The official Department of Energy definition of Microgrid is:
“a group of interconnected loads and distributed energy resources (including demand management, storage, and generation) within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid, and that connects and disconnects from such grid to enable it to operate in both grid-connected or “island” mode.”
In plain English, a microgrid is a generator configured to work in both grid-parallel and island mode. This is the key distinction between Distributed Generation/On-Site Generation and a “Microgrid”— a diesel generator isn’t a microgrid, because it cannot generate power in grid parallel mode. Most solar energy systems aren’t microgrids because they can’t operate in island mode. A Combined Heat Power (CHP) system that can operate in island mode, however, is a microgrid.
The Benefits of a Microgrid are harder to define, thanks to a ton of different types of microgrids, but, generally speaking, good microgrids share three values:
• Create economic value during normal operations — they make your utility bills go down and/or generate revenue by selling electricity to the grid.
• Provide resiliency during grid outages.
• Reduce Greenhouse Gas (GHG) emissions — not all microgrids do this, but sustainability is a key selling point of almost every microgrid that gets built.