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Microgrids: Transforming data center energy resilience
As AI demands surge, data centers are turning to microgrids for resilience and cost efficiency, ensuring reliable energy amid rising risks and uncertain power supply.
The importance of reliable and resilient energy sources has become essential for data centers as demand for data processing rises, especially with the growth of AI.
Recent events, such as the March 2026 cyberattack in Foster City, California, disrupted internet access for several days, affecting over 30,000 residents. The cyberattack did not affect the central energy grid, but it raises concerns about vulnerabilities in the current energy infrastructure. To mitigate these risks, organizations are increasingly turning to microgrids to achieve energy independence.
From enhancing resilience to lowering operational costs, microgrids are becoming crucial for companies facing energy supply uncertainties. This article explores how microgrids are transforming data center energy management, their benefits and real-world examples of organizations adopting the technology.
Why use microgrids?
Microgrids enable data centers to operate independently from the central power grid, ensuring continuous operation even during external disruptions.
For some remote communities, there is no alternative. They either build their own microgrid or face a lack of energy access.
However, for corporate data centers and company edge operations that might run their own micro data centers, microgrids can free organizations from complete dependence on a central or regional power grid, even though grid services are available. A microgrid can be a real game-changer in ensuring uptime and continuous data center operations, no matter what happens elsewhere.
Who's using microgrids?
Large AI data centers, already under scrutiny from communities concerned about rising energy consumption and costs, are adopting microgrids partly to reduce public backlash. They are also doing this because they recognize that they will be running large AI workloads without a clear understanding of how much energy AI processing will require in the future.
These data centers want to stay operational regardless of what happens to the central or regional power grid. By establishing their own microgrid energy islands, they can ensure continuous operation.
For example, in 2023, Microsoft built a data center with a microgrid in San Jose. The Microsoft microgrid uses natural gas for energy and can switch to it if there is a power outage on the main grid that the data center normally depends on.
Meanwhile, in Dublin, Ireland, the Pure Data Centre Group developed a localized power generation system to support its AI processing without affecting the city's main power grid.
The military also recognizes the need for microgrids in both field and stationary operations. An example is Raytheon's Marine Corps Air Station in Miramar, California. According to the National Laboratory of the Rockies, this microgrid uses "a central controller with PV inverters, a zinc bromide flow battery energy storage system, utility service entrance equipment, metering, and building electrical loads," and explains that the goal is "to demonstrate energy security, provide [micro grid] islanding capability, and reduce energy costs."
Remote areas and small communities are also adopting microgrids. In Nepal, four isolated villages now have electricity for the first time, thanks to a microgrid powered by water from nearby rivers.
Ta'u, an island in American Samoa, is 4,000 miles from the U.S. West Coast. Still, it provides its residents with renewable energy by installing a microgrid that uses abundant solar power and diesel generators to distribute energy across the island.
How much do microgrids cost?
Given today's risks, the idea of a self-contained island microgrid will resonate with nearly everyone. However, there are costs and implementation challenges to consider.
The first component that sites consider is a generator. Most central data centers already have generators for disaster recovery and failover when primary power sources fail, but generators only provide temporary relief.
A microgrid has its own backup generator powered by gas or diesel. It also needs a battery to store energy and likely relies on off-grid energy sources like solar or wind. This equipment must be purchased and installed, along with a central control board to manage the microgrid. There will also be labor costs for installation and training, regulatory permit and inspection fees that vary by location, insurance and financing expenses. All these factors add up to at least a six-figure investment, even for smaller sites.
As of 2024, the Department of Energy estimates that microgrids cost $2 to $5 million per megawatt.
Ultimately, justifying the cost of a microgrid investment depends on the level of risk an enterprise is willing to assume if it opts not to have one.
Strategizing the data center for microgrid technology
CIOs working to justify and install microgrids understand from the start that strategizing and planning for microgrids is more than just a disaster recovery and failover exercise.
IT leaders are considering microgrids because the growth of AI still hasn't provided a clear picture of future energy needs. Regional power companies also lack certainty but are aware that their past efforts to upgrade facilities and infrastructure have been slow and difficult. That's why builders of large AI data centers, such as Microsoft, Google and Amazon, are incorporating microgrids in their strategies for constructing AI data centers. They aim to become self-sufficient.
Although enterprises lack the resources and scale of the AI giants, they also have businesses to run and edge locations to support. If enterprises want to free themselves from reliance on central and regional power grids and scale up for AI workloads on their own terms, they need to go beyond investing in gas and diesel generators for failovers. Instead, they should explore power generation, battery storage and the management of their own mini-power companies.
Mary E. Shacklett is president of Transworld Data, a technology analytics, market research and consulting firm.
