Microgrid Feasibility Study: What to Evaluate Before a Project Moves Forward

A microgrid feasibility study determines whether a proposed microgrid is technically practical, operationally useful and economically defensible before a project advances into detailed engineering.

The study sits between an initial idea and an engineered project.

A hospital may want backup power that can sustain critical operations for several days. A municipality may want to keep police, fire, communications and shelter facilities operating during a regional outage. A commercial campus may be considering solar and battery storage for both resilience and electricity-cost savings.

In each case, installing equipment before understanding the loads, outage requirements, existing infrastructure and economics can produce an oversized, undersized or unnecessarily expensive system.

A rigorous microgrid feasibility study asks a more fundamental question first: what microgrid configuration, if any, can realistically achieve the site’s objectives?

What is a microgrid feasibility study?

A microgrid feasibility study is an early-stage technical and economic assessment of a potential microgrid project.

It typically evaluates the site’s electrical loads, critical facilities, existing infrastructure, distributed energy resources, resilience requirements, preliminary equipment sizes, utility interconnection considerations and project economics.

The objective is not to create final construction drawings.

Instead, the study narrows a large number of possible configurations into one or more concepts that are sufficiently promising to justify further engineering.

The U.S. Department of Energy’s microgrid project-development checklist similarly treats project development as a progression through planning, design, procurement and implementation rather than a single equipment-selection exercise.

That distinction is important. A feasibility study should reduce uncertainty before a project commits substantial capital.

How feasibility fits into the microgrid development process

Microgrid development generally begins with a need rather than a technology.

A facility may have experienced repeated outages. Electricity demand may be growing. A community may need resilient emergency facilities. A data center may face a long utility-interconnection timeline.

The early process can be simplified as:

1. Define the problem and project objectives.
2. Collect site and electrical data.
3. Perform the feasibility analysis.
4. Select a preferred concept.
5. Advance into detailed engineering.
6. Procure and construct the system.
7. Commission and test the completed microgrid.

Microgrid Media’s guide to how to design a microgrid examines that larger engineering process in detail. Feasibility is the stage where the project determines whether its requirements can be translated into a credible system concept.

Step 1: Define what the microgrid must accomplish

The first task is establishing measurable objectives.

Common goals include:

• Maintaining critical loads during utility outages
• Reducing peak electricity demand
• Lowering utility energy costs
• Increasing use of on-site renewable energy
• Reducing exposure to fuel or electricity-price volatility
• Supporting decarbonization objectives
• Providing grid services
• Supporting new loads that exceed existing electrical capacity

These goals can conflict.

For example, discharging a battery every afternoon may reduce demand charges, but doing so could leave less stored energy available if an outage begins that evening.

The feasibility process therefore needs to identify not only objectives but their relative priority.

Step 2: Build an accurate electrical load profile

Annual electricity consumption alone is not enough to design or evaluate a microgrid.

Engineers need to understand when electricity is consumed.

Useful information can include:

• 15-minute or hourly interval load data
• Annual peak demand
• Minimum demand
• Daily and seasonal load patterns
• Weekend and weekday differences
• Large motor or equipment-starting loads
• Planned electrification
• Expected facility expansion

A site with a brief 5 MW annual peak presents a different problem from one that operates near 5 MW continuously.

Load data also provides the foundation for modeling solar production, battery dispatch and generator utilization.

NREL’s REopt resilience curriculum specifically identifies utility bills and load data as foundational inputs when evaluating energy investments for critical facilities.

Step 3: Identify critical loads

A resilience-oriented microgrid does not necessarily need to support every load during an outage.

The feasibility team should identify which services must continue and how much electricity those services require.

Critical loads might include:

• Hospital clinical equipment
• Emergency communications
• Data-center computing and cooling
• Water and wastewater equipment
• Police and fire facilities
• Emergency shelters
• Security systems
• Essential heating or cooling

Other loads may be deferred, reduced or disconnected.

This distinction can dramatically change system size and cost.

A campus with a 10 MW peak load but only 3 MW of truly critical load does not necessarily need 10 MW of islanded generation.

Step 4: Define the resilience requirement

The phrase “backup power” is not specific enough for engineering.

The project needs to determine what outage it is designed to survive.

Is the requirement four hours? Twenty-four hours? Three days? A week?

The answer influences technology selection.

Batteries provide rapid response but store a finite amount of energy. Solar can replenish stored energy but varies with weather. Dispatchable generators can potentially operate for long periods but depend on fuel availability and maintenance.

A strong microgrid feasibility study therefore models multiple outage scenarios rather than assuming a single ideal condition.

This is also why resilience should be evaluated as a system property. Microgrid Media’s microgrid resilience guide explains how generation, storage, islanding, controls and load prioritization work together during utility outages.

Step 5: Inventory existing electrical infrastructure

Many projects begin with assets already on site.

These may include:

• Emergency generators
• Solar PV
• Battery storage
• Uninterruptible power supplies
• Combined heat and power
• Automatic transfer switches
• Switchgear
• Substations
• Building-management systems

The feasibility study should determine whether those assets can be integrated into the proposed microgrid.

Existing generators, for example, may have sufficient capacity but lack the controls, switchgear or emissions permissions needed for the proposed operating strategy.

Reusing existing equipment can reduce capital cost, but assuming every existing asset is microgrid-ready can create misleading economics.

Step 6: Assess available distributed energy resources

Only after objectives and loads are understood should the project evaluate the resource mix.

Potential resources include:

• Solar photovoltaic systems
• Battery energy storage
• Natural-gas or diesel generators
• Fuel cells
• Combined heat and power
• Wind generation
• Hydropower where available
• Flexible and controllable loads

Each resource solves a different part of the problem.

Solar can reduce daytime grid purchases. Batteries can shift energy and respond rapidly to disturbances. Dispatchable generators can provide longer-duration firm power when fuel remains available.

The correct mix depends on site conditions rather than a universal formula.

Step 7: Develop preliminary system sizes

Feasibility analysis normally compares several candidate configurations.

One scenario might maximize renewable generation. Another may prioritize resilience. A third may seek the lowest lifecycle cost while satisfying a minimum outage requirement.

The Department of Energy’s Microgrid Design Toolkit was developed specifically to evaluate alternative microgrid designs across cost, performance and reliability objectives.

DOE’s 2026 microgrid strategy also describes the toolkit as supporting feasibility studies by modeling, analyzing and optimizing microgrid designs.

This type of analysis is valuable because there may be dozens or hundreds of technically possible combinations of generation and storage.

Step 8: Model grid-connected economics

A resilience microgrid can create value even when the utility is operating normally.

Potential economic benefits can include:

• Reduced energy purchases
• Peak-demand reduction
• Solar self-consumption
• Demand response
• Time-of-use optimization
• Grid-service revenue where available

The financial model should also account for costs.

Those can include capital expenditure, financing, fuel, operations and maintenance, battery replacement, equipment overhaul, software, communications and periodic testing.

A credible model should distinguish between modeled benefits and guaranteed revenue.

Step 9: Evaluate resilience economics separately

Some of the value of a microgrid appears only when the grid fails.

A hospital avoiding interruption to clinical operations has a different resilience value from an office building avoiding several hours of lost productivity.

Resilience can therefore be difficult to express as a universal dollar-per-kilowatt-hour figure.

Useful questions include:

• What services would stop during an outage?
• What would the interruption cost?
• Are health or safety functions involved?
• How long can existing backup systems operate?
• How frequently do relevant outages occur?

The California Energy Commission’s Santa Monica City Yards study, for example, evaluated a renewable microgrid intended to support municipal operations and continue operating during utility outages, including a requirement for at least two days at full load.

Step 10: Examine utility interconnection early

A technically attractive system can still face significant interconnection constraints.

Projects should identify the utility point of common coupling, existing service capacity, protection requirements, export limitations and applicable interconnection process before the design becomes too advanced.

Interconnection studies may identify equipment upgrades or operating restrictions that affect cost and schedule.

For a resilience project, engineers also need to establish the electrical boundary that will separate from the utility during islanded operation.

Step 11: Consider controls, communications and protection

Solar panels, batteries and generators do not become a microgrid simply because they share a site.

The system needs coordinated controls.

A microgrid controller can monitor resources, coordinate dispatch, manage operating modes and participate in islanding and reconnection.

Protection must also account for the fact that electrical conditions can change when the utility connection opens.

These requirements should appear in feasibility-level cost and architecture assumptions rather than being treated as minor additions at the end of the project.

Step 12: Test scenarios, not just one forecast

A feasibility model becomes more useful when assumptions are stressed.

Scenarios can include:

• Higher-than-expected load growth
• Lower solar production
• Generator unavailable during an outage
• Battery beginning an outage at partial charge
• Fuel interruption
• Longer-than-expected utility outage
• Higher capital costs
• Different utility tariffs

If a project is financially attractive only under one optimistic set of assumptions, that is important information.

Similarly, a resilience design that works only when every generator and battery is fully available may need additional redundancy.

What should the final feasibility report contain?

A useful final report normally documents:

• Project objectives
• Site and load characteristics
• Critical-load assumptions
• Outage requirements
• Existing infrastructure
• Candidate DER configurations
• Preliminary equipment sizing
• Operating strategy
• Interconnection considerations
• Capital-cost assumptions
• Lifecycle economics
• Resilience analysis
• Key risks and uncertainties
• Recommended next steps

The recommendation does not always have to be “build the microgrid.”

A valuable feasibility process may determine that an alternative investment, smaller system or phased project better satisfies the site’s objectives.

Feasibility study vs. detailed engineering

A feasibility study determines whether a concept deserves to advance.

Detailed engineering turns the selected concept into a buildable electrical system.

Skipping directly from an idea to detailed engineering can lock a project into a configuration before its basic assumptions have been tested.

Frequently Asked Questions

What is included in a microgrid feasibility study?

A microgrid feasibility study typically includes load analysis, critical-load identification, resilience requirements, existing infrastructure, distributed energy resource options, preliminary sizing, controls, interconnection considerations, cost estimates and economic analysis.

How much data is needed for a microgrid feasibility study?

At minimum, projects benefit from utility bills and detailed interval-load data. Electrical one-line diagrams, generator specifications, outage history, utility tariffs, critical-load requirements and information about future load growth can substantially improve the analysis.

Is a feasibility study the same as microgrid design?

No. Feasibility is an early design stage that determines which concepts are practical and worth advancing. Detailed engineering follows after a preferred configuration has been selected.

Can a feasibility study determine microgrid cost?

It can produce preliminary capital and lifecycle cost estimates, but final cost generally becomes more reliable as equipment specifications, interconnection requirements, site conditions and construction details are developed.

Should resilience be included in the financial analysis?

Yes when resilience is a project objective. Economic savings during normal grid operation and the value of maintaining critical services during outages represent different benefits and should be evaluated explicitly rather than conflated.

The bottom line

A microgrid feasibility study reduces uncertainty before a project commits to detailed engineering and construction.

The strongest studies begin with loads, operating requirements and resilience objectives rather than a predetermined technology package. They then compare realistic combinations of generation, storage, controls and load management while examining both grid-connected economics and islanded performance.

The result should not merely show that a microgrid can be built. It should explain what the system needs to accomplish, which configuration best supports those objectives, what assumptions determine the outcome and which risks still need to be resolved before the project moves forward.