In late April, a massive power outage swept across parts of Spain and Portugal. Within minutes, trains stopped, flights were grounded, and critical services were knocked offline. Even though most power was restored within 24 hours, the blackout was a wake-up call, showing just how one problem in a tightly connected grid can ripple outward and cause major disruptions.
As extreme weather events grow more frequent and cyber threats more sophisticated, today’s grid, designed and built for a different era, is under increasing pressure. At the same time, the growing share of renewable energy brings new technical challenges that further strain the system. Unlike traditional coal or gas plants, solar and wind systems rely on inverters and don’t provide the same kind of “inertia” that helps stabilize the grid. That makes it harder to maintain balance when conditions change quickly.
In response to this growing uncertainty, microgrids are gaining attention as a practical way to strengthen energy security and improve grid flexibility.
At its core, a microgrid is a localized energy system that can operate independently from the main grid when needed. It typically includes one or more sources of electricity such as solar panels, wind turbines, or generators, and may include battery storage or other technologies. What sets a microgrid apart from a simple collection of energy resources is its ability to “island”: to disconnect from the larger grid during an outage and continue delivering power to a defined area. That area might be anything from a single building, like a hospital or school, or something larger, like a neighborhood, university campus, or an entire military base.
Source: Department of Energy
This kind of resilience is especially important for places that can’t afford to go dark, like hospitals, emergency operations, military bases, and, some might argue, data centers. And it can also be a game-changer for remote communities, which are often the last to have power restored after storms or wildfires. In Alaska, for instance, dozens of villages already rely on microgrids—typically powered by diesel generators—because they’re too far from the state’s main grid.
Beyond emergency reliability, microgrids can reduce strain on the central grid by handling some local demand during peak hours. This helps stabilize the larger system and can even lower energy bills. Many microgrids today are also built with sustainability in mind, helping communities hit decarbonization targets by integrating solar, storage, and other clean technologies.
The State of Microgrids:
Across the country, microgrid adoption is growing, though unevenly.
According to a DOE database that uses a relatively broad definition of microgrids, covering everything from backup diesel generators to hybrid renewable systems, Texas currently leads the way with over 1,000MW of installed microgrid capacity, roughly 17% of the national total. The state is home to 363 microgrid sites, most of which are tied to food stores and commercial retail. Next up are Alaska and California, each with over 700MW.
Zoom into the Southeast and Georgia comes in at #6, with about 340 MW across five sites. Of those five projects, three are hosted at military bases with a total of 332 MW while Georgia Tech and Emory each host one project. The rest of the southeastern states trail behind, with Florida leading in capacity at roughly 136 MW across 10 sites.
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When it comes to who’s using microgrids, commercial businesses are among the biggest adopters, with retailers and food stores accounting for more than a third of all sites in the U.S.
But while they make up a significant share of sites, they tend to be smaller in scale, contributing just about 7% of total installed capacity. Many are targeted systems designed to keep operations running during outages, manage energy costs, or meet sustainability goals.
In contrast, municipal and community microgrid owners make up the largest share of installed capacity, accounting for around 25% of the total megawatts deployed. These systems are often built to support broader public infrastructure, including emergency shelters and municipal buildings.
Military bases also play a significant role, making up 4% of microgrid sites and 16% of installed capacity. These bases seek high levels of energy reliability and security, making microgrids a natural fit. Education is another key adopter. Colleges, schools, and research facilities together represent 12% of microgrid sites and almost a quarter of total capacity. And lastly, hospitals, long recognized as ideal candidates for microgrid technology, continue to invest in these systems to ensure uninterrupted, 24/7 power. They account for 6% of sites and 8% of installed capacity, reflecting the critical need for energy security in healthcare services.
It’s worth noting that the number and capacity of microgrids don’t necessarily reflect how often they’re actually used. Some are designed for daily energy management, while others, especially in critical facilities, serve primarily as backup.
