The definition of a microgrid is “a localized grouping of distributed electricity sources, loads, and storage mechanisms which can operate both as part of the central grid or independently as an island”. Note that renewable is not a prerequisite for a microgird, hence power generation can be achieved along several technics, but renewable is sustainable and aligned with the global climate objectives.
Applications can roughly extend from a house on one side to a city on the other one. The scale is not really the point. The point is the combination of production (injection) and consumption (offtake) with a power quality satisfying to the grid standard. All the possible benefits come from this combination.
At grid level, as well as at society level, they found their origin in the shortening of the distance (along the lines) between the energy source and the place where it is consumed, decreasing the net losses. To give an idea of the achievable societal gain, these losses are in the range of 5% of the consumed energy (one direction: from power stations till consumers) and the double if you produce this energy at home level for consumption far enough (along the grid). For Belgium, if we take 7% of the yearly electricity consumption, the losses represent ca. 5 TWh/year (equivalent to the yearly consumption of 1,4 million families).
Next, at consumer level, the gain comes the production or rather to the avoidance of all the grid costs, taxes, levies and surcharges. So that the total price of the consumed energy is much more expensive than the produced one. For a household, the energy part in the total electricity price is in Belgium less than 25% (2015) and will keep on decreasing, among others due to the increasing cost of the support to the renewable (look at Germany where this fraction now – 2015 – already less than 15%).
Of course a microgrid must be managed and maintained, and the production, storage and control devices will require investments. However, if the microgrid is small enough (a house, a shopping center, a holiday park, …), the maintenance can be kept minimal, as the investment, and the control can rely on automatic equipment. In the USA, a lot of microgrids are popping-up, mainly where the grid connection and service are of poor quality. In our countries, experiments have been conducted (e.g. in the Netherlands), with success.
The arising of microgrids does not suppress usefulness of a grid. A connection to the grid will remain beneficial, e.g. to enable exchanges between microgrids (during outages, maintenance, excess of production or higher consumption), but for much less hours than nowadays.
Once the technology will be industrially available, the distribution grid operators will face rapidly growing load defections. Their business model is in Belgium (as in a lot of other countries) still based on the consumption, so that if this shrinks their revenue also do, while their costs remain nearly unchanged. In the Netherlands, capacity tariffs were introduced, giving one element of the solution. But if these tariffs were too high, the consumers will endeavor the step further to choose for off-grid, accepting possible few and short outages rather than paying high prices.
Since a grid can enhance the wellness, at society level, if proposed at affordable price, we will benefit from enabling sustainable grid operation business. It is possible to develop a new paradigm, taking positively into account the existence and beneficial contribution of microgrids and renewables, but it requires an important change in the mindset an in gird investment management approach.