How Microgrids Help Utility Companies Balance Electricity Supply and Demand 

Utilities are under growing pressure to deliver increasing power to more places. Severe weather, electric vehicles, scorching heat, aging infrastructure, and an influx of new data centers and factories are all making power delivery a complex balancing act.

Some utilities are using fossil-fueled power plants and expensive peaker plants to meet this skyrocketing electricity demand. While these plants might offer a short-term solution, they also greatly increase carbon emissions and utility operating costs.

Microgrids, on the other hand, give utility companies and their customers a more reliable, efficient, and sustainable distributed energy resource (DER). Here I’ll explain how microgrids can ensure there’s enough power for the people and places that need it.

Renewable Microgrids Smooth Out Energy Demand

Solar and wind are popular renewable energy sources for microgrids. But they have a problem.  The sun is not always shining and the wind doesn’t always blow. However, when paired with batteries, the energy can be saved for use later. Batteries then supply power at night or on cloudy days, reducing dependence on the electric grid and fossil-fueled power plants in the process.

For industries with high energy demands, such as factories, microgrids further serve as demand buffers. For example, a new titanium mill in West Virginia is using a solar powered microgrid with battery storage to provide 70% of the facility’s power needs. By isolating high-demand facilities, microgrids mitigate their impact on the larger grid and ultimately improve grid stability.

By smoothing out demand peaks and valleys, microgrids contribute to a more balanced and stable energy system while simultaneously helping utility companies work towards sustainability goals. 

Microgrids Supply Power During Extreme Weather

Between 2014 and 2023, the U.S. experienced two times more weather-related power outages compared to the prior ten years. Between 2000 and 2023, 80% of major reported power outages were due to weather. These numbers will inevitably swell with worsening climate change. Simply put, weather is wreaking havoc on the electric grid and utility companies’ ability to get power to where it’s needed.

Microgrids play an important role in providing power during hurricanes, storms, and other severe weather events. If the utility’s primary power source or power lines go out during a hurricane, a community microgrid can be turned on to ensure everything from refrigerators and HVAC systems to lights and CPAP machines continue to function. They can also ensure critical infrastructure like hospitals and fire stations have the electricity they need to provide essential services.

One of my favorite examples of a community microgrid is from a 37-home subdivision in Wimauma, Florida. The subdivision uses solar panels to feed power into batteries that are installed at each home. When Hurricane Ian hit in late 2022, many homes in the area experienced power outages. But the subdivision never lost power thanks to its solar-powered microgrid.

To sum it up, microgrids can maintain and supply power when there is critical need.

Microgrids Reduce Energy Waste

Many existing power plants generate alternating current (AC) power. But that power typically needs to be converted because most consumer electronics and modern home appliances use direct current (DC) power. By the time AC power has traveled along power lines, is reduced to a lower voltage, and is converted to DC power, it can lose a significant amount of the total power that was originally generated.

Microgrids are more energy-efficient because they typically generate DC power (mainly via renewables), which can be used by many electronic devices and systems without conversion or traveling long distances. While some power losses can occur when the energy is stored in batteries, the losses are lower by comparison at around 5% to 10%.

Microgrids also help the main grid operate more efficiently through demand response programs. Microgrids can automatically reduce the amount of energy pulled from the main grid during peak demand periods, such as hot days when air conditioning is needed, and incorporate locally produced power. They can operate as an independent island and strictly use locally produced energy sources. This operating function reduces transmission losses and ensures that most of the energy produced is usable.

In practice, Colorado’s Department of Local Affairs (DOLA) recently awarded $700,000 to a microgrid project that is sponsored by United Power. The microgrid’s main purpose will be to power fire stations during widespread outages so they can continue to provide critical services. But what’s more interesting is that the microgrid will have a load balancing tool to be used during non-emergency conditions. This tool will ensure that the fire stations are only using energy when it’s needed, especially in rural communities which are prone to power outages. 

Balanced Supply and Demand Provides Revenue Opportunities

In addition to operational advantages, microgrids offer additional revenue sources and economic benefits for utility companies. When microgrids use renewable energy sources, there is less need for expensive and less efficient peaker plants – ultimately reducing utility operating costs. 

Microgrids can enable utility companies to offer frequency regulation and voltage support services for grid operators who typically pay for them. When grid frequency deviates from its standard value and causes grid stability issues, microgrids can automatically adjust their power output or use to bring the grid back into balance.

Voltage support is another revenue-generating service to keep voltage levels on the power grid within a specified range. Microgrids that have smart inverters and control systems can provide or absorb reactive power as needed to stabilize voltage levels. Some states have even started adopting interconnection requirements for these inverters because they can make it safer for the grid to accommodate higher levels of intermittent renewable energy while also reducing fire risk.

Microgrids Keep the Lights On

As electricity needs balloon, microgrids can provide ample power when demand is highest. With increased microgrid adoption over time, utility companies can substantially reduce carbon emissions and reliance on fossil fuels. This helps reduce utilities’ carbon footprints and operating costs while keeping the lights on to the delight of their customers.

Brian Nelson is the Renewables Segment Leader of ABB’s Renewables Division, which is part of ABB’s Electrification business. He is responsible for technology development to support renewable energy adoption across the U.S. ABB Electrification is a technology leader in electrification and automation, enabling a more sustainable and resource-efficient future. Building on over 140 years of excellence, ABB’s more than 105,000 employees are committed to driving innovations that accelerate industrial transformation.