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In terms of technology, the most common generation source by capacity is combined heat and power (CHP), which makes up about 40% of total U.S. microgrid capacity. CHP systems, which generate both electricity and useful heat from a single fuel source, are popular for their ability to withstand harsh weather and operate through extended outages. Another go-to option is natural gas, used in 423 projects totaling about 1,200 MW.
Meanwhile, solar is gaining traction, adopted in about 18% of all microgrid sites and accounting for roughly 11% of total capacity. As storage becomes cheaper and more advanced, solar-powered microgrids are expected to take on a bigger role.
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The Roadblocks: What’s Holding Microgrids Back
Despite the promise, building a microgrid isn’t easy.
First, there’s the cost. Microgrids are expensive to build—anywhere from $2 to $5 million per megawatt, according to a NREL study. While costs might have come down with new technology, they remain high enough to make financing a major hurdle, especially in states with low electricity rates where investors can’t justify the upfront investment.
Then there’s the issue of customization. Every microgrid is different: different energy mix, size, climate, and user needs. That makes them tough to scale and drives up design and engineering costs.
Another challenge is the legal side. Most energy regulations were written long before microgrids were even a concept. In many states, Georgia included, non-utilities are still unable to sell electricity across property lines unless the operator is a public utility. While there have been efforts to update these laws, so far, progress has been slow.
Beyond regulation, there are practical and safety-related barriers. Unlike standalone solar or battery installations, microgrids require advanced energy management systems that can safely disconnect from the grid during an outage and operate independently. Ensuring safe interconnection and coordination with the utility adds another layer of complexity, and cost, to deployment.
How States Are Stepping Up
Still, momentum is building. Across the country, states are launching grant programs, policy reforms, and pilot projects to support microgrids, especially in the wake of extreme weather events.
Connecticut was one of the early movers. After a string of damaging storms, the state created a microgrid grant and loan program in 2012, funding 11 projects with over $22 million.
Over the years, more states have followed. In 2018, California passed Senate Bill 1339, laying the groundwork for microgrid development. Under this initiative, PG&E has announced in late March that it would award $43 million in grants to develop nine community microgrids. Colorado had also made notable progress, releasing a statewide roadmap and launching a $3.5 million grant program in 2022 to support rural and municipal utilities. In Texas, the state passed a law in 2023, reserving up to $1.8 billion for microgrids and backup systems as part of its $5 billion Powering Texas Forward initiative. In June this year, the state approved the long-anticipated funding to support microgrid deployment at critical facilities across the state. In Alaska, where many communities rely on diesel generation, the state is exploring hybrid microgrids that mix diesel with wind, solar, and battery storage to lower costs and emissions.
On the East Coast, states like New York, New Jersey, Massachusetts, and Maryland are supporting projects at various stages, ranging from feasibility studies and engineering design to construction. At the local level, from Michigan to Florida, communities are also developing pilot programs to test microgrids tailored to their specific needs. Together, these efforts reflect a growing recognition of microgrids as a flexible solution for a more resilient grid.
Beyond funding, states are also addressing the regulatory inflexibility that can make it difficult to build and operate microgrids. In 2021, Maine passed a law that defines microgrids and exempts them from utility regulation if they meet certain public-interest criteria. Hawaii has introduced a Microgrid Services Tariff to formalize how microgrids connect to the larger grid. And in West Virginia, the state passed House Bill 2014 in April to establish a Certified Microgrid Program aimed at streamlining permitting and supporting on-site energy systems, especially for high-impact infrastructure like data centers.
In conclusion, as energy demands grow and the risks to the aging grid continue to mount, microgrids are increasingly seen not just as a backup plan, but as a smart, long-term investment in energy resilience and local control. Beyond supportive policies, microgrids also need people—engineers, economists, programmers, electricians, and tradespeople—ready to design, build, and operate them. Growing that workforce through universities, training programs, and apprenticeships will be a key part of bringing microgrids into broader use. Moving forward, continued support from states will be key to making microgrids more common, more affordable, and more effective in keeping communities safe and powered.
Written By: Yang You