As the cost of solar energy has fallen, it has opened up new
markets that were once unimaginable in energy. Five years ago, it
seemed impossible that a million homes in the U.S. could be
powered by solar energy, but that's the goal of just
one company --
-- and it hopes to accomplish this goal by 2018.
As the cost of solar energy falls and new technologies like
energy storage, smart meters, and demand response advance, new
opportunities open up, like microgrids, which can create a self
contained energy ecosystem. If designed right, microgrids can
produce more renewable energy, cause less strain on the grid, and
even provide technology that could change energy around the
What's a microgrid?
A microgrid is an electric grid that is much smaller than a city,
state, or national grid and contains both generating assets as
well as energy demand sources.
It may contain distributed solar on rooftops, ground mounted
wind and solar generation, smart meters, energy storage, and even
demand response. The main electric grid would then feed into a
central point that would control all points of the system and
communicate with the main grid, which would still provide a feed
of energy to the microgrid. Below is a graphic from Siemens, a
large grid supplier, that shows what a microgrid may look
From the grid's perspective, microgrids could turn hundreds of
points of demand (homes) into a single point of demand,
simplifying operations and giving more control within the
microgrid. In some locations, the microgrid could even operate
independently of a central electric grid.
Solving the grid's main problem with rooftop
One advantage is that microgrids would alleviate the major
problem utilities say they have with rooftop or distributed
solar's intermittent supply to the grid. By dealing with one
large point of contact, the microgrid could smooth out demand
from the larger grid and even store excess energy produced within
the microgrid for use during times when solar energy production
may be high.
If designed correctly, the microgrid could actually improve a
utility's cost structure by reducing the amount of spinning
reserves required to pick up when intermittent energy sources,
like wind and solar, reduce generation.
It may soon be possible to invest in the solar system on
your neighbor's roof. Source: SolarCity.
So, how does this change the world?
The revolution of the microgrid will be noticed here in the U.S.,
but it could also transform impoverished nations with little
access to energy worldwide. There are currently 1.3 billion
people worldwide who lack power, and most of them live in
locations far from a traditional energy plant or electric grid.
It's also often infeasible to build a fossil fuel plant or run
transmission lines from the central grid to these locations. So,
creating a microgrid with local energy sources is a logical
It just so happens that many of these communities in Africa
and India are also home to tremendous solar energy potential. If
these communities had the ability to build their own grids,
produce energy, and store energy, they could improve life
immensely. It's possible the improving economics of solar energy,
energy storage, and microgrids could improve the lives of
billions of people.
Who will play in this market?
So, who is going to be building microgrids and community energy
The first two companies I think of are SolarCity and
. SolarCity is the largest distributed solar installer in the
U.S. and has invested in Off-Grid Electric, a Tanzania-based
company that provides solar lighting in Africa. It is also
developing energy storage to store energy for emergencies within
the home that could be transferred to microgrids both here and
SunPower is working with 7 of the top 10 homebuilders in the
country and is testing energy storage systems that would be
valuable for microgrids as well. It's also building utility-scale
projects in Africa and the Middle East, building out capabilities
in places where solar energy potential is highest. Below is a
short explanation of SunPower's energy storage vision.
SunPower's plans for energy storage in the home. Source:
No doubt companies like
would be in this market as well, but microgrids would be more
line extensions than new growth markets.
The grid is changing
As distributed energy becomes more common, and utilities adapt to
the new normal, where homeowners can own power-generating assets,
we'll see new opportunities emerge in energy. One concept I think
communities will see as attractive is the microgrid. If built
properly, they will put the power in the community's hands and
give consumers more control over their energy choices. If that
happens, it will be a positive development for the world of
Another energy transformation in the U.S.
You already know record oil and natural gas production is
changing the lives of millions of Americans. But what you
probably haven't heard is that the IRS is encouraging investors
to support our growing energy renaissance, offering you a tax
loophole to invest in some of America's greatest energy
companies. Take advantage of this profitable opportunity by
grabbing your brand-new special report, "
The IRS Is Daring You to Make This Investment
," and you'll learn about the simple strategy to take
advantage of a little-known IRS rule. Don't miss out
on advice that could help you cut taxes for decades
to learn more.
Microgrids Are Coming, and They Could Change the
originally appeared on Fool.com.
manages an account that owns shares of General Electric
Company and SunPower and is personally long shares of SunPower.
The Motley Fool recommends SolarCity. The Motley Fool owns shares
of General Electric Company and SolarCity. Try any of our Foolish
free for 30 days
. We Fools may not all hold the same opinions, but we all believe
considering a diverse range of insights
makes us better investors. The Motley Fool has a
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights
reserved. The Motley Fool has a