A microgrid is a small-scale power grid that can operate independently or collaboratively with other small power grids. The practice of using microgrids is known as distributed, dispersed, decentralized, district or embedded energy production.
Any small-scale, localized power station that has its own generation and storage resources and definable boundaries can be considered a microgrid. If the microgrid can be integrated with the area's main power grid, it is often referred to as a hybrid microgrid.
Microgrids are typically supported by generators or renewable wind and solar energy resources and are often used to provide backup power or supplement the main power grid during periods of heavy demand. A microgrid strategy that integrates local wind or solar resources can provide redundancy for essential services and make the main grid less susceptible to localized disaster.
Buildings equipped with electric generation capabilities through solar panels and contingency generators can also generate energy and revenue during downtime. By joining together with smart grid deployments, excess energy can be sold back to local microgrids to create revenue in addition to providing resilience and capacity to local electrical grids.
See a video about the microgrid at the University of California at San Diego: