Microgrid 101
What a commercial microgrid is and how to find out if your facility needs one.
A plain-English guide for California commercial and industrial decision-makers. .
Read end-to-end, take the 2-minute self-assessment, or skip ahead to the Feasibility Study.
What a commercial microgrid actually is
A commercial microgrid is your facility’s energy system, organized.
A commercial microgrid is the combination of on-site generation, on-site energy storage, and the controls that decide when to use which one. For most California commercial sites, on-site generation is solar PV. On-site storage is a battery. The controls decide minute-by-minute whether to pull from the utility, dispatch the battery, take from solar, or do some combination. The system stays connected to the utility under normal conditions and disconnects automatically — islands — when the grid goes down. The result is a facility that runs on its own resources during outages and runs more economically than a utility-only connection during normal operations. A microgrid is not a generator. It is not solar by itself. It is the integrated system that produces, stores, and dispatches energy at your facility, with the utility as one input among several rather than the only input.
How a microgrid operates day-to-day vs. during a grid outage
Two operating modes. One system.
Day-to-day
Most days, the system stays connected to the utility. The controller dispatches solar to the facility first, charges the battery from solar surplus, and uses the battery to shave demand-charge peaks during the utility’s expensive hours. The utility fills any gap. The visible business outcome is a lower, more predictable monthly energy bill — fewer surprises in the demand-charge column, fewer time-of-use spikes hitting the operating budget.
During an outage
When the utility loses power — wildfire shutoff, equipment failure, a planned PSPS event — the microgrid disconnects from the grid in milliseconds and runs the facility on solar and battery alone. Critical loads identified during design stay powered. The site continues operating without the staff having to start a generator, transfer loads manually, or wait for utility restoration. When the utility comes back, the system reconnects automatically.
What a microgrid does for a California commercial site
Four things a microgrid does for a California commercial site
Cuts demand charges
The battery dispatches during the utility’s most expensive hours, lowering the peak demand the utility meters and bills against. For most California commercial sites this is the largest single line item in the energy bill — and the line item with the most predictable savings.
Stabilizes monthly energy expense.
Time-of-use rate volatility, demand-charge surprises, and rate-case increases all flow through to a smaller share of your monthly utility expense. The microgrid converts variable utility exposure into a more predictable on-site expense profile.
Keeps critical loads powered through outages.
When the utility goes down — PSPS, equipment failure, weather event — the system islands and continues running the loads identified during design. No generator start, no manual transfer, no wait for restoration.
Defers or eliminates a generator.
For many California commercial sites, the microgrid replaces or downsizes a diesel generator on the operating budget — fewer fuel deliveries, fewer compliance permits, no run-time pollution. Sites that need beyond-12-hour resilience pair the battery with a linear generator or fuel cell instead (see Independence).
Capability #1 in pictures. The dotted line shows your facility’s daily load curve. The shaded area shows where the battery dispatches to keep your peak demand below the utility’s billing threshold.
Why California commercial buyers are looking at microgrids now.
California’s three large investor-owned utilities (PG&E, SCE, SDG&E) have all filed multi-year rate cases that increase commercial rates above the rate of general inflation. The cost of doing nothing is no longer flat — it’s a rising curve.
Under California’s Net Billing Tariff in effect since 2023, exported solar earns substantially less than it did under the prior NEM 2.0 regime. The economics now favor self-consumption with storage over export-and-credit. A microgrid is the architecture that makes self-consumption with storage work; solar-only systems have lost ground in this regime.
California commercial sites in wildfire-risk territory face Public Safety Power Shutoffs that can last hours to days, and grid-equipment-driven outages outside PSPS season are also rising. The cost of an unplanned operational shutdown is increasingly part of the energy decision, not a separate facilities decision.
The 30% ITC under §48E remains available for projects that meet safe-harbor requirements before the published transition date. Projects that miss the window face a different credit structure or no credit at all. Faraday’s commitment to domestic-content adders is held; the energy-community and low-income adders depend on site eligibility and government rule-making.
The right way to think about a California commercial microgrid in 2026 isn’t “should I add a capital project to my budget.” It’s: you are already paying for energy. Today that payment goes to the utility on a rising curve with embedded outage risk. A microgrid swaps that payment for a lower, more predictable monthly expense to Faraday under a financing structure that includes resilience as part of the package. Same line item. Different counterparty. Lower number. More predictable. Outage-resilient.
Is a microgrid right for your facility?
Six short questions. Two minutes. The output is a starting point — which Faraday tier looks like the right fit for your site, and what your next step should be. The Feasibility Study confirms the fit for your actual interval data and rate schedule.
Q1. > What’s your facility’s primary use? > > ○ Cold Storage > ○ Food Processing > ○ Biotech & Pharma > ○ Manufacturing & Multi-Tenant > ○ Healthcare & Institutional > ○ Other (short text field appears)
Q2. > What’s your facility’s approximate size? And, if you know it, your peak electrical demand? > > Square footage: > ○ Under 50,000 ○ 50,000–150,000 ○ 150,000–500,000 ○ Over 500,000 > > Peak demand (kW): > ○ Under 100 ○ 100–200 ○ 200–500 ○ 500–2,000 