Efficiency Endeavour: Decentralised microgrids provide inclusive power supply solution

Decentralised microgrids provide inclusive power supply solution

Delivering grid-connected power to remote areas is becoming an increasingly challenging task for the government, more so with the rapidly rising power demand, population and fuel costs. In such a scenario, decentralised or distributed microgrids can be designed to meet the power needs of various population strata on different scales. They are an inclusive solution that can serve diverse economic segments and offer clear financial advantages to low-income end-users, particularly in the context of poor rural communities.

With these advantages in mind, the central government has started taking various steps to encourage the development of microgrids. It has issued the Smart Grid Vision and Roadmap for India initiative, which aims to develop a secure, adaptive, sustainable and digitally enabled grid structure by 2027. The initiative directs the currently highly centralised and target-driven electricity sector’s regulatory framework to include decentralised energy elements and reorient to a customer- or demand-driven approach for the adoption of smart technologies.

The Smart Grid Vision and Roadmap for India aims to develop microgrids in 1,000 villages, industrial parks and commercial hubs by 2017; 10,000 microgrids by 2022; and 20,000 microgrids by 2027. The Roadmap reflects a “dispersed vision” of the twenty-first-century operating grid. Under this, the government envisages the expansion of the legacy grid by connecting smart microgrids or microgrids to the bulk power system with the help of smart grid technologies.

National Smart Grid Mission

India recently launched the National Smart Grid Mission (NSGM) with the aim of bringing together all stakeholders to implement the policies and programmes of the Smart Grid Vision and Roadmap for India. The objective of the NSGM is to build national support across various ministries and states; develop detailed blueprints for programmes and projects in each state to reduce costs and provide budgetary support; coordinate with state utilities and other stakeholders for developing pilot projects and monitoring their implementation; and coordinate the development of standards and sustainable business models.

The NSGM will implement the Smart Grid Vision and Roadmap for India to formulate new param-eters for evaluating grid operations, empowering new market players and galvanising new regulatory structures. It will effectuate the vision of expanding the boundaries of the electricity value chain through the inclusion of decentralised energy elements, distributed energy technologies, and new players and prosumers in the electricity market. It will also encourage the adoption of regulatory innovations to change the current paradigm and utility business model, thus achieving India’s policy objectives.

Advanced microgrids

Though the microgrid market is still at a nascent stage in India, it has reached the next level in most foreign markets, where the focus has now started shifting towards advanced microgrids. In this context, the US Department of Energy and Sandia National Laboratories have published a white paper titled “The Advanced Microgrid Integration and Interoperability”. The paper defines an advanced microgrid as the third element of a smart grid, with the other two being macro-grid operation and grid-load interaction. Equipped with smart grid-enabled functionalities, advanced microgrids can help transform the upstream and downstream value chains of electricity.

Advanced microgrids are dynamic microgrids that are capable of going beyond the niche and reaching the mainstream market. They contain multiple customers, resources,and resource interconnections on both sides of meters.

Smart microgrids operate on an intelligent distri-buted energy management service model, and use specialised hardware and software to integrate, control and optimise multiple demand and supply assets within systems for overall intelligent and efficient load and resource management.

An advanced microgrid is a potential utility tool for addressing the system complexities involved in managing wide and dynamic sets of distributed and intermittent resources and control points. It is capable of clustering loads and distributed en-ergy resource (DER) units within an integrated autonomous system to provide smart distribution through fast control; avoiding problems of DER as stand-alone or randomly dispersed resources; and providing improved cost-effective power quality, availability and reliability benefits.

Regulatory innovations

A new policy ecosystem is one of the requirements for developing advanced microgrids. This ecosystem must be capable of supporting investments in the standardised use of distributed and demand-side energy resources as part of overall power system planning, grid operations and power market trading. New regulatory and social compact is also needed to support smart investments in developing highly flexible, configurable and interactive networks of utility, customer and third-party applications. It is also a requirement for the efficient tracking of market data, price signals and transactions; and adopting the “system of systems” method for the integration of DER and load-side management.

With regard to the above requirements, amendments need to be made in the Electricity Act, 2003, and the model smart grid regulations to include the definition of advanced microgrids as a distributed power network with intelligent en-ergy systems. These should be aimed at:

  • Developing an integrated grid in which all energy resources (including DERs and demand-side resources) function in parity with bulk supplies.
  • Realising the full potential of smart grid technologies by piloting new smart energy architectures and delivery systems, especially at the distribution system level.
  • Expanding power systems to include cost-effective decentralised elements and taking a “system of systems” approach for achieving the roadmap’s objectives.
  • Valuing and taking into account the benefits, attributes and costs of advanced microgrids, DER and energy efficiency.
  • Defining microgrids and incorporating India’s policy objectives.
  • Developing new cost-benefit analysis frameworks, standards and protocols, performance metrics, and measures and validation methods for assessing the performance of microgrids and DERs.
  • Developing performance- and output-based cost recovery criteria, tariff structures and incentives for utilities to shape new business and service delivery models.
  • Developing more robust interstate and intra-state power markets at the level of both the wholesale and retail power markets.
  • Shifting towards a customer-driven “dispersed” smart grid model.
  • Aligning federal and state smart grid programmes and pilot planning, development and implementation.

In addition to the above, there is a need for reforming the traditional regulatory paradigm to support a distributed grid in which advanced microgrids serve as integrative agents. Some traditional assumptions, like the notion that customers play a very minor role in addressing system needs and that centralised generation and bulk transmission invariably yield cost-effective results, need to be altered. These assumptions hinder the development of decentralised systems as consumers play a significant role in maintaining the reliability and sustainability levels of the power grid in such situations.

There is also a need to reform traditional economic regulations for achieving a more efficient allocation between capex and opex and incentivising continuous improvement. Dynamic price signals and rate designs should be provided to reflect the value of grid services to customers with and without DERs for determining the value of DERs to the grid. These rate structures should be based on the timing, location, flexibility, predictability and controllability of a resource. The burden of adopting these advanced technologies should be distributed as per the economic conditions of consumers. It is also important to build retail markets in a way that they value system-based investments and operation protocols that can drive innovation and efficiency in distribution utilities.


The Smart Grid Vision and Roadmap for India provides an opportunity to build an effective policy eco-system for achieving its objectives. The adoption of smart grid technologies will help develop a new intelligent energy management model in which advanced microgrid systems manage and optimise DER in real time, and use layers of intelligence to link customers with energy with the use of infrastructure and facilities in communities.

A policy ecosystem that supports the development of advanced microgrids can serve as an integrative agent, using power and information to:

  • Integrate decentralised energy with centralised energy;
  • Harmonise on-grid electrification efforts with off-grid electrification efforts;
  • Attract private capital in order to increase supply and delivery capacities through market-based approaches. n

Based on a presentation by Larisa Dobriansky, Senior Vice- President, General MicroGrids, at the India Smart Grid Week 2015