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How Microgrids Work: Components, Benefits, and Use Cases

Eric Hinckley
January 21, 2026
3 min read
How Microgrids Work: Components, Benefits, and Use Cases

Microgrids are localized energy systems that can operate independently from the main electrical grid. They combine distributed energy resources; solar panels, battery storage, generators, and controllable loads; into a coordinated system managed by an energy management system. As grid reliability concerns grow and distributed energy costs decline, microgrids are becoming an increasingly practical solution for campuses, military bases, remote communities, and critical facilities.

What Is a Microgrid?

A microgrid is a self-contained energy system that serves a defined geographic area. It connects to the main utility grid under normal conditions but can disconnect ("island") and operate autonomously during grid outages. The key distinction between a microgrid and a standard backup power system is that a microgrid can optimize energy use in both grid-connected and islanded modes.

Core Components of a Microgrid

Generation Sources

Microgrids typically include multiple generation sources for redundancy and flexibility:

  • Solar PV; The most common renewable generation source for microgrids, providing clean energy during daylight hours
  • Battery energy storage; Stores excess generation, provides power during outages, and enables time-shifting of renewable energy
  • Diesel or natural gas generators; Provide backup generation when renewable + storage capacity is insufficient
  • Wind turbines; Supplement solar in locations with favorable wind resources
  • Combined heat and power (CHP); High-efficiency generation that captures waste heat for facility heating/cooling

Energy Storage

Battery storage is the enabling technology for modern microgrids. It provides:

  • Islanding capability; Batteries form the voltage and frequency reference when the grid disconnects
  • Renewable integration; Smooths intermittent solar and wind output
  • Peak management; Reduces grid demand charges in connected mode
  • Seamless transition; Batteries can transfer loads from grid to island mode in milliseconds, versus seconds for generators

Microgrid Controller (EMS)

The microgrid controller is the intelligence layer that coordinates all resources. It decides when each source generates, when the battery charges or discharges, which loads are served and which are shed, and when to island or reconnect. This is typically a storage EMS with additional capabilities for islanding, load management, and multi-source coordination.

Switchgear and Point of Common Coupling

The point of common coupling (PCC) is where the microgrid connects to the utility grid. Automatic transfer switches or intelligent switchgear enable seamless transitions between grid-connected and islanded modes.

How a Microgrid Operates

Grid-Connected Mode

When connected to the utility grid, the microgrid optimizes for cost savings: solar generates during the day, excess energy charges the battery, and the battery discharges during peak rate periods. Generators remain on standby. The microgrid imports or exports power as needed to balance generation and load.

Islanded Mode

During a grid outage, the microgrid disconnects from the utility and operates independently. The battery immediately takes over, providing grid-forming capability (establishing voltage and frequency). Solar continues generating, generators start if needed, and non-critical loads may be shed to extend runtime.

Microgrid Use Cases

  • Military installations; Energy security and mission continuity
  • University campuses; Cost reduction, sustainability goals, and research platform
  • Hospitals and data centers; Critical uptime requirements beyond what backup generators provide
  • Remote communities; Replacing expensive diesel generation with renewable + storage
  • Commercial and industrial parks; Shared infrastructure for multiple tenants with grid resilience

WATTMORE's Intellect Operate provides the storage EMS and microgrid control capabilities needed for modern microgrids, with Intellect EnFORM providing the monitoring layer. Contact us to discuss your microgrid project.

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