Microgrids: A shift toward energy independence
April 01, 2026
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Microgrids pull together distributed energy resources to enhance reliability and sustainability for communities in need. Here’s how.
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Hawaii is famous for many things. Beaches. Culture. Breathtaking sunsets. But in the energy world, it’s known for leading the way toward a renewable future.
In the early 2000s, solar photovoltaic (PV) became widely accessible in the United States. Over time, residential use grew. This was particularly true in Hawaii. There, high electricity costs, abundant solar resources, and favorable incentive programs led to a boom in rooftop solar adoption. Hawaii quickly became a leader for solar use in the US. Currently, more than a quarter of Hawaiian Electric’s residential customers have rooftop solar.
Being a leader also means navigating the challenges that come with success. As rooftop solar spread, the state had to rethink its programs and create solutions to maintain grid stability and share system costs fairly. It had to set up programs where customers could export energy back to the grid and incentivize pairing solar PV with battery systems. These initiatives could unlock a new phase in solar development. It would also reshape the relationship between customers and utilities, potentially paving the way for distributed microgrids.
In recent years, the energy sector has focused more on microgrids. But what are they, exactly? A microgrid is small, self-sustaining local energy grid that can connect to the broader utility grid when it’s available; it can also operate on its own when the utility grid goes down. By offering a backup for when the power goes out, microgrids improve energy resilience.
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The application of microgrids in Hawaii serves as a powerful example. It shows us how electricity systems are adapting and how customer opportunities are changing.
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Microgrids coordinate distributed energy resources within their local grid to meet energy needs. They can rely on traditional fuel sources, like diesel and natural gas. But they are also being used to integrate renewables like solar, wind, and energy-storage solutions like batteries. This allows microgrids to improve both resilience and sustainability for consumers.
Below, we’ll dive into a bit more detail on Hawaii’s history with renewable energy. We’ll also consider how microgrids can be used to provide a stable local grid for communities while also reducing the carbon intensity of our modern energy infrastructure.
The potential of microgrids in Hawaii
Historically, Hawaii has relied on oil-fired generation for most of its electricity. Oil is carbon intensive. It’s also costly and subject to high price volatility. This meant that business and residential customers in Hawaii have paid some of the highest electricity costs in the US.
In 2001, the state adopted a net energy metering (NEM) law. It allowed homeowners with solar panels to send their excess electricity back to the grid for credits. While Hawaii wasn’t unique in adopting this kind of law, its distinct energy landscape meant that the trajectory would be quite different.
Early on, growth was slow. By the end of 2006, the program had fewer than 200 participants. As solar became more affordable and a local ecosystem emerged to deliver projects, momentum quickly built. In 2009, the program added more than 1,000 participants in a single year. And two years later, more than 5,000 were added in one year. The NEM program was driving rapid growth in solar deployment. It was a great incentive—until it wasn’t.
The grid has its limits. As solar energy production grew, grid operators had to adapt. In some locations, the electrical grid began to receive more energy than it could safely handle. With a large amount of solar power being fed into the grid, the system became unstable. The result? Voltage fluctuations and higher maintenance costs. Voltage fluctuation can lead to equipment damage in the best-case scenario and widespread blackouts in the worst.
" }Declining battery costs are changing the equation. With the right equipment, batteries create the potential for individual customers to have a small, sustainable microgrid.
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To manage the constantly increasing solar production, the grid needed updates and investments. To protect overloaded circuits, the utility started to limit interconnections in certain areas. This reality presented questions regarding the fair allocation of costs and benefits for solar generation and system upgrades to manage growing solar capacity. In response, the NEM program was closed to new applicants in 2015. This was after more than 60,000 customers had enrolled across the state.
Hawaii became one of the first places to face the realities of managing high volumes of distributed solar. New programs were launched to realign incentives, including programs that encourage coupling solar with energy storage.
Early battery uptake in Hawaii was shaped by program rules designed to stabilize a grid saturated with solar exports. But the battery market is changing. Declining battery costs are changing the equation. With the right equipment, batteries create the potential for individual customers to have a small, sustainable microgrid. At the right price, customers may soon see batteries not just as a compliance tool but as a pathway to resilience.
Solar costs dropped and a local industry flourished under NEM. Could parallel market forces unlock a new wave of investment in customer-sited storage and microgrids?
The first wave of distributed solar introduced volatility and new utility cost pressures. It’s likely that a comparable boom in microgrids would have the opposite effect. Instead of a one-way flow where utilities supply and customers consume, microgrids enable customers and communities to generate, store, and manage their own power. Microgrids can be tools for smoothing peaks and managing variability. They can help increase resilience and lower collective energy costs.
Leading by example, the state started to install battery systems to store its solar energy and selectively export it to the utility grid. The primary goal? To improve energy resilience. The islands’ geography is vulnerable to weather and natural disasters. Another goal? To support renewable energy.
Our teams have seen this transformation firsthand. We’ve worked on multiple projects in Hawaii that are shifting from standalone solar systems to full microgrids.
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As solar energy production grew in Hawaii, grid operators had to adapt. In some locations, the electrical grid began to receive more energy than it could safely handle.
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Microgrids as a mindset shift
Microgrids are more than just a technology. They’re a mindset shift. Instead of relying entirely on a distant utility, they let communities produce, store, and manage their own power. The relationship between the utility (only giving) and the customer (only receiving) can evolve. It becomes more of a give-and-take dynamic.
For families and businesses, that means stability and peace of mind. For communities, it means empowerment and independence. This is especially true for remote or underserved areas where the main grid can’t reach. For many, microgrids make reliable electricity possible. And communities with microgrids will have the greatest potential gains as technology becomes more accessible. Their infrastructure is designed for resilience. Things like:
- Underground cabling
- Weather-resistant switchgear
- Smart control systems that automatically prioritize critical loads
Microgrids can also bring financial relief. Provided with the proper incentives, microgrids can support grid operations. During months of high demand, users aren’t entirely subject to utility prices for peak load demand. Microgrids have the potential to reduce overall energy costs for all customers, not only for those who are able to invest in microgrid technology. And for those who can invest, they can rely on their own stored energy.
Our teams are focused on energy reliability. But we’re also champions of sustainability. Our microgrid work embodies that perfectly. These systems aren’t just about technology. They’re about people. We have experienced first-hand how every project engages local communities and creates ways for residents to be trained in microgrid operations and maintenance.
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Hawaii became one of the first places to face the realities of managing high volumes of distributed solar. New programs were launched to realign incentives, including programs that encourage coupling solar with energy storage.
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Microgrids represent three key values.
- Sustainability through renewable generation
- Equity by extending power to hard-to-reach areas
- Innovation by preparing us for the future
In a world that’s electrifying faster than ever, microgrids are how we help our clients stay ahead of the curve, building systems that are adaptable, reliable, and resilient.
Microgrids as a powerful energy solution
The application of microgrids in Hawaii serves as a powerful example. It shows us how electricity systems are adapting and how customer opportunities are changing.
Microgrids aren’t just an engineering solution. They’re a social one. They transform power from something we consume to something we can share, manage, and take pride in.
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