Microgrids have emerged as a viable solution for the future. They integrate various renewable sources and improve the reliability and resilience of electrical grids. Both Europe and the US see microgrids as essential. While Europe faces challenges such as complex regulations and a centralized grid, the United States is advancing rapidly with favorable policies and technological innovations.
Silvia Caschera
26 May 2025
Microgrids represent one of the most dynamic and promising solutions for the future of energy production. It is a self-sufficient energy system that serves a discrete geographic location, such as a college campus, small town, hospital complex or business. These decentralized energy distribution systems are designed to integrate various energy sources, including renewables, and to improve the reliability and resilience of electrical grids. Microgrids represent not only a response to sustainability needs but also an economic and strategic opportunity, particularly in Europe and America, where the transition to clean energy sources is increasingly urgent.
Microgrids are local electrical networks that can operate independently or connected to the main grid. They combine various energy sources, such as solar, wind, geothermal, and thermal energy generation, through storage systems like batteries. The central idea of microgrids is to produce energy locally, reducing the need for long-distance transmissions, which often involve significant losses and increase the risk of service interruptions. When disconnected from the main grid, microgrids can continue to supply energy to communities, making infrastructures more resilient during extreme weather events or other situations that could damage the main grid.
In Europe, the transition to renewable energy is one of the key priorities across the region, with the goal of reducing carbon emissions and improving energy security. However, despite the growing interest in microgrids, their adoption has been slower compared to other regions, such as North America. The reasons for this delay are varied, including complex regulations, a highly developed centralized electrical grid, and some resistance to change from traditional utilities.
Microgrid penetration in Europe is limited, with most projects being small-scale and located on islands, universities, or buildings. These microgrids are often pilot or research projects rather than fully developed solutions. Regulatory frameworks pose a significant barrier to scaling up distributed energy resources (DERs) and microgrids, as they influence investment in these technologies. Promising examples include microgrids on the Scottish Isle of Eigg, Valencia Polytechnic University in Spain, and the Florian Hotel in the Netherlands. For Europeans microgrids would be particularly advantageous for integrating intermittent renewable sources like solar and wind energy. In some regions of Spain and Greece, microgrids are already playing a crucial role in integrating domestic solar panels into local energy systems. This approach helps reduce energy costs and increases grid reliability, while also creating a more resilient system against energy interruptions caused by natural disasters or technical failures.
The fragmentation of energy markets and strict regulations in Europe are factors that have slowed the adoption of microgrids. European regulations tend to favor large, centralized plants, and transitioning to decentralized models like microgrids requires significant changes in regulations. However, with the push towards greater sustainability, some European countries are beginning to promote incentives for the spread of microgrids, including policies to facilitate interconnection between small networks and the main grid.
In the United States, microgrids are more advanced compared to Europe and are gaining significant momentum thanks to a combination of favorable policies, technological innovations, and growing concerns about energy resilience. The United States has a long history of experimenting with microgrids, and innovative projects have been implemented in many areas, from isolated communities in Alaska to university campuses in California.
The University of California San Diego (UCSD) Microgrid Project is a comprehensive energy system designed to enhance the resilience, reliability, and sustainability of the University of California, San Diego campus. It integrates various energy sources and technologies, including combined heat and power (CHP), solar power, energy storage and fuel cells. The microgrid supplies 72% of the campus’ annual electricity needs and achieves a total efficiency of 66%. It significantly reduces emissions, cutting CO2 by an estimated 82,500 tons per year, equivalent to the annual emissions from over 13,700 vehicles. The project, which cost USD 33.8 million, saves the university USD 9 million annually and has a payback period of 3.75 years.
The advanced technology for microgrids, developed mainly by startups and tech companies working on smart energy management, has given the US an edge in this industry. The use of lithium batteries and other advanced storage solutions has made microgrids much more efficient. A notable example is the Brooklyn microgrid project in New York, which has demonstrated the effectiveness of creating a decentralized network that integrates renewable sources like solar and wind energy, along with storage systems to enhance grid stability.
Microgrids in the United States are receiving substantial support in contexts where resilience is crucial. In California microgrids are designed to withstand wildfires and power outages caused by climate change. Additionally, microgrids are essential for rural and remote areas, where the cost of building traditional power lines is very high. In these areas, microgrids provide a more accessible and reliable energy source
Tax incentives and reduced regulatory requirements for renewables on the state and federal level have significantly contributed to the spread of microgrids. Many states, including California and Hawaii, are implementing policies to encourage the adoption of microgrids as part of sustainable energy plans. For example, the California Public Utilities Commission has approved programs that allow the creation of microgrids in neighborhoods, thus reducing dependence on the main grid.
Both in Europe and the US, microgrids face common challenges, including the need for more efficient energy storage technologies, interoperability between different networks, and managing the variability of renewable sources. Additionally, regulation remains a significant barrier, particularly in Europe, where regulations are often focused on centralized models rather than decentralized solutions.
Although the US is currently leading in the adoption of microgrids, having already surpassed 10 GW of installed capacity with numerous projects, and Europe lags behind with limited, small-scale microgrids mainly on islands, universities, or buildings, the future may hold an unexpected turn of events. Although the European microgrid market, valued at USD 3.8 billion, is significantly smaller than the nearly USD 17 billion US market, it is expected to grow significantly at an impressive annual rate of 15.9%. By 2032 the European market is anticipated to reach over USD 16 billion. This growth is expected to be driven by local energy communities (LECs) and advancements in AI and machine learning, which can enhance planning and operation.
Overall, with increased investment in research and development, the adoption of favorable policies, and technological innovation, microgrids have a promising future in both regions. The continued expansion of renewable energies, along with the need for more resilient and sustainable energy solutions, makes microgrids a fundamental part of the global energy landscape.
Picture: The Columbus Dispatch 3 November 2022; Etna, Ohio, United States; The first-ever solar-powered microgrid at the City of Columbus Tussing Water Booster Station, 3515 Hines Rd. on the Far East Side. © IMAGO / Imagn Images
