Moving away from a centralised national grid towards distributed local microgrids

The industrial revolution brought modern convenience to our lives by burning fossil fuels to generate electricity (initially coal but later oil and natural gas) which was then transported by wires and cables around the country to the homes and businesses who used it. 

This model of centralised energy distribution has remained largely unchanged for the past 150 years. For the most part, electricity generation has been the privilege of a handful of corporations who developed multi-million pound power plants that generate vast amounts of electricity using steam turbines that feed into the National Grid.

However, the recent emergence of affordable micro-generation technologies (and solar panels in particular) has brought the ability to generate energy within reach of ordinary people. For the first time, households, businesses, and communities can start to generate their own power independent of the large energy suppliers and free from reliance on the national grid.

solar panel array brighton road baptist church
The falling costs of new technologies has brought the ability to generate energy within reach of ordinary communities for the first time. Photo: BHESCo

By combining these micro-generation technologies with emerging battery storage capabilities and digital trading platforms, communities in Sussex, Kent and across the UK are now in a position to create their very own ‘microgrids’.

Microgrids can exist independently from a national grid whilst simultaneously engaging with it, providing electricity during times of high demand or drawing electricity from the grid when it could become overloaded, for example when the sun is shining or the wind is blowing. This high level management occurs using predictions of weather, supply and demand forecasts from the day before.

Microgrids present an abundance of opportunities for communities to save money, increase independence, improve resilience, and accelerate the energy transition in the South East and the rest of the UK to a 100% low carbon emissions supply.

What is a microgrid?

When we refer to the ‘electricity grid’ we’re talking about a network of power generators, energy consumers and the system that connects them (e.g. pylons, transmission and distribution lines). The electricity generated from power stations today usually has to travel a long way to get to the place where it is eventually consumed. This is inefficient, with network losses averaging around 10% and costly, as electricity transmission and distribution must be closely monitored, centrally controlled and is highly regulated.  Network costs add about 23% to your electricity bill.

Since the 1920’s the energy transmission and distribution grid in the UK has looked something like this:

Traditional Centralised Distribution & National Transmission Grid
A typical centralised electricity grid, where power is generated by a handful of very large corporations and distributed nationally via a long and inefficient transmission network

Microgrids in comparison are a much more efficient way of delivering electricity, with the power being produced and consumed within the same community.

A microgrid is still a network that connects energy generators to energy consumers, only it takes place on a more localised and much smaller scale (hence, a ‘micro’ grid).

Unlike the National Grid, which for most of its lifetime has transmitted electricity from predominantly coal and natural gas power stations, modern microgrids make use of clean, renewable energy sources like solar and wind power combined with batteries and smart metering to minimise network losses and associated costs to the consumer.

These sources of renewable energy can come from a variety of generators including schools, businesses, individual residential properties, or a community owned solar or wind farm. A microgrid is connected to the National Grid for backup if and when needed.

Decentralised distributed microgrid - brighton hove energy services 2020
A decentralised microgrid, where power is sourced from a variety of regional generators and managed by a data control centre. Excess energy can be banked in battery storage facilities to be drawn upon when required. The microgrid remains connected to the national grid and other microgrids and can both provide energy during times of peak demand or absorb energy during periods of overabundance.

How does a microgrid benefit local residents and businesses?

By having access to locally generated renewable energy, residents and businesses can make significant savings on their energy bills.

Instead of purchasing energy from national suppliers, who must consider profit margins, pay shareholder dividends and network charges, customers can buy energy from within their own community. If they are buying energy from a community owned solar or wind farm, profits can be redistributed in the form of a community benefit fund and invested in improving the social fabric of their community, be it supporting vulnerable people or improving community assets that are important to them.

Making use of locally generated energy also strengthens resilience and improves the reliability of supply. In the event that power generators in other parts of the country fail, the microgrid can continue providing power to local residents. Microgrids may also be much less vulnerable to cyber or other attacks, while the impact would be marginal instead of national.

