Unplanned shutdowns are always challenging for large industrial facilities, but the power outage in February 2024 at the BP Whiting refinery in Indiana proved particularly problematic.

The outage, later traced to the failure of a single transformer, forced the refinery - the sixth largest in the U.S. – to shut down for more than six weeks, costing the company millions in lost production and resulting in a sizeable CO₂ release into the atmosphere. Beyond those immediate effects, the shutdown caused local gas prices to increase by as much as $0.20 cents per gallon, and national prices to jump by more than $0.12 cents on average.

While the incident highlights the deeply interconnected nature of industrial systems and the energy value chain, and how vulnerable that system is to unexpected disruptions, it also serves as a near-perfect example of why a growing number of companies across energy-intensive industries are turning to an increasingly relevant and popular technology – microgrids.

Delivering flexibility and reliability

For decades, asset-intensive companies and other large facilities like hospitals, airports and data centers have relied on costly backup generators to provide emergency power in the case of outages or other disruptions to the grid and have supplemented grid power by their own captive power generation.

While such supplemental power supply systems have in the past been effective for keeping critical units and systems operating, they are ultimately limited. They were typically installed with simple control, monitoring and SCADA systems and predated the current complexities of the grid and of power markets. While these arrangements do a reasonable job of ensuring power availability to critical units and can supplement the grid during periods of peak power demand, these legacy systems are not able to handle the incorporation of renewable power generation, cannot predict supply and demand enough for electricity market participation, and fall short as power grid interruption events become more frequent.

Microgrids, by comparison, offer far greater flexibility and reliability.

Essentially a self-contained electricity system designed to serve a single plant site or infrastructure location – oil refineries, chemical or metals refining plants, data centers, airports and more are all ideal candidates – a microgrid allows companies to own and manage their own on-site generation and management system to predict and respond to power supply and load fluctuations, and to disconnect (island) from the grid when necessary.

When implemented with advanced digital grid management tools, microgrids afford companies far more control over how power is produced, distributed and consumed across their assets, allowing them to optimize day-to-day operations. That greater management capability also enables companies to incorporate renewable resources, like solar and wind power, and battery storage into their operations, helping them optimize asset power consumption and cost as they balance margins and production against their carbon footprint.

Microgrid management tools are invaluable in predicting availability of intermittent renewable generation resources, allowing them to proactively plan for situations where power supply may fall short, and when supply peaks, even sell excess power back into the grid.

Most importantly, though, microgrids – because of their self-contained nature – can be “unplugged” from the larger grid if or when disruptions happen.

That ability is particularly important, as there is evidence that such disruptions are becoming more common.

In the U.S. alone, there were at least three major refinery shutdowns in the first seven months of 2024 caused by power outages. In two of the three cases, more than two weeks were needed before production was back to normal levels.

While the reasons for those outages may include everything from a damaged transformer to impacts from severe storms, recent studies by Bloom Energy suggest that more than three-quarters of commercial and industrial power customers experience one to two outages per year – making their ability to deal with such disruptions a key consideration.

With a microgrid and digital grid management tools, operators have far greater insight into how power is used across their operations. With that improved situational awareness, they can act quickly in the case of a disruption to not only unplug from the larger grid but can also make specific decisions to keep critical systems up and running to allow for more orderly shutdowns. The result is not only safer, more efficient operations, but less risk to assets and workers, and reduced downtime.

As the grid ages and becomes more stressed in certain regions, some utilities and governments are pursuing active strategies of promoting microgrids. Utilities in these regions are working as fast as they can, through the planning and regulatory processes that they work within, to increase generation, transmission and distribution capacity. In some areas, the projected future demand for electricity is outstripping the speed with which utilities can respond. In those areas, microgrids can serve both as a power reliability strategy for heavy electricity consumers but also as a grid safety net for the regional utility, where a network of privately owned microgrids connected to the grid can add to the overall grid resiliency. In regions as separated as upstate New York, California and Western Australia, such strategies are underway.

Support a changing business model

The Energy Transition is a challenge will continue to drive the need for significant global investments in the grid over the next 15 years. As new forms of energy are incorporated – including wind, solar, geothermal and hydrogen – the grid is more complex than ever before. Industrial energy users are becoming “prosumers” who both produce and consume energy and may sell some power back to the grid. Business boundaries are becoming blurred, and for industrial and energy-intensive companies, opportunities are coming amidst complexities, but also the risks that come from disruptions to that system are more significant.

For companies where business continuity depends on reliability of electricity supply, microgrids are quickly becoming an essential tool that offers asset-intensive companies power reliability and the opportunity to better optimize their operations to reach higher levels of operational excellence while also increasing sustainability.