Growing Reach: Promoting microgrids and distributed generation

Promoting microgrids and distributed generation

Distributed generation, also known as on-site generation, distributed resources, distributed energy resources and dispersed power, is the use of small-scale power generation technologies located close to the load being served. Meanwhile, microgrids are groups of interconnected loads and distributed energy resources within clearly defined electrical boundaries that act as single, controllable entities. Microgrids are local power networks that use distributed generation to manage local energy supply and demand. The current grid infrastructure could face enormous challenges in keeping pace with the complex system of give-and-take required to make distributed generation and microgrids work. In this context, smart grids and digitalisation of electrical grids could prove to be key enablers for local power generation. At the same time, the grid stands to benefit from increased distributed generation and microgrids as they help in peak load management and voltage support.

A look at the key trends in the distributed generation and microgrid segments.…


Distributed generation as another option for rural electrification has been implemented successfully across the world in countries such as Cambodia, Nepal, China and the Philippines. Decentralised distributed generation (DDG) is also being promoted by the government under the Deendayal Upadhyaya Gram Jyoti Yojana through the Rural Electrification Corporation. The scheme provides subsidy towards 60 per cent (85 per cent for special category states) of the project cost. However, an additional subsidy of 15 per cent (5 per cent for special category states) is applicable, subject to timely completion of DDG projects.

The National Smart Grid Mission (NSGM) is also tasked with planning and monitoring the implementation of policies and programmes related to distributed generation and microgrids, and is promoting the deployment of distributed generation in the form of rooftop solar photovoltaic (PV) and the development of medium-sized microgrids. DDG can be based on either conventional or renewable sources and is usually implemented in remote villages. When connected to the utility’s lower voltage distribution lines, distributed generation can help in the delivery of clean, reliable power to additional customers and reduce electricity losses.

The traditional portfolio of distributed generation technologies included reciprocating engines, microturbines, combustion gas turbines and miniturbines. However, new and emerging technology options such as fuel cells, photovoltaics, particularly rooftop solar PV, and wind turbines are now proliferating rapidly. Meanwhile, by operating in parallel with the main grid, microgrids can provide support to the grid in case of outages and during periods of peak demand. Although microgrids have existed for quite some time, their popularity and usage have been increasing in recent times. According to industry estimates, about 125,000 rural households have been connected to microgrids, with Chhattisgarh implementing the largest number of minigrids.

Smart grids and distributed generation

Accommodating increased distributed generation, especially from intermittent renewable energy sources, is expected to become easier with a smarter grid. Smart grid technologies can help promote greater use of distributed renewable generation. They can provide system operators with continual, real-time information on how these systems are operating and allow full control over them. This information and control can be used for reducing the output of, or even disconnecting, distributed generation as needed to maintain reliability, match load or protect workers. They can also provide real-time data on distributed generation electrical output and support the distribution system through, for example, tighter control of voltage.

Microgrids have also evolved over time, becoming much smarter and making extensive use of renewable sources and advanced technologies. Microgrids also become the most efficient when they are complemented with energy storage and control systems. Energy storage systems play a significant role in addressing the issue of grid stability in renewable energy generation and are an attractive option for both grid-connected and off-grid renewable sources. It is a much cleaner means of synchronising renewable energy as compared to carbon dioxide-emitting diesel generators. Besides remote off-grid areas, microgrids are useful in supplying power to military bases, hospitals, large data centres and research-driven colleges and universities, which have high energy demand and where loss of critical operations poses a significant risk of revenue and/or data loss, or impacts safety and security. They can also be a source of increased revenue for utilities because being able to regulate energy use in real time enables energy saving through managing demand response, price response, voltage support, capacity support and spinning reserve.


Traditionally, it has been the utility’s role and responsibility to build power plants when they are needed. Distributed renewable generation and microgrids, in contrast, allow investors, individual users, and commercial and industrial users to invest their own private capital in generation. For capital-strapped utilities, this is an appealing option. Smart grids enable this by providing a way for utilities to manage and incorporate many small, individually owned power plants into the electricity system.