The assimilation of battery storage technologies within a microgrid performs an essential role in providing a reliable supply of energy as well as providing an opportunity for flexibility and grid balancing services to the national grid.

How battery storage plays a pivotal role within microgrids

Microgrids can be powered by a mixture of solar, wind, hydro power, or marine power sources, like tidal or wave power, all of which are clean and renewable energy sources supplied for free by nature. An important consideration is that these energy sources are subject to variations in weather conditions which impact the reliability of generation.  As such they are referred to as intermittent sources of electricity supply.

Therefore, the ability to store electricity that can be accessed when the sun isn’t shining or the wind isn’t blowing is essential for ensuring a reliable electricity supply.

The increasing proliferation of renewable energy sources throughout the UK also means that in the near future, the price of electricity will vary throughout the day depending on the level of available electricity at any one time.

Dyke Golf Club Battery control monitor
Smart battery storage capabilities will become a lynchpin of the successful microgrid, enabling users to bank energy during times of surplus generation or low prices and to distribute energy during times of peak demand. Photo: Powervault

For example, at lunchtime on a sunny day, when solar electricity is abundant, the cost of energy may be low or even negative (i.e. the supplier pays you to use the excess electricity available on the grid). Having an electricity storage facility means that energy can be purchased at this low price (by charging the battery) then stored for use at a time when electricity is more expensive (i.e. in the evening). This stored electricity can be used in order to minimise energy costs, or it can be sold to the national grid when electricity demand is higher.

These technologies will give consumers more control over the way that they engage with their energy supplier, by giving them access to the energy market. No longer will they simply consume energy, they can produce and trade it through microgrids, leading some industry experts to refer to the emergence of a new kind of actor in the energy market – the ‘prosumer’.

To gain maximum effectiveness from a microgrid we will see an increasing use of ‘Big Data’ analysis coupled with weather forecasting to accurately predict times of electricity scarcity and abundance, enabling the microgrid controller to decide when is the right time to use, store, purchase, or sell electricity.

How does a microgrid interact with other grids?

Whilst microgrids can operate independently of a national grid, they are typically integrated alongside it, reacting to changes in consumer demand and levels of available power generation.

During times when energy generation outstrips energy demand, the national transmission network can become stressed. A microgrid can assist by taking some of the surplus energy out of the system using a battery storage facility.

Alternatively, when energy demand is greater than the available supply, a microgrid can provide energy to the wider grid.

In both of these scenarios the owners of the microgrid are presented with a potential revenue stream through what is referred to as offering ‘flexibility services’. This allows the national grid to have access to reserve capacity without the need to build more power stations.

How do microgrids help to de-carbonise the energy supply in the UK?

As we have already discussed, microgrids are typically powered by any combination of solar panels, wind turbines, and hydro-power, all of which are renewable energy sources which do not release any carbon dioxide into our atmosphere.

All of these energy sources produce electricity, which will play an increasing role in the UK’s energy mix as we progress towards the target of Net Zero emissions.

There are several reasons for this, and one is because we currently rely on fossil fuels for the majority of our heating requirements. Most buildings in the UK are heated using a gas powered boiler, and some villages in rural Sussex and Kent are still reliant on oil and liquid gas. Unfortunately, these types of heat sources are damaging to the atmosphere and contribute to climate breakdown.

For this reason, the UK Government is planning to transition away from relying on gas and oil as a heat source and towards electricity. There is already a policy in place which mandates that no new building developments can be connected to the gas grid from 2025.

Therefore, electricity will become the dominiant power source for our heating requirements, with heat being delivered via electric heaters, air source heat pumps, and ground source heat pumps. Microgrids will make it easier and cheaper to power these electric heat technologies, and will be especially important for rural communities.

heating and hot water bright hove 4
Heat pumps will play an increasing role in supplying the UK's heat requirements. Heat pumps are powered by electricity which is much easier to source from low carbon energy sources. Photo: BHESCo

Alongside the electrification of heating, the UK will also be electrifying its road transport systems, moving away from diesel powered motors and towards electric vehicles.

The mass uptake of electric vehicles will have profound repurcussions for the UK’s energy consumption behaviour and will be a critical component of the distributed energy landscape.

As well as providing low carbon transport for road users, electric vehicles will be able to use their batteries to both store and provide energy to the grid during times of abundance or scarcity. This will further enhance the flexibility of the microgrid and provide revenue potential for electric vehicle owners.

Electric vehicles will play a critical role as part of the microgrid network, both pulling power from the grid when the vehicle needs to be charged, and providing additional capacity to the grid during demand peaks. Photo: PikRepo

Peer-to-peer energy trading; buying and selling energy within the local community

For a microgrid to benefit the whole community it is not the case that every home and every business must be generating renewable energy. In many cases this will not be an appropriate option for a property.

However, homes and businesses that are not generating energy can still benefit from being part of a microgrid by accessing energy from their neighbours at a lower cost than they might otherwise pay to an energy company.

This is of course also beneficial to the local producers of energy who can generate income by trading their surplus energy to their community and elsewhere.

In a microgrid properties can be connected virtually through smart meters to enable energy to be traded between energy producers and energy consumers.

Until recently in the UK, it was the case that homes and businesses were eligible to receive a ‘Feed-In-Tariff’ for any surplus electricity that they generated that was exported to the grid. Unfortunately however, this scheme was closed by the UK Government in April 2019, meaning that solar generators are not guaranteed any remuneration for their surplus solar electricity.

Being part of a local microgrid provides an attractive new opportunity for energy generators to sell surplus energy to their neighbours.

This is what is known as ‘peer-to-peer’ trading, and whilst it may sound like science fiction it is already happening in many parts of the world, the most famous example being the Brooklyn Microgrid in New York City.

Case Study: The Brooklyn Microgrid

Describing itself as ‘an energy marketplace for locally-generated, solar energy’, the Brooklyn Microgrid was established in 2016 and brings together local solar power generators with electricity customers.

Electricity is traded using blockchain technology combined with an innovative mobile app. Generators sell their excess solar energy to the marketplace where consumers purchase the available solar via auction.

The Brooklyn Microgrid currently consists of only a handful of local apartment buildings and commercial properties but the company is focusing on expanding its reach throughout the Brooklyn area.

How are BHESCo planning to develop microgrids in Sussex and Kent?

As discussed, the electrification of the UK’s heating is of vital importance if the country is to meet its legally binding Net Zero Emissions targets, and nowhere is this of greater importance than in rural communities that are not connected to the gas grid.

Many properties in rural villages in Sussex and Kent use heating oil and Liquid Petroleum Gas (LPG), which are terrible for both local air quality and carbon emissions more generally.

BHESCo are working with a number of village communities in the Sussex and Kent area to develop shared heat networks which can be powered by local renewable energy that is delivered through a local microgrid. 

In particular, we believe that air source heat pumps and ground source heat pumps offer a compelling alternative to the use of heating oil or LPG. They can be quickly and easily installed, they are eligible for the Renewable Heat Incentive (RHI), and they can be run on local renewable energy sources.

By developing microgrids in towns and villages in Sussex and Kent, BHESCo will be empowering these communities to take ownership of their own energy supply whilst simultaneously taking action on the climate crisis. In addition to reducing their environmental impact, residents can expect to reduce the cost of their energy bills, and build greater resilience against rising energy prices and disrupted global supply chains.

What do you think?
Join the conversation by leaving a comment below


greenjamespage · 04/09/2020 at 11:34

A very useful overview of microgrids.
However I wouldn’t say battery storage is ‘essential’, if it’s still grid connected to the National Grid. Even without storage residents will get the main benefits of renewable (probably cheaper) electricity.

I see the main benefit of microgrids being that renewables are then more financially viable (less kWh exported to the grid for little £) hence more widespread hence less CO2.

There remains the question as to who will pay for the N. grid as fewer and fewer people contribute to it’s running costs. Otherwise the electricity costs for those not on microgrids will rise faster…..?

Roger Banister · 11/03/2021 at 20:12

Microgrids should be encouraged for new housing developments but how to encourage developers to install the appropriate infrastructure from the ground up? They will be reluctant to add to the cost and price of the new houses and the buyers need to be sure that the extra investment will more than pay for itself.
If developers don’t install it for a whole development they will cost more and be less efficient.

    Simon Jenkins · 11/08/2022 at 13:28

    I think you will find a lot of developers are interested in this approach, indeed Housing developer Quinn Estates is working with SNRG SmartGrids, backed by Centrica, on a 162 unit scheme Grove Park at Sellindge, near Ashford in Kent. We are thinking a bit broader with the approach being to create a Microgrid for the wider community.

Josh Bullock · 07/05/2021 at 15:07

could someone please clarify the scale of infrastructure change that is needed to implement a micro-grid say in a town like Margate (where I happen to live :-). Does it require a whole new set of cables need to be laid, attaching each of the houses in the micro-grid ? what are the estimated costs of setting one of these up ?

and with your heat micro-grid example, my understanding was that each property needs it’s own air source heat pump – or is what you are describing some sort of district heating system, with pipes running hot water around the grid.

many thanks,

    Dan Curtis · 10/05/2021 at 13:39

    Thank you for your enquiry and your interest in establishing a microgrid in Margate.

    The microgrids that BHESCo envisions would utilise the existing grid infrastructure. We would naturally need to take action to support the increased electricity loads that would occur as a result of the electrification of heat and transport, however, smart equipment, energy storage and local generation could work in tandem with any reinforcement activity required by the network operator to ensure that the microgrid was established in the most economically affordable manner.

    The heating network would be designed based on the proximity of properties to each other and the economies of scale that would be derived as a result.
    If you are interested in working with us towards creating clean, affordable heat and transport for Margate, please get in touch.

Simon Jenkins · 11/08/2022 at 13:19

Do microgrids still connect to the national grid to sell surplus energy? If so is it a two way street with the national grid supplying the microgrid when/if needed?

    Dan Curtis · 28/08/2022 at 09:09

    Yes, this is exactly how we envision it would work.

Why decentralising is key to a resilient energy system - New Statesman · 16/10/2023 at 12:10

[…] Under a typical centralised model, utilities are vulnerable – when one fails, a whole area may face blackouts. Within a microgrid, says Lees, “it’s much harder to really stymie a system”. Even if 100 of your 1,000 assets are impacted, you still have another 900 supplying your network. It’s also more efficient than the national grid, in which around 10 per cent of electricity is lost in transit and network costs add almost a quarter onto the average electricity bill. […]

Why decentralising is key to a resilient energy system – The New Statesman – Greenstak · 16/10/2023 at 13:19

[…] Under a typical centralised model, utilities are vulnerable – when one fails, a whole area may face blackouts. Within a microgrid, says Lees, “it’s much harder to really stymie a system”. Even if 100 of your 1,000 assets are impacted, you still have another 900 supplying your network. It’s also more efficient than the national grid, in which around 10 per cent of electricity is lost in transit and network costs add almost a quarter onto the average electricity bill. […]

Why decentralising is key to a resilient energy system – · 16/10/2023 at 18:02

[…] Under a typical centralised model, utilities are vulnerable – when one fails, a whole area may face blackouts. Within a microgrid, says Lees, “it’s much harder to really stymie a system”. Even if 100 of your 1,000 assets are impacted, you still have another 900 supplying your network. It’s also more efficient than the national grid, in which around 10 per cent of electricity is lost in transit and network costs add almost a quarter onto the average electricity bill. […]

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