Economic and sustainability benefits of smart grids and microgrids

Defining these systems by scale and function will help us navigate their interrelation and set a basis for how we can apply them.


Illustration by Michael Schrader / Affiliated Engineers, Inc.The need to transform our nation's aging electrical grid to enhance reliability and sustainability is increasingly imperative. While the fundamental concepts behind microgrids do not vary much from typical campus-scale power production model that proliferated throughout the mid-20th century, drivers for their application and the smart technologies available to support them continue to evolve.

The terms smart grid and microgrid often become intertwined, inviting a variety of different understandings. Defining these systems by scale and function will help us navigate their interrelation and set a basis for how we can apply them.

A smart grid is an intelligent and integrated system of inter-regionally connected electric utilities, consumers, and distributed energy resources (DERs). This evolving form of electrical transmission uses advanced metering, monitoring, management, automation, and communication technologies to provide reliable two-way generation, delivery, and consumption of electric power. The real-time flow of information among grid components assures effective, efficient operations for generators and end users alike. A smart grid optimizes two-way traffic on the grid.

A microgrid is a localized electrical network that allows campuses and other similar-sized districts to generate and store power from various DERs, including renewables such as wind and solar, providing the ability for the end user to function in isolation from the grid. Balancing captive supply and demand resources - including thermal and electrical load - within its defined boundaries, a microgrid system provides resiliency. A microgrid can "island" itself as needed or desired from the larger utility grid, for example during extreme weather events or at times when self-generation is more cost-effective.

With the design of distributed generation on many campuses dating back decades, many of us have experienced microgrids long before the term was coined. However, what has changed is that we are now relying on a smarter interface, making the supply and draw of power to and from the grid more efficient, resilient, flexible, and sustainable.

The purpose of electrical transmissions systems in our country traditionally has been to distribute electricity from large utility-scale generation plants to loads, i.e. consumers. Comparing it to our transportation network of vehicular traffic, the transmission system is the interstate system, while local distribution consists of roads and streets. The safety systems are traffic controls. The variability of contemporary economic growth, population growth, climate change, and both natural and man-made disasters demand the grid to support both large-scale and local generation and distribution. Effectively every lane of the grid superhighway now must go in both directions, subject to instant reassignment and change. Examining the potential of smart electrical transmission systems demonstrates the capability to support the technical, financial, and regulatory requirements for microgrid development.

The Research Electrical Distribution Bus (REDB) – for AC and DC testing at the Energy Systems Integration Facility. (Photo by Dennis Schroeder / NREL)Experience with microgrid projects has shown the areas essential to successful analysis, planning, and implementation to include: identifying needs and drivers; developing functional requirements; developing system topology and operation; considering technical, regulatory and financial outlooks; and proper commissioning, start-up, and operation. Campuses, municipalities, and other similarly-sized regional areas choose to develop a microgrid for a variety of reasons, including resiliency, economics, flexibility, sustainability, and reputation. At the beginning of each project, it is important to discuss and determine the drivers behind implementing a microgrid in a specific region.

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