The Four Economic Factors that Determine the Feasibility of Microgrids

Microgrids are poised to alter the economics and topology of the electricity grid, ultimately transforming the electricity industry as we know it. In this article, we discuss the four economic factors to consider before and during microgrid development and provide an opportunity for designers, policymakers, and industry experts to join a community of microgrid professionals looking to capture the green, reliable, resilient energy of microgrids.


Last week, Dr. Mahesh Bhave, Visiting Professor of Strategy at Indian Institute of Management, Kozhikode, India, explained how microgrids will soon create the potential for 100% electrification worldwide, along with cleaner, cheaper electricity. (Access the full free lecture here). In his lecture, Dr. Bhave presented two case studies to demonstrate how to assess the economics and feasibility of a prospective microgrid project: 

1. Indian Institute of Management, Kozhikode: Kerala, India


2.  ~120 home homeowners association in California. 



According to Dr. Bhave, anyone considering or currently involved in microgrid development needs to be asking two big questions:

  • How economical are microgrids today?
  • What factors drive their deployment?

In his free, 60-minute lecture, Dr. Bhave broke down the four economic factors that determine microgrid feasibility with each case study:

  • Optimization for capacity, or sizing of generation sources
  • Optimization of operations
  • Pro forma cash analysis with assumptions
  • Demand management, especially in emerging economies

The factors the drive deployment span technology, regulatory, research, industry trends, and more. At the end of his lecture, Dr. Bhave connects the dots, reviews regulatory challenges that must be overcome for microgrids to succeed and discusses the impact of favorable microgrid economics on industry structure in emerging and developed markets.

microgrid deployment


WATCH THE FULL LECTURE, ACCESS MORE RESOURCES, VIEW ARCHIVED DISCUSSION BOARD: Enroll in the full free lecture to access more than 20 additional articles and learning resources, listen to Dr. Bhave’s answers to attendees’ questions, and read the archived discussion board, which is brimming with interesting ideas and knowledge.

JOIN THE CONVERSATION: Looking to learn more from other professionals in the microgrid industry? Join our LinkedIn group: Microgrid MBA: Best Practices for Evaluating Economics of Microgrid Projects.

LEARN EVEN MORE – ONLINE TRAINING: Looking to dive deeper into the world of microgrids? Building one of your own or hoping to in the near future? Check out Dr. Bhave’s 6-week course, Microgrid Executive MBA Training. Designed in partnership with, this rigorous, online course will teach you how to evaluate the economics of microgrid projects in a variety of markets using case studies, financial models, and templates. The course is approved for 18 GBCI credits. View the full course outline here. The course is capped at 50 students with 30 discounted seats.


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HeatSpring Community Builder // I'm focused on building communities of knowledge in various technical and professional industries. Most recently, our team is focused on spreading knowledge about and creating communities around renewable energy and building - microgrids, building science, megawatt design, biomass heating, and more. (

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