The Rise of Microgrids: Bridging the Rural Energy Gap

Microgrids are independent, small-scale power grids utilizing renewable sources and are beneficial in rural areas without existing infrastructure for energy distribution.
These decentralized systems are proving advantageous during extreme weather events, offering reliability where traditional power grids may fail.
While they are becoming more prevalent and are supported by investments and projects, microgrids face challenges in densely populated areas due to land use concerns and potential environmental impacts.

For over a century, many countries have been relying on the same electricity transmission mechanisms. While some countries have upgraded their equipment, others are using antiquated lines to deliver electricity. As populations rise in an industrialised and increasingly digitalised world, the global electricity demand is also growing. Governments worldwide are exploring innovative ways to upgrade their grid systems to respond to this growing demand. While there is no doubt that the main electricity systems of many countries must be improved, many countries are starting to invest in microgrids, many of which are located in rural areas where renewable energy is being produced, rather than traditional energy hubs, and they are showing great potential.

As the renewable energy capacity of several countries worldwide continues to rise, governments must ensure these new energy sources are able to reach the consumer market. Many green energy projects, such as wind and solar power, are being developed in rural areas, not previously known for their energy production. This means that many do not have the infrastructure required to share the energy being produced with consumers. Further, it can be extremely expensive and complicated to connect these projects with the main grid.

As rural renewable energy projects become more common, governments are responding by developing micro-grid systems, to help them share energy more practically. This is particularly the case in North America, which has vast amounts of sparsely populated land. Microgrids are small grid systems that use one or more distributed energy source to supply power. They are independent of the regional or national energy grid. In 2022, North America had around 35 percent of the world’s microgrid revenue share.

The U.S. microgrid capacity has increased by around 11 percent since 2020, with over 460 operational systems across the country, delivering around 3.1 GW of electricity. This helps provide rural populations with a reliable source of electricity, generated using clean energy sources. In addition to providing hard-to-reach areas with energy, microgrids can also be useful during extreme weather events, ensuring that populations do not lose power at pivotal moments.

In recent years, we’ve seen an increasing number of cases in which large populations lose power in the wake of an extreme weather event. In the U.S., this has been the case during the Californian wildfires in recent years and following the severe winter storm in Texas in 2021. This is also being seen elsewhere, such as in New Zealand, where, in 2023, the national grid operator Transpower declared a grid emergency following the loss of power in some regions after the country was hit by a cyclone. Now, experts are suggesting that microgrids might prevent huge power outages in the event of extreme weather events.

Centralised power systems depend on large power plants and transmission grids, which makes them susceptible to single points of failure, making them extremely vulnerable to the effects of severe weather conditions. In contrast, microgrids are self-sufficient and operate independently or alongside the main grid, powered by renewable energy sources. This makes them suitable for regions prone to extreme weather, as individuals and communities can generate, share and trade energy among themselves, through a decentralised energy market.

However, this could be more complicated in densely populated areas as microgrids generally require large amounts of land to set up renewable energy projects from which they can draw power. Concerns over land use, the visual impact on the area and the potential disruption to wildlife habitats are just some of the concerns that citizens have about the development of these types of projects. The “not in my backyard” (NIMBY) approach to the development of alternative energy operations has played a major role in the blocking of new energy projects in recent years, and would almost certainly be a major concern in highly populated areas.

Nevertheless, the microgrid approach is becoming increasingly popular, with several companies investing in the development of these types of projects. This month, the New Jersey-based company Scale Microgrids signed an agreement to acquire a 500MW portfolio of distributed solar and storage projects from the Dutch renewable energy developer Gutami. The purchase includes sites across several U.S. locations, from California to New York. The operations are expected to provide electricity for around 80,000 homes and small businesses.

The CEO of Scale Microgrids, Ryan Goodman, stated “Community solar continues to be a priority for Scale for both its inclusivity and ability to provide more options to our microgrid customers. Community solar is a great option for those who are unable to install rooftop solar because they are renters, can’t afford solar or because their property is not suited for it.”

While governments must invest heavily in upgrades to their national energy infrastructure to respond to the growing demand for electricity, microgrids could play a major role in the future of energy distribution. Microgrids are growing in popularity as countries worldwide develop their renewable energy capacity, establishing projects in non-traditional energy regions that are well-suited to these structures. Further, microgrids could help ensure people are supplied with electricity in the wake of an extreme weather event, in the case that the main grid system becomes damaged.

By Felicity Bradstock for Oilprice.com