Microgrid Industry State of Play - Converge Strategies

Microgrid Industry State of Play

By Migdalia Blanco, Power Systems Engineer, Converge Strategies

The grid is changing, and microgrids are not a future technology. They are a present-day resilience tool, and the organizations that understand how to deploy them strategically will be better positioned for whatever comes next.

“What does this system need to do?” is increasingly being answered by communities that have already lost power when it mattered most. “What is that capability worth?” is being answered by the utilities, developers, and planners who are building something better.

I see this in my work. Whether we are supporting a municipality navigating DER interconnection costs, a healthcare system that has never considered backup power, or a water district trying to remain operational during a natural disaster, the technical foundations discussed at this conference are the same ones we bring to our clients.

Five panels. Eight hours. A lot of notes. Here’s the state of play from the 2026 Microgrid Knowledge Conference and what we should pay attention to at the intersection of power engineering, infrastructure resilience, and energy policy.

The Core Thesis: Value Over Cost

The opening keynote by Duke Energy set the tone for the entire day: stop leading with cost. Lead with value.

Microgrids are best understood as a platform for stacking benefits: reliability, peak shaving, frequency support, demand response, asset deferral, and voltage management. The most successful microgrid deployments are the ones that maximize that stack. Duke Energy’s portfolio of 10 in-service microgrids, totaling 60 MW / 105 MWh across six states, is a direct reflection of this philosophy. Every system is purpose built. There is no universal solution, and the industry is not close to one. Varying load profiles, site conditions, regulatory environments, and customer needs make every project its own engineering problem.

That framing matters for how we approach project development at Converge Strategies. Affordability dominates energy policy conversations. It shouldn’t be the only thing. More and more, the primary question about microgrids is shifting from, “how much does it cost?” to “what should it be capable of, and what is that worth?”

The Broader Market Picture

Where is the microgrid sector heading? . Solar and storage surged in 2024, but fossil-based generation is projected to reclaim 68% of new microgrid capacity in 2025. It’s worthwhile to note that this is a reflection of cost, permitting speed, and political environment rather than a reversal of long-term trajectory. Through 2030, solar plus storage is still expected to be the dominant capacity addition in the space.

Emerging technologies to watch: long-duration energy storage (LDES), small modular reactors (SMRs), and geothermal. None of these are ready to reshape the market in the near term, but each addresses a limitation that current battery-solar configurations have not fully solved.

One market dynamic worth flagging: data centers in Utah and New Mexico are being denied utility interconnection due to insufficient distribution and transmission capacity. Their response has been to bring permanent, around-the-meter generation to their own sites, which is accelerating microgrid deployment in commercial prime power applications. I anticipate that this is a market segment that will grow quickly.

40% of the U.S. Healthcare Facilities Have No Backup Power

This number stopped the room, and it should. Across more than 14,000 healthcare sites nationwide, nearly half have no backup generation. The ones that do largely rely on diesel generators: aging, maintenance-intensive, and increasingly inadequate for the operational demands of modern healthcare facilities managing temperature-sensitive medications, critical life-safety equipment, and 24/7 patient care.

The panel discussion reinforced a fundamental shift in mindset that is now taking hold across the sector: resilience is no longer a “nice to have.” It is an operational requirement, especially for facilities in weather-vulnerable regions. Florida was cited specifically given its exposure to hurricanes and severe weather, are beginning to treat backup power the way they treat infection control protocols: non-negotiable.

Military Microgrids, Open ADR, and Cybersecurity

The Department of War panel brought a dimension of microgrid operations that rarely surfaces in commercial discussions: cybersecurity obligations tied to the microgrid controller itself.

A microgrid controller is a system that keeps everything running. It coordinates local energy sources, matches supply to demand, and manages the connection to the wider grid automatically. Because military microgrid controllers are attached to DoW facilities, they fall under the Risk Management Framework (RMF), a federal standard that governs how cyber-secure systems are developed, operated, and changed. Any modification to the controller, even a routine update, must be assessed and managed within that framework. That requirement shapes every aspect of how these systems are designed from the start, how they are maintained over time, and how quickly they can adapt to new technology.

One of the most significant technical takeaways from this session was a collaboration between S&C Electric and National Laboratory of the Rockies (NLR) on an Open ADR-compliant load shedding architecture for islanded military microgrids.

Today, when a military installation needs to reduce its power consumption during an outage or grid stress event, the process is relatively blunt, and large blocks of power are cut without much precision. The solution allows the microgrid to communicate directly with individual buildings on the installation, so power can be reduced in a deliberate and prioritized sequence. Critical facilities can stay powered while lower priority loads are scaled back. The system also gives military installations the ability to operate fully independently from the commercial utility grid when needed, without losing the ability to reconnect and communicate with their energy provider. For instance, having the ability to close the gates during a threat, while keeping a secure line open for when you are ready to re-engage. For military installations, where mission continuity is non-negotiable, this kind of precision and control is not a convenience, it is an operational requirement.

For engineers working at the intersection of grid security and resilience, this is the kind of systems architecture problem that defines the next generation of critical infrastructure protection.

No Power, No Water, No Fighting the Fire

Public Safety Power Shutoffs (PSPS) events in California are now occurring 4 to 5 times per utility company per year. The Eaton Fire in January 2025 marked SCE’s worst reliability month on record per CPUC metrics.

That context made the California panel one of the most operationally grounded case studies of the day: the Santa Margarita Water District (SMWD) microgrid in Orange County.

SMWD serves over 200,000 residents through a combination of 1.5 MW of battery energy storage, 1 MW of solar, and 2 MW of backup generation that is capable of sustaining facility operations through an extended outage. This continuity of operations is especially important during wildfire events when firefighters depend on a reliable supply of pressurized water, making water utilities a tier-one critical infrastructure.

The critical technical insight from this panel is one that does not always receive enough attention in project planning: generators often fail in active wildfire conditions. Poor air quality impairs combustion, ash and particulate matter clog intake systems, and fuel access is disrupted when evacuation routes close. In comparison, battery-based systems with solar generation mitigate these vulnerabilities. For any site located in or adjacent to wildfire-risk zones, this needs to be a primary design consideration, not a footnote.

Converge Strategies has worked directly in California on resilience initiatives, and that experience has shaped how we approach these projects. California operates under a unique combination of extreme weather exposure and layered regulation that exists almost nowhere else in the nation. Navigating that environment requires more than technical knowledge, it requires understanding how compliance and resilience interact and how to deliver solutions that hold up practically and long-term.

The 1 MW Threshold — A Practical Interconnection Strategy

Two panels in the afternoon converged on a single, actionable insight for project delivery teams: keeping distributed energy resource projects under 1 MW significantly accelerates the interconnection process by bypassing the cluster studies required for larger utility-scale DERs.

Cluster studies are designed to evaluate the cumulative grid impact of multiple large interconnection requests in a given area. They are thorough, necessary, and slow, often misaligned with customer timelines. Projects under 1 MW, particularly behind-the-meter systems, can move through the distribution interconnection process on a faster track.

For Converge Strategies, this has direct implications for how we scope and phase microgrid projects, particularly with municipal clients who face funding constraints and timeline pressures. A phased approach that keeps initial deployments under the 1 MW threshold may be the fastest path from award to energization.

About the Author

Migdalia Blanco is a Power Systems Engineer at Converge Strategies where she supports infrastructure resilience, grid modernization, and energy security initiatives.

📍 Interested in discussing microgrid strategy, DER interconnection, or resilience planning for your organization? Connect with Migdalia at Converge Strategies.