From concept to commercial reality: What’s accelerating the rise of microgrids?

As power systems become more decentralised and electrification accelerates, the pressure on distribution networks continues to grow. The question facing the industry is no longer whether we need more flexible, localised solutions, but how quickly they can be deployed at scale.

Smart Local Energy Systems, including microgrids, have for some time been positioned as part of the answer. They offer a way to balance local generation with local energy use within defined boundaries. Microgrids can, in addition, provide a high level of resilience, essential as we become increasingly dependent on electricity for the majority of our energy needs. Yet despite their potential, widespread adoption has often been held back by one persistent challenge: initial investment costs.

New research which we presented at CIRED 2026 shows how innovation in two key areas is addressing this challenge:

1. Assets and configuration: How microgrids are designed, built and operated.
2. Business models: How they are funded and commercialised, such as Microgrid-as-a-Service (MaaS).

Smarter systems, better performance

On the technical side, improvements are no longer limited to individual assets. Increasingly, value is being unlocked through how systems are configured and operated.

The use of AI (Artificial Intelligence) and machine learning are now helping developers optimise design to better match generation and demand. This reduces overinvestment at the design stage and improves operational efficiency over time.

At the same time, microgrids are evolving beyond purely electrical systems. Multi-vector configurations are becoming more common, integrating electricity with heat, renewable fuels and hydrogen. This allows energy to be stored and used more flexibly, particularly where long-duration energy storage (LDES) would otherwise be prohibitively expensive.

We are also seeing the rise of cross-sector microgrids. Integration with transport assets such as Electric Vehicles (EVs) as mobile storage, allows these assets to return energy to the microgrid during outages, extending resilience beyond stationary battery limits. This trend is increasingly reflected in UK system planning from National Grid ESO.

Another important shift is the move towards modular design. Standardised, “plug-and-play” systems reduce engineering complexity and bring down unit costs through bulk manufacturing. While this approach can limit site-specific optimisation, it opens the door to scaling microgrids more quickly across multiple locations.

Unlocking value through existing assets

Although many microgrids have incorporated behind-the-meter (BtM) assets in an ad hoc manner, it is also possible to actively manage such assets as part of a fully integrated energy resource. Rather than relying solely on centralised infrastructure, microgrids can now incorporate distributed resources such as rooftop solar and residential batteries.

Rethinking the commercial model

Technical innovation alone is not enough; commercial structures need to evolve alongside them. This is where new delivery models are playing a critical role.

“Microgrid-as-a-Service” is one such example. Under this model, a third-party provider designs, funds and operates the system, removing the need for upfront capital from communities or developers.

In the UK, this approach is already being applied in residential developments. Households effectively become participants in a local energy system, benefiting from lower and more stable energy costs while the provider manages the complexity behind the scenes.

This model also helps address one of the most pressing challenges in the housing market: access to grid connections. By reducing peak demand on the network, microgrids can ease connection constraints and enable new developments to move forward.

Alongside this, new market mechanisms such as peer-to-peer trading and collective self-consumption are being explored. While still evolving, these models incentivise rational behaviour and optimise energy flows within the microgrid.

From innovation to implementation

What emerges from this work is an important evolution in the design, construction and operation of microgrids. Microgrids are no longer defined solely by their technical architecture. Their viability increasingly depends on how well technology, optimisation and commercial models are integrated.

For network operators, this presents an opportunity to rethink how resilience and flexibility are delivered. For developers and investors, it opens new pathways to viable projects. And for consumers, it offers the prospect of more reliable and potentially lower-cost energy.

The transition to a sustainable energy system will not be achieved through a single solution. But as these innovations continue to mature, microgrids are demonstrating a clear and significant role in supporting a more decentralised, low carbon and affordable energy system.

Find out how our Resilient Customer Response data and MaaS insights can help you build a more viable, scalable, and resilient energy project.