per se, they do save electricity as opposed to older “dumb” appliances. This saved electricity can be used elsewhere on the microgrid.

Batteries are part of a microgrid’s DER portfolio when they are charged. But when they are being charged, they are loads.

Although electric vehicles are not supplying electricity to the grid (or to microgrids) on a large scale now, this will likely change as time goes on and more EVs are made with the V2G capability. This means that, with regard to microgrids, EVs will spend their lifespans alternating between being loads (when they are consuming electricity) and distributed energy resources (when they are supplying electricity).

For a list of U.S. microgrids: U.S. Department of Energy – Microgrid Installation Database

Tom Rafferty
Business Development Manager
Imperia Engineering Partners
305 Fellowship Road
Suite 300
Mount Laurel, NJ 08054
(855) 425-8726