As the U.S. faces increasing pressure on its aging power grid, the concept of microgrids has gained traction as a solution to improve energy resilience, sustainability, and efficiency in urban areas. A microgrid is a localized energy system capable of operating independently or in conjunction with the traditional power grid. By producing and storing their own power, microgrids can ensure continuous electricity, even during grid failures, and provide a more flexible, renewable energy source for communities.
The U.S. Department of Energy (DOE) has recognized the potential of microgrids to transform the way cities power their homes and businesses. With rising energy demand from electric vehicles (EVs), artificial intelligence (AI), and other power-hungry technologies, microgrids offer a way to decentralize power production and improve urban energy resilience. This interest from the DOE has spurred investments and innovation in the space, opening up exciting opportunities in the real estate industry.
Bob Waun, co-founder of DIRT Realty, sees tremendous potential in microgrids and is working with several real estate investors in the energy management space. “The traditional, single-source power grid is being strained like never before,” Waun explains. “By rethinking how we produce and distribute energy, we can create more resilient cities. For real estate investors, microgrids represent a huge opportunity to add value to properties and make neighborhoods more self-sufficient.”
What Is a Microgrid?
At its core, a microgrid is a smaller, independent energy system that can generate, store, and distribute electricity within a defined area. A microgrid can connect to the larger power grid, but it can also operate autonomously in the event of a power outage, ensuring continuous electricity for the buildings or infrastructure it serves.
Microgrids typically integrate renewable energy sources such as solar panels, wind turbines, or even small-scale hydroelectric power. These renewable sources are often paired with battery storage systems that capture excess energy and release it when needed, ensuring a reliable and consistent energy supply. Additionally, microgrids can include backup generators to provide power during extended outages.
Why Is the U.S. Department of Energy Interested in Microgrids?
The U.S. Department of Energy (DOE) has taken a keen interest in microgrids as part of its broader push to modernize the U.S. energy infrastructure. The existing power grid, much of which was built in the mid-20th century, is becoming increasingly outdated and vulnerable to failures caused by natural disasters, cyberattacks, and spikes in energy demand.
Here are a few key reasons why the DOE is investing in microgrid development:
Increased Resilience: Microgrids can provide continuous power during emergencies, such as hurricanes, wildfires, or cyberattacks. In 2020 alone, the U.S. experienced 1.33 billion hours of power outages, highlighting the need for more resilient energy solutions. Microgrids allow critical infrastructure—like hospitals, water treatment facilities, and emergency response centers—to stay operational even when the larger grid goes down.
Decentralization of Power: Microgrids allow for localized energy production, which reduces reliance on large, centralized power plants. By producing energy closer to where it's consumed, microgrids help reduce transmission losses and increase overall energy efficiency.
Support for Renewable Energy: Microgrids are well-suited to integrate renewable energy sources like solar and wind, helping cities transition to greener, more sustainable energy systems. This aligns with the DOE's goal to achieve 100% clean electricity by 2035 as part of the Biden administration’s climate agenda.
Reducing Peak Demand Strain: By producing energy locally, microgrids can alleviate the strain on the larger grid during periods of peak demand. This is particularly important as technologies like EVs and AI-powered data centers consume increasing amounts of electricity.
Opportunities for Real Estate Investors in Microgrids
The rise of microgrids isn’t just a solution for governments and utilities—it represents a significant opportunity for real estate investors as well. Properties equipped with microgrids can provide tenants with energy independence, improved resilience, and the promise of lower energy costs. Microgrids can also contribute to sustainability goals, which is becoming an increasingly important factor for both residential and commercial tenants.
Waun, who has worked closely with investors in the energy management space, believes that the intersection of real estate and energy presents exciting new opportunities. “We’re at a point where real estate investors can rethink energy production and consumption at the neighborhood level,” Waun says. “Instead of relying solely on the main grid, we can incorporate microgrids into new developments and existing properties, making them more valuable, more resilient, and more sustainable.”
Here are a few ways microgrids are transforming the real estate landscape:
Increased Property Value: Properties with microgrid capabilities can offer uninterrupted power supply, even during outages. This added resilience is particularly attractive to businesses that can’t afford downtime, such as data centers, medical facilities, or retail spaces. As a result, microgrid-equipped properties can command higher rents or sale prices.
Energy Cost Savings: Microgrids that utilize renewable energy sources like solar or wind can significantly reduce energy costs for tenants by generating and storing power on-site. This makes properties more attractive to tenants who are increasingly conscious of both energy efficiency and long-term cost savings.
Sustainability Certifications: Many tenants, particularly businesses, are seeking out properties that align with sustainability goals. Microgrids can help buildings achieve certifications like LEED (Leadership in Energy and Environmental Design), making them more marketable to eco-conscious tenants.
New Revenue Streams: Real estate investors can monetize microgrids by selling excess energy back to the main grid or to other properties within the local network. This can create new revenue streams and offset the initial investment in building a microgrid.
How Microgrids Work in Urban Areas
In cities, microgrids can be deployed to provide energy independence for entire neighborhoods or specific critical infrastructures, such as hospitals, schools, or municipal buildings. Microgrids in urban areas often include a mix of renewable energy sources, such as rooftop solar panels or wind turbines, combined with battery storage systems to ensure reliability.
For example, in Brooklyn, New York, the Brooklyn Microgrid project allows residents to generate and sell solar energy to their neighbors through a peer-to-peer trading system. This system not only helps reduce energy costs but also creates a more resilient community energy network.
“Microgrids have the potential to change how we think about energy in cities,” Waun explains. “Instead of every building being dependent on the main grid, we can create neighborhoods that generate their own power, share it with each other, and sell the excess back to the grid. It’s a whole new way to think about energy infrastructure.”
The Future of Microgrids in U.S. Cities
As the U.S. continues to modernize its energy infrastructure, microgrids will play a key role in ensuring that cities remain resilient, sustainable, and self-sufficient. The DOE’s focus on microgrids is part of a broader strategy to decentralize power production, reduce the country’s reliance on fossil fuels, and prepare urban areas for the increasing demands of new technologies like AI, EVs, and cryptocurrency mining.
For real estate investors, the rise of microgrids represents a unique opportunity to lead the way in energy innovation. By incorporating microgrid technology into new developments and retrofitting existing properties, investors can add significant value to their portfolios while helping create a more resilient, sustainable future.
“Microgrids are a win-win,” Waun concludes. “They make properties more valuable, more efficient, and more resilient. As cities evolve, this is the kind of infrastructure that will allow us to keep pace with the demands of the future.”
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