Microgrids are an energy system comprised of distributed energy sources (for example renewables and conventional energy). Although they have been around for a decade, they have not been widely adopted for a variety of reasons – cost prohibition being the main factor. However, they are currently enjoying a renaissance sparked by technological advancement; the recently demonstrated fragility of the Grid (the NE blackout, Hurricane Sandy, etc.) and intense government interest. For example, the US Department of Defense is pushing the deployment of Microgrids and the advancement of Microgrid technologies and business models as part of its own independence and energy security and strategy. As a result, we are witnessing an upswing in interest among our utility and commercial markets. The instability in the supply infrastructure, as well as volatile prices, are also powerful motivators.

Are Microgrids for everyone? According to industry experts like Marc Lopata, President of Microgrid Energy, payback often occurs around the 15 year mark, so the short answer is probably not. However, the dropping cost of renewable generation and energy storage technologies, plus a growing awareness of the limitations on Grid reliability means you should keep Microgrids on your radar.

Anecdotal evidence shows that Microgrids will lead to a permanent reduction in consumption (electricity, water and gas) – giving you near term cost reductions, as well as term savings driven by measured and verifiable conservation measures. A fully developed Microgrid will give you the capability of automatically disconnecting and operating independently from the Grid. It will also offer complete independence and the opportunity to actually make money by selling energy back. So, by interconnecting with the Grid, a facility should be able to get the lowest energy costs and create new revenue streams.

While barriers to entry are few, they can be significant depending on your consumption reduction and your geographic location. I believe that the volatility of the energy market, the aging Grid infrastructure, and the increasing need for power quality, make the energy surety of Microgrids of paramount importance to your business long term. A power loss, even for a matter of minutes, can result in lost data, disabled security systems and a total shutdown of business operations. Power outages in healthcare facilities may have even more dire and irreparable consequences. Therefore, the question you should really be asking yourself is not whether you can afford to implement a Microgrid but … can you afford not to?