Although September — National Disaster Preparedness month — is behind us, there’s no better time to focus on the continued, growing demand for decentralized energy services that don’t rely on the traditional power grid. That demand, along with advancements in digitalization, have already transformed many industries, and the combination of these two forces has led to the emergence of microgrids.

Microgrids can play a vital role in critical applications, serving as a solution to an organization’s continuous improvement and long-term sustainability. By integrating several power sources, microgrids can maximize efficiency and ensure uninterrupted power by offering multiple backup options to avoid failure, even in extreme conditions.

As all critical facilities need electrical power, it becomes advantageous to diversify the one item that is so vital. Microgrids can optimize a facility’s electrical assets to draw power from the most efficient source throughout the day, thus providing sustainability to an organization for the long run.

But finding the right mix of energy sources to power each unique microgrid system is key for facilities looking for the most reliable result.


Power diversification

No energy source is 100% reliable and foolproof. Whether they’re caused by infrastructure issues, a storm, or a natural disaster, outages can strike at any time. Smart contingency plans, especially for critical facilities, must be in place when a power grid goes down or a generator set runs out of fuel. It pays to have options available locally, such as a microgrid, to generate power.

Having diverse power options at your command is an advantage if primary energy costs or peak demand rates rise dramatically. In addition, with a mix of energy sources available in a microgrid system, you can choose a more cost-effective solution if the price of diesel fuel or natural gas gets too high.


Power security

Concerns about power quality in the grid have led to an increased demand for new solutions and for good reason. Major regional blackouts can cause billions of dollars in economic losses. Rolling blackouts are becoming more common. Many power grids are outdated, as investments in this infrastructure have been lacking. As the coal industry slows down, traditional plants that keep electricity flowing are disappearing. With a microgrid on-site, an energy user can avoid power interruptions by seamlessly switching over to a diverse and resilient mix of alternative energy sources that do not rely on the grid.

Microgrids FIGURE 1: Microgrids optimize the use of solar, wind, energy storage, and other resources to allow an operation to obtain renewable, low-cost energy and maintain reliability.


There are several unique benefits and challenges when integrating renewable energy sources and battery storage systems into a microgrid that need to be considered to result in a reliable system. A microgrid transmits and distributes traditional energy and renewable energy assets to a variety of value centers. Battery energy storage systems can be used to support the grid for behind-the-meter, customer-specific applications and for in-front-of-the-meter or utility-support applications. By incorporating intelligent controls, a microgrid can be optimized to maintain an efficient balance between instantaneous and variable energy demands.


The Combination Is Key

No matter the project or application, delivering the right energy mix for an operation’s specific requirements is vital. Not only should it match energy demand, it must also fit seamlessly with distributed generation assets.

Another factor to consider are the types of energy storage in place, if any. Is it thermal storage, such as a hot water tank, or is it a complex lithium-ion battery storage application? Whether the microgrid is interconnected to the grid or self-supported (island mode), intelligent controls optimize all the assets. The control system determines how the assets will work together with the load and how they’re going to interact with the utility and the grid as a whole.

Battery storage is another tool that can be utilized to fit a facility’s needs. A microgrid equipped with a battery and generator sets can reduce energy costs. Renewable energy sources can also integrate into a building or grid design. There are various different applications in the microgrid spectrum, and incorporating engines and batteries through a control system can create an intelligent energy solution.


Importance of Storage in Grid Design

Since we are no longer dependent on coal and other traditional types of energy-generation sources, the prevalence of renewable energy generation has changed the energy landscape in many ways.

As the world becomes less dependent on coal and nuclear plants, new generation technologies and fuel sources, such as wind, solar, and natural gas, are growing. The increase of renewable energy is good for the environment, but, if not properly managed on the grid, it may lead to issues.

Renewables have a different capacity factor than traditional power-generation assets. Nuclear power generation has a 92% capacity factor (time the facility is able to produce maximum power). Coal and natural gas are above 50%. However, wind and solar have a very low capacity factor, which must be considered when designing a power system and matching up battery storage and fast-responding reciprocating engines with these new assets.

Since they’re not 100% dependable, wind and solar power sources can’t be used on demand and dispatched at the request of power grid operators. Even on a sunny day, there will be a curve of power generation. If a facility is dependent on a solar panel for all its power, it will need something that can be turned off and on quickly to match the power it needs with the variable power created by the sun or wind.

Grid congestion is another issue that may arise as operators stretch the grid further to get the most from their resources. It occurs during periods of high demand greater than existing capacity. Due to this, some energy should be stored during the time of day when the demand is lower. Then, it can be dispatched to ensure a facility can match its transmission or substation capacity at all times.

Pumped hydro storage comprises 97% of all storage capacity in the U.S. Water is pumped up a hill or into a pond or retention basin when power is at a low price. When it’s higher, the pond or retention basin is drained, and the water runs through a turbine to make electricity. Huge volumes create many megawatts, but finding land to install new facilities is difficult.

The remaining 3% of U.S. storage capacity has been dominated recently by lithium-ion battery technology. Lithium-ion has captured both the power capacity markets (instantaneous power available from the battery) and energy capacity markets (megawatt hours available from the battery). It has become the technology of choice for these types of applications due to its high-cycle efficiency and fast response time. The technology is available worldwide, offering high reliability and performance. It’s also great for short- and long-duration applications, which are the focus of bridge storage applications in the real world.


Trends in Grid Storage

New challenges in the energy industry have increased the need for flexible storage solutions. The grid is changing, and battery energy storage is becoming a highly effective tool to optimize energy systems. Now more than ever, infrastructure customers need interconnected systems designed for life cycle performance, energy flexibility, and responsiveness.


Regional Storage Trends

In the U.S., the types of applications and uses for batteries differ by region. In Pennsylvania, New Jersey, and Maryland, the focus is on power capacity: short-time, high-power output applications dispatched almost instantaneously for grid and frequency stabilization. The region’s power capacity and energy capacity are almost at a 1:1 ratio.

Nuclear plants FIGURE 2: As the world becomes less dependent on coal and nuclear plants, new generation technologies and fuel sources, such as wind, solar, and natural gas, are growing.


The energy capacity market is in high demand in California, where the California Independent System Operator (CAISO) oversees the electric power system. In this region, there are longer duration outputs. Since energy capacity is three times larger than power capacity, the grid needs to bridge some issues to supply long-term power. Many applications in California are looking for battery storage to accommodate a four-hour duration or four-hour discharge.



How can battery storage technology be used? The four main application types for battery functions are energy shifting, power quality and frequency stabilization, integration of renewables, and backup power.

Energy shifting charges during low-load periods and supplies in high-load periods. It allows for renewable power to be stored for use later. This allows for peak shaving, which equates to cost savings.

When it comes to power quality and frequency stabilization, reactive power capability can provide active voltage support. It also allows users to control and regulate energy system frequencies to increase grid reliability.

Integrating renewables ensures smooth fluctuations during defined time periods. It also avoids large ramp rates/rapid voltage and power swings on the infrastructure, and it increases grid reliability.

Backup power has a short reaction time to maintain network continuity until backup generators can take over loads.


Full of Potential

Battery storage is mainly dispatched for demand charge reduction, backup power, and renewable self-consumption. However, engineers have yet to tap into the full potential of battery technology. Currently, less than 50% of the battery’s capacity is used for its primary application, meaning there is more potential energy available. The best way to tap into the energy is by stacking values. Because the value of a microgrid comes from multiple sources, all value streams must be understood, measured, and added up for each project.


Barriers and Incentives

With the emergence of so many new technologies, several Federal Energy Regulatory Commission (FERC) regulations are outdated, making it harder to stack the value of those batteries, but they are evolving.

Rules and regulations that place behind-the-meter energy storage on an equal playing field with large, central generators have been developed and implemented slowly. A three-year rollout of FERC Order 755 required independent system operators (ISO)/regional transmission organizations (RTO) markets to provide compensation to resources that provide faster-ramping frequency regulation. Under prevailing ISO/RTO rules, utilities can’t stack the value of batteries.



Microgrids optimize the use of solar, wind, energy storage, and other resources to allow an operation to obtain renewable, low-cost energy and maintain reliability. As renewable generation capacity continues to grow, more dispatchable power-through-battery storage is needed to provide stability. Placing an exact value on microgrids is challenging, since each individual project is unique. The microgrid must be carefully designed with services as close to the end user as possible and intelligent controls that optimize the interaction between energy sources. 

Back To Top