A microgrid pairs solar, batteries, and generators so your site can keep the lights on — even when the grid goes dark.
A microgrid is a self-contained energy system that serves a defined area — a factory, campus, hospital, or business park — using its own local power sources. It normally works alongside the utility grid, but its defining trick is that it can disconnect and run on its own when needed.
That disconnect-and-run mode is called islanding. During a blackout, price spike, or grid disturbance, a microgrid can separate from the utility at a single connection point and power its loads independently, then reconnect once conditions are stable.
Two ideas make a microgrid different from a plain backup generator: it can manage multiple energy sources at once, and a smart controller decides — automatically and in real time — where power comes from and where it goes.
Most commercial microgrids are assembled from a few core parts. The mix depends on the site's goals — pure backup, lower bills, cleaner power, or all three.
On-site solar panels generate power during daylight, offsetting purchased electricity and feeding the batteries. Clean and low-cost to run, but variable — it needs a partner for nighttime and cloudy days.
A battery energy storage system (BESS) stores surplus solar or cheap off-peak grid power and releases it on demand. It's what lets solar carry a load after sundown and enables a smooth, instant switch into island mode.
Natural-gas or diesel generators provide firm, dispatchable power for extended outages or when solar and batteries run low. They cover the "worst case" so the system can island for days, not just minutes.
The microgrid controller is the brain: it monitors demand, prices, and grid status, then orchestrates every source and the connect/disconnect switch — prioritizing the cheapest or cleanest power available at each moment.
The same hardware runs in two modes. The controller flips between them, often in a fraction of a second, at the point of common coupling — the switch that links your site to the utility.
Everyday operation. Solar and batteries reduce what you buy from the utility, and the grid fills any gap or absorbs any excess.
The switch opens and your site runs alone. Batteries respond instantly; solar keeps producing; the generator starts if the outage is long.
Microgrid pricing varies enormously by size, site conditions, region, and how much backup runtime you need. The figures below are broad U.S. orientation ranges for installed, commercial-scale equipment — useful for framing a budget, not for quoting a project.
| Component | Typical installed range | Priced by |
|---|---|---|
| Solar PV | $1 – $2 / watt | per watt (W) |
| Battery storage | $400 – $1,000 / kWh | per kWh |
| Generator (gas/diesel) | $500 – $1,500 / kW | per kW |
| Whole system | ~$2M – $4M / MW | per megawatt |
A microgrid tends to make the most sense when several of these are true:
If only one applies, a simpler solution — standby generator or a basic solar-plus-storage system — may be the better fit. The value of a full microgrid grows as more of these stack up.