Understanding Microgrid Categories and Business Models

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Whether your goal is to bring power to a remote location or improve reliability and energy security, there is a microgrid that meets your needs. Microgrid categories are organized by their connection mode to the main grid (off-grid or grid-connected) and their type of ownership (facility or community). Categorizing microgrids is a priority because it allows for standardized designs that enable the creation of repeatable, modular, and scalable systems.

Here’s a look at four of the categories:

  • Off-grid facility microgrids are the most common type of microgrid worldwide. They are most often implemented in remote locations that don’t have access to the traditional grid, such as remote military bases or isolated buildings like resorts. They’re able to minimize fossil fuel dependence while maximizing renewable energy use.
  • Off-grid community microgrids, such as those that are found on islands or in remote communities, serve multiple consumers and producers in locations where the main grid is not accessible. Like off-grid facility microgrids, they integrate a high percentage of renewable energy, but community microgrids differ because they are committed to providing energy access for a community to ensure its critical services are available.
  • Grid-connected facility microgrids provide increased energy reliability to already main-grid connected sites like business campuses and hospitals. The greatest benefits are the potential for cost savings, secure and resilient energy, and increased use of renewable resources.
  • Grid-connected community microgrids are designed to share energy usage within a community, such as multiple consumers or even small municipalities. They reduce the cost of energy and provide more reliable energy from renewable sources.

Grid-connected microgrids can also be designed with the ability to disconnect from the main grid (islanding) and manage all or part of its distributed energy resources.

A variety of business models are available to finance these microgrids. These options include customer-owned, microgrid-as-a-service, and pay-as-you-go business models.

Customer-owned and microgrid-as-a-service (MaaS) business models yield identical returns. The primary difference is that in a customer-owned business model, the financial risk falls onto the customers. In comparison, the MaaS model provides a flexible ownership structure that allows customers, electric utilities, and other financing partners to strategically collaborate and capitalize on market opportunities.

The small-scale pay-as-you-go microgrid model is well suited for the developing world. Although still in early stages, this flexible payment system could greatly expand power options and electricity availability for consumers with low or variable income.

By categorizing microgrids and business models, the energy industry can meet a key goal of minimizing microgrid system costs, which include areas such as project development, system design, and support.

To learn more, read our white paper “Microgrid Business Models and Value Chains.”

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