"In 2009, the American Council of Civil Engineers (ACEC) graded the U.S. grid with a lowly D+. (This nearly flunking grade is one of the prime reasons why North America in general – and the United States in particular – is the world’s most active microgrid market.) The main shortcoming the ACEC identified was a lack of investment in new transmission capacity to keep up with growth in demand and corresponding investments in new generation sources.
Nevertheless, Lawrence Berkeley National Laboratory (LBNL) statistics show that 80% to 90% of all grid failures begin at the distribution level of electricity service. Microgrid advocates argue that power quality and reliability can be dramatically improved at the local distribution level through microgrid technologies. Since electricity travels at almost the speed of light (186,000 miles per second), a power outage of just 1/60th of a second can crash critical radar systems or life support systems in Veterans Administration (VA) hospitals. On average, each U.S. consumer suffers a 4-hour power loss annually, an outage rate 30 times higher than Japan’s and also much higher than Europe’s.
Utility smart grid programs raise the level of homogenous power quality for all captive utility customers, a noble and prudent way to facilitate better service across the entire utility rate base. On the other hand, microgrids functioning within the developed world’s utility transmission and distribution networks offer the flexibility to provide heterogeneous power products and services to meet specific end-user needs and requirements.
Pike Research views the microgrid as a building block in the ultimate smart grid, designed to serve the needs of energy producers and consumers, but most importantly, distribution utilities that have an obligation to serve. This view is not unanimous. True, the terms “smart grid” and “microgrid” are not synonymous. In the eyes of some, these two terms could actually offer two competing visions of how best to bring technological innovation to the electricity grids of the United States and the world. The smart grid’s goal and the microgrid’s goal are the same: maximize services provided by generation and storage assets through embedded intelligence, while dramatically boosting efficiencies, thereby minimizing costs. However, the smart grid and the microgrid appear to offer two potentially different paths forward, as depicted in Figure 2.1. In short, smart super grids represent a top-down approach, while microgrids are, generally speaking, a bottoms-up solution platform."
-Pike Research: Utility Distribution Microgrids, published 3Q 2012