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The microgrid boom, explained

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The microgrid moment has arrived. Are utilities ready?

Microgrids have long been billed as a "future solution"—ideal for resilience, sustainability, and distributed generation, but too costly or complex for widespread use. But in 2025, that future is starting to look like the present.

As electricity demand is exploding, driven by the growth of data centers, electrification of everything from buildings to transportation, and a surge of economic activity, utilities are struggling to keep up. To highlight how microgrids can fill in this gap, this episode of Power Perspectives features Michael Stadler, Co-Founder and CTO of Xendee—a pioneer in DER and microgrid modeling.

How the business case has shifted, thanks to new cost dynamics and technologies? Are we entering a new era of true grid defection? And is this microgrid boom a threat or opportunity for utility leaders? Hear these questions and more answered as we dive in with Michael.

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Want to watch the conversation? Video of Power Perspectives are now being posted to YouTube

Thanks to the sponsor of this episode of the Power Perspectives: West Monroe

 

Key Links:

Michael Stadler on Energy Central: https://energycentral.com/member/profile/michael-stadler

Ask a Question to Our Future Guests: Do you have a burning question for the utility executives and energy industry thought leaders that we feature each week on Power Perspectives? Leave us a message here for your chance to be featured in an upcoming episode: www.speakpipe.com/EnergyCentralPodcast 

 

TRANSCRIPT

Jason Price:

In the next 10 years, the grid is expected to experience significant load growth, driven by factors like data centers, electrification of vehicles and buildings, and economic development, with forecasts suggesting a substantial increase in electric demand, some numbers to drive this home, according to the recent CBR report, include the fact that. Data center supply and major markets of Northern Virginia, Atlanta and Chicago surged 34% year over year in 2024. Construction under capacity for data centers in these markets increased between 100 and 200. Percent so for data center developers, battery system manufacturers and industries with intensive low demand waiting for utility upgrades, substation build out, grid interconnection and regulatory approval is just not going to cut it as utilities struggle to meet growing demand, many large energy users, particularly data centers. Major tech companies are exploring microgrids viable alternative to traditional grid expansion. So is 2025 the turning point for micro grid adoption? And if so? What will the micro grid of the latter half of the decade look like compared to the earlier pilots to help us understand these questions, we're joined by Doctor Michael Stadler, the co-founder and Chief Technology officer at the ZENDI, and a leading expert of Microgrid and DER Modeling. Michael has been. At the forefront of Michael good research and deployment. For decades, working with utilities, regulators and private industry to develop cutting edge solutions for energy resilience and as a reminder to those listening in our podcast, now has a video component that you can find on our YouTube channel. If you're listening to audio only and want to watch the video of this conversation, check out the show notes. Where we'll have a link to the full video version and I'm Jason Price coming to you from New York City and as always, I'm joined by my co-host Matt Chester, Energy Center producer and Community manager from Orlando, FL. Matt, when we talk about microgrids, they've long been a future technology, but do you get the sense that the energy centric community is now seeing that the future?

 

Matt Chester:

Because now, yeah, absolutely, Jason, that's exactly what the energy sector community members are sharing on the platform they. Days microgrids once we were waiting for the economics and the policy to catch up, but we're no longer talking about hypotheticals. We're talking about what's the present day strategy and and specifically we see conversations between energy managers, utility planners, especially those in the private sector, things areas like data centers, industrial operators, but all talking about microgrids. No longer has a Plan B, but as you know, here's our competitive. So as we're moving past pilots and straight into microgrids as the go to solution, I think it's fair to call 2025 a tipping point.

 

Jason Price:

Thanks, Matt. And before we dive in, a big thanks to West Monroe, our sponsor of today's episode. So without further ado, let's get started in this critical conversation with today's guest, Michael Stadler. Welcome to Energy Essentials Power Perspectives podcast.

 

Michael Stadler:

Hey, Jason. Hey, Matt. Good being here. Thank you. For having me.

 

Jason Price:

Absolutely. And we're thrilled to have you. So again, thank you for joining and let's just dive in. So Michael, Michael grins come in various forms, even though we have an energy and utility audience. How about you breakdown for us what is a micro grid and its various incarnations?

 

Michael Stadler:

Yeah. Good questions. I mean, there, there couple of definitions around migrates, but the one that I'm always using is microgrid is basically a cluster of controllable resources, meaning generation resources could be filterable, takes battery systems, combined heat and power systems but also controllable. Good resources, which allow us to control. For them and by by Co locating generation resources with the loads we can achieve some benefits to migrates, meaning we have less losses in the system because we don't have to transport energy that far right, we can utilize waste heat from the CHP system and heat of building or cool something down. So overall, microgrids are really trying to increase the system efficiency and provide energy not only for electricity, but also for heating, cooling or maybe hydrogen. At lower costs and maybe also more reliably.

 

Jason Price:

OK. So I mean, Michael, grids as we know it's a hot topic. It's been like that for years. A lot of the discussion around it, but the adoption has been incremental at best. You're in a front row seat of all this. So are are we finally at that inflection point where micro grids are moving beyond the pilot and and more widespread adoption and deployment?

 

Michael Stadler:

From our perspective, migrants have been growing very nicely. I mean, I guess it depends on the viewpoint, but we have seen strong growth and with an expansion exponential growth. And in 2023, I mean, we saw a market value of 42 billion U.S. dollars, which is expected to grow to 170 billion by 2042. So micro rates are real. The real cases on the in, in the military, I mean communities and universities are really using them and we have clients. At at the same day, which really build hundreds of microgrids a year. I. I think we already have seen that inflection point in the past.

 

Jason Price:

Alright, well, you know, at the at the lead up to the to the call I in the intro I mentioned AI and data center growth and this is massive new loads that utilities are struggling to. Keep up with. So you've been working with data centers looking to bypass, you know, grid constraints by going with micro grids. How is this approach working and why are micro grids? Particularly well suited for this.

 

Michael Stadler:

Need so with data centres it's like with the electric vehicle infrastructure that we have seen the last couple of years. It's really about the power demand which is driving the challenge here, so it's not necessarily the energy, it's more like to get through the power that is needed to the data center because we're talking about, I mean, we have seen projects in the GW range, right. So it's really an infrastructure problem and we know that upgrading the infrastructure can take time. We have seen that it can take 7 to 10 years that the utility sector is upgrading the point of common coupling. We've decided, so that's not a viable solution most of the time for for data centers. And This is why they're looking at Co location of generation resources and microgrids, right. And I think actually data centers are really well. Suited for this because in the past they have been dealt, they have been dealing with, with, with backup generation anyway, so from from our perspective it's just a in quote small step to. Actually build out a real micro grid here and that's what we are seeing with our clients.

 

Jason Price:

I mean by definition and you you described it, Michael. Grids can basically island itself as a backup solution. So how do you see the function of microgrids evolving in the latter half of the decade? You know, if it's all this growth and it's always being more of. A backup focus. Is it is. It at what point is it going to become a the primary focus, right? And and it will be a combination of the two. Just just what is your general impression of where this market is going?

 

Michael Stadler:

So it's I guess it's again depending on the viewpoint, because we were digging out some statistics here and based on what we have found with research and in the statistics is that actually 2/3 of the micro grid at the moment are grid connected. So they're not really niche markets when it comes to island, it's systems. Microgrids really live from this benefit. To do cost management, I mean we have really high energy prices in some parts of. The country we. Have demand charges, power charges, right time of use rates and 60% of those migrates that are in the market are actually designed to mitigate those cost numbers. So I would say that they are mostly built for economic reasons. And not for for islanded situations.

 

Jason Price:

So one of the challenges has always been cost justification, especially compared with just relying on utility infrastructure. What does the business case for microgrids look like today?

 

Michael Stadler:

Well, it's already briefly mentioned earlier, it's it's mostly cost management. Yes, migrates are built for resiliency purposes like in California, right, because we have earthquakes or for hurricanes. But we see that it's always about cost management and this is how you make money with the migrate because you want to. Manage your cost you. Want to be you want to participate? In in, in. Market. And maybe and solar service markets that change energy with utility. So the the business case is really cost management augmented of course with resiliency purposes. And of course, in some areas like Africa, we still see migrants getting built for electrification purposes and we are involved in those projects, but it's really cost driver and and we know that in, in many parts of the country, migrants can generate electricity. Cheaper than it would be provided by the utility system.

 

Jason Price:

I want to ask. About interconnection process the interconnection queue, it just seems to be such a hot topic at every conference I go to, it's just all this frustration. Strategies to you know help with the throughput of the interconnection queue that we see. So from your observation, are we seeing true grid defection going on or do most microgrids still maintain some level of grid connectivity? And and what does the environment mean for the utility leaders listening today you know? Decision makers today. What does it mean for them when we hear about, you know, the risks of grid and grid?

 

Michael Stadler:

Defection. Yeah. I mean, first of all, your apps. Are right, I mean. Everyone who comes to us either using this software or or engineering. There was this complaints about this problem, really get this interconnection and we have seen this already in the past with the infrastructure. So it's real and of course a lot of people are so disappointed that they say, well, I don't want to deal with this right. But at the end of the day, I mean the the distribution system provides some services and it would be foolish to completely disconnect in many cases. But we see great defect in the sense that future load growth is actually covered by the microgrid. So if a business wants to grow, then they are planning this in a way that the microgrid will cover the. Future growth and of course they stay interconnected because there's some energy exchange and makes it faster, but in most cases that we have seen, then there's some form of grid interconnection still going on, but it's not that they're upgrading it in this way. They can avoid this long lead times. It's just more like to hedging the risk of with this load growth that they're seeing. In providing the energy that is needed for different means.

 

Jason Price:

Let me ask you, you know, all these states have GHG, you know, goal reduction goals to hit. And so it's sort of sort of a two-part question here. The first is you're in a state that has aggressive GHG goals. And all these, let's say, all these microgrids come online and they're all gas powered, how was that treated in the the thinking process and the goal setting that the state had made and then following up for that I. Mean. My understanding with microgrids is that there are many means and many ways to to that. To run them to generate the power and it could. You know, renewable energy that runs the microgrid to gas driven energy to to, you know, to run the microgrid. So help us through this sort of this balancing act of, you know, the cost, the carbon generation, the reliability, this all this stuff plays into this entire equation.

 

Michael Stadler:

No, you you, you. Have very good points and and I mean. From from our perspective, Michael, it is a concept, right? I mean and I'm technology agnostic, I mean you can build a micro grid with just CHP systems, natural gas fired engines, right? Of course you can build in renewables, battery systems. It is. I mean we we can take care of almost 25 technologies in a microgrid when we model them and implement them right. But what you're really using at the end of the day depends on your objective and your goal. Because let's and and you're right, I mean in California, we have seen the last couple of years a lot of projects which were just focused on greenhouse gas reduction, right, and we saw. Projects popping up just with PV systems battery systems without. Right. But then it's also becoming a cost squash, right, because you can do maybe resiliency management with the CHP system with generator cheaper and not impacting your greenhouse gas emissions too much, right? So and this is how we are. Helping here with. With our technology, we have basically a platform, a system approach which. Helps you to really define your goals. Combine it with the market constraints and then figure out depending on what you want to achieve, what is the best technology mix and. For data centers, I mean we see at the moment a lot of projects which will of course put in batteries because they wanted to demand charge management. They want to reduce their costs or they want to participate in the market. Some of those projects also participate in ancillary service markets. So change exchange energy, but a lot of them actually use also combined. Empower. Because with a CHP system you can reduce your electricity demand for cooling because traditionally you have all your cooling met by electricity, which means you have high electricity, you have the. The the AI. The data center load you have the cooling load, but if you use the waste heat from a CHP system in an absorption chiller, you can reduce your. Actually your cooling load, So what you're really using in a micro? It depends on your objective on your loads and then this is how we're helping here. By providing this this modeling capabilities and knowledge to actually figure out which is the best technology combination for your. For your project, for your state, and of course it can be different, right? I mean, if you have cheap natural gas, then of course you will see some CHP systems or other engines popping up. If you're more concerned about the cost. But that's the flexibility for migrants, which I think is really important because you can run a micro grid which is natural gas based. You can run a microid which is renewable. Based or it can be a combination of it.

 

Jason Price:

Michael, we're we're talking now at a time when we're three months into the new administration. So I'd love to get some perspectives here on the role of government, the, the policies, the maybe the, the lack of consistency with some of these policy. Sees, you know there's been a push for grid resilience and even some funding around microgrids. As I understand, and are red, some of that's being pulled back now, what role do you see policymakers, regulators, other stakeholders in influencing the microgrid market? Do you feel like they're gonna help accelerate it? Do you think it'll help? It'll it'll. They'll put policies in place. To to to slow it down, or even retract growth in microgrids. Just where is the market going? Where where where's your head?

 

Michael Stadler:

On that, of course, historically, all this this funding was really supportive and helped us. To get the micro market going. And yes, the states put still a lot of money into migrates. But the point here is, I think microgrids are mature. Technology is a concept, right. So you don't really need funding to build a microgrid, you need some support when it comes to certain aspects of microgrids. For example, the control problem. And I mean how you control a migrate that is already implemented will impact the the benefits, right. And there's certain ways of doing this and there are more sophisticated ways. They're less sophisticated ways. And for example, in California, we see research is going to the in this in, in this area. Right. But overall and that's interesting maybe for some of you here listening, we actually posted the best quarter that we ever had at our company in the microbes market, so that we were really worried about this uncertainty. But since microgrids are really available and can reduce the cost, people are really doing them. What changed is we see them now, more like a cost reduction measure or resiliency measure until last November. So we've lasted. Ministration was more about greenhouse gas emission reduction. This is why we saw different technologies. In the mix, but now we actually see that a lot of people, data center industry communities are really interested to create a stable solution for cost reduction. And for us it has been actually great. And as I said, I mean I mean we had a lot of new projects and I have also some other data. I mean the last year the last 365. This we actually optimized 80,000 different micro case centers on our platform. So that's an indication that the market is really in an exponential growth. As I said earlier. And yes, there's uncertainty, but so far it hasn't materialized, at least on on our side.

 

Jason Price:

Could you throw some numbers out? Like what's the first of all, how many mic do you know how many micro grids are currently operating in the United States or North America? And then what is the average cost to develop a micro grid?

 

Michael Stadler:

So I I I think it would. Be not really. A good way to to throw out here every concrete number because you can have a micro really small and you can have a large migrate right? So I mean you can, I mean, I'm sitting here in California and my house here has a microid on it, which of course costs maybe 4 to $50,000 being battery, right. But then of course, you could have a data center which is in the. Hundreds of millions of I don't know, because, I mean we we wanna carry 1 GB loads, so there's no real number for this. And that's also the beauty beauty about microgrids because they can come in very small. Formed and large forms, they are very flexible. That's that's actually the point here. So I mean. It can be a couple of $100,000, but it of course it can't go into the hundreds of millions if it's a large system, right? And this also means that you can have microbes in the kilowatt range. I mean, I have a microwave running at my house, which is. In the 10 kilowatt range. And I'm saving their 80% of my cost. But of course you can have a data center which has 500 megawatts. And maybe saves 3040% of of the cost because it will be hard to really supply data center in the 500 mega range completely for microgrid unless you have new technologies like small module reactors which are not available at the moment right? And This is why data centers also focusing on generation resources to actually provide that power.

 

Jason Price:

All right, very good. All right. So Michael, we're going to give you the final word. However, we're going to go now to what we call the the Lightning Round, which gives us an opportunity to learn a little bit more about you, the person rather than you the professional. So we're gonna throw some questions at you very, very straightforward simple questions we ask you to keep your response to one word or phrase or sentence. And Are you ready?

 

Michael Stadler:

Sure, go ahead.

 

Jason Price:

So here goes. What's your guilty pleasure? TV show or movie?

 

Michael Stadler:

Sounds funny? Maybe. But it's Magnum Pi, the original series from the 80s, because it's really a cult thing and and it reminds me to growing up, actually so.

 

Jason Price:

That's great. That's a good. Show we're collecting lightning round questions from past podcast guests to ask future guests. So this question comes from Veronica Ung Kono at the National Wildlife Fund, who was on the show, and she asked the following question. What is 1 accomplishment that you've achieved that you would be excited to share with your younger self?

 

Michael Stadler:

Well, one thing is I would say stick to your goals and stay on track. Because I think I got a little bit diluted along the way and then it worked out nicely and I got a nice reward from the White House back in 2016. But I think it's really important to to really stick to your ideas and work them out.

 

Jason Price:

Now it's your turn. What lightning round question do you want to challenge a future guest to answer? And of course. It can be. Topical or and you know or anything that's off the wall, it's your call.

 

Michael Stadler:

Hey, when you were a kid. What? What? What was your dream job? And I asked about this because I always wanted to become a pilot. But how? I'm happy that I not became a pilot because it would be too much traveling for me now. So.

 

Jason Price:

I'm going to. Throw a curveball at you. What is some service or technology that no longer exists, but perhaps was available in the past? You would vote to.

 

Michael Stadler:

Bring back cell phones because I'm too fed up with smartphones because they just take too much of my time.

 

Jason Price:

Alright. And the last question, the question we often ask many of our guests and that is what are you most passionate about?

 

Michael Stadler:

It's the Nexus between Annachi and software, and I think This is why I'm doing this job that I'm doing. I really like hands on work in the software field and I think This is why microbes are so great, because they need a lot of software and planning.

 

Jason Price:

Well, since you were a champion at the Lightning round one, I said it would give you the final. Word so knowing. That you've got a listening audience of utility leaders and decision makers. What is one piece of advice or or reason for optimism as you give your final soliloquy to the?

 

Michael Stadler:

Science. Well, I realized that I'm pretty strong. Migrates and I think the utility industry does not always want to hear. Bad, right? But I think I I I don't think that that the utility system is going away because it it's it's really providing a good service and it really created the foundation for a strong economy. I mean worldwide, right. But I think some things can be done more efficiently now with microgrids. And I think it would be good to see this. There's a combination between utility system and migrate because I think it also could say. If some money, the utility industry and we know that some utilities working on microgrids, but when it comes to infrastructure investments, I personally would be very careful doing them because they could be strained at some point. For example, if small modular reactors are really becoming real and and they're located with data centers, then all these investments that we are doing right now. Infrastructure might be obsolete, so I think it's migrates can be really good if we use them to. That way, and if I would be in a utility industry, I mean, I would certainly build them and and and plan them for my clients.

 

Jason Price:

OK, well, thoughtful and insightful words from someone who sits in the middle of the microgrid world. So definitely, you know, definitely things to think about. And I know that our audience, they're going to have lots of questions and comments, and we invite our listeners to post questions and engage with Michael and keep the conversation going. Now until then, though, we want to thank you for sharing your insights on today's episode. Of the podcast.

 

Michael Stadler:

Thanks for having. It was a pleasure.

 

Jason Price:

You bet. You can always reach Michael through the energy central platform where he welcomes your questions and comments. And we also give a shout out of thanks to our podcast sponsors that made today's episode possible. Thanks to West Monroe, Westboro is a leading partner for the nations largest electric, gas and water utilities, working together to drive grid modernization, clean energy and workforce. Transformation West Monroe's comprehensive services are designed to support utilities in advancing their digital transformation, building resilient operations, securing federal funding, and providing regulatory advisory support. With a multi displayed team of experts, Westboro offers a holistic approach that addresses the challenges of the grid today and provides innovative solutions for a sustainable future. And once again, I'm your host Jason Price plug in as they fully charge in the discussion by hopping into the community at energycentral.com and we'll see you next time at the energy. Central Power Perspectives podcast.

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Power Perspectives features conversations with thought leaders in the utility sector. At least twice monthly, we connect with an Energy Central Power Industry Network community member to discuss compelling topics that impact professionals who work in the power industry. Some podcasts may be a continuation of thought-provoking posts or discussions started in the community or with an industry leader that is interested in sharing their expertise and doing a deeper dive into hot topics or issues relevant to the industry.

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