The Golden Decade of Smart Microgrids: Transforming Energy Systems for the Future

The Golden Decade of Smart Microgrids

In the modern energy system, traditional power grids function like wide “arteries,” allowing energy to flow in one direction. While they provide stability, they can be somewhat cumbersome. Extreme weather or equipment failures can lead to widespread outages, as a single issue can affect the entire system. With the rapid development of renewable energy, a significant influx of distributed solar and wind energy is entering the grid, leading to what can be described as “indigestion” for traditional grids. This situation has given rise to microgrids, small-scale systems that integrate distributed energy sources, storage devices, energy conversion systems, loads, monitoring, and protection devices. Their primary goal is to ensure reliable electricity supply and self-sufficiency in localized areas, featuring clear physical boundaries and relatively independent operational management systems.

For the grid, microgrids can be viewed as controllable components. They can act as controllable power sources supplying energy to the grid or as general power loads drawing energy from it. For consumers, microgrids are flexible and reliable power supply systems that can cater to diverse energy demands.

Four Key Functions of Microgrids

1. **Supply Assurance**: Microgrids can provide reliable electricity in specific areas, particularly in remote or underpowered regions, effectively compensating for the shortfalls of the main grid. In the event of a main grid failure, microgrids can operate in island mode, ensuring power supply to critical facilities and minimizing losses due to outages.

2. **Renewable Energy Integration**: Microgrids can fully utilize local renewable resources such as solar and wind energy, enhancing their utilization rates. They drive the development of clean energy and optimize the generation and consumption processes through intelligent control systems.

3. **Cost Efficiency**: Through intelligent energy management systems, microgrids can monitor and optimize energy usage in real-time. By optimizing energy structures and improving efficiency, they can significantly reduce energy consumption and operational costs, leading to more economical power supply.

4. **Emissions Reduction**: The deployment of microgrids helps lessen reliance on fossil fuels, thereby reducing greenhouse gas emissions and facilitating a transition to greener energy structures. By deploying photovoltaic storage systems, facilities can achieve self-consumption of clean energy, resulting in substantial emission reductions.

In traditional models, grid dispatch systems must manage all entities within the microgrid, including renewable sources and users, separately. This results in complex dispatch management and trading processes. However, with the advent of intelligent microgrids, these systems can participate in trading and dispatch management as new operational entities, streamlining trading processes and enhancing the efficiency of power system scheduling, making resource allocation more flexible and efficient.

It is essential to note that in scenarios where power supply reliability is critical, the design of intelligent microgrids can meet the technical requirements for island operations. In other situations, island operation capabilities are flexible and can be adjusted based on actual needs.

Policy Support Accelerating Development

As a crucial part of the new power system, renewable energy microgrids have received significant attention and support from both national and local governments, resulting in a series of policies aimed at promoting microgrid development.

In July 2015, the National Energy Administration issued guidelines to explore microgrid technologies and operational management systems suitable for renewable energy development, pushing for market-oriented innovations. In July 2017, the National Development and Reform Commission and the National Energy Administration proposed methods to promote healthy microgrid development and guide distributed energy and renewables’ local consumption.

In January 2022, the National Development and Reform Commission and the National Energy Administration emphasized the active development of intelligent microgrids that primarily absorb renewable energy while ensuring compatibility with the main grid. In subsequent months, various policies continued to encourage building green energy industrial parks, developing industrial microgrids, and integrating emerging market players into power transactions.

Local governments have also actively responded, issuing numerous regional policies to support microgrid construction and development. For instance, initiatives in Xiong’an New Area and Chongqing emphasize the development of intelligent microgrids and new technologies such as “solar-storage-direct-flexible” systems.

The active promotion of policies at both national and local levels has been decisive for the microgrid industry’s growth. Policies clarify development directions and provide clear pathways for the industry. Additionally, financial subsidies and tax incentives have reduced construction and operational costs, enhancing the economic viability of microgrids.

Projected Growth and Market Trends

Although microgrids have only recently begun to gain traction in China, the rapid growth of distributed solar and storage technologies has accelerated the expansion of the microgrid market. Applications have evolved from supporting remote areas and islands to urban distribution network upgrades, industrial energy management, and electric vehicle charging stations.

By 2024, over 1,284 MWh of new microgrid projects are expected to come online, with significant contributions from regions like Inner Mongolia and Xinjiang, which lead in new installations. The microgrid market is anticipated to sustain high growth rates, driven by increasing user demand for clean energy, technological advancements, and decreasing costs.

As the global microgrid market is projected to reach USD 39.5 billion by 2025, with China expected to lead the Asia-Pacific region, the microgrid penetration rate could reach 18%. Looking ahead to 2035, microgrids could enhance local renewable energy utilization rates to 40% and reduce transmission losses by up to 20%.

Challenges and Future Prospects

Despite the promising outlook, experts have identified three main challenges hindering the synergistic development of microgrids and larger grids in China. First, there is a lack of unified understanding across society regarding microgrids, leading to varied interpretations of their role in collaborative development. Second, unclear policy guidelines are impacting the standardized growth of microgrids. Lastly, the maturity and stability of technologies related to microgrids have not yet fully met the requirements of larger grids.

In the coming decade, microgrid construction will focus on three main scenarios: establishing intelligent microgrid projects in remote and underserved areas, developing collaborative microgrids in regions rich in renewable resources, and constructing these systems in conditions suitable for industrial enterprises to facilitate local renewable energy absorption.

Conclusion

The next ten years are poised to be a golden development period for intelligent microgrids, transitioning from pilot technologies to widespread applications. This evolution will be driven by technological advancements, coordinated policies, refined market mechanisms, and global collaboration to achieve energy security, economic feasibility, and sustainability objectives. Collaboration among governments, enterprises, and research institutions is essential to elevate microgrids from being a “key puzzle piece” to a “driving force of the energy revolution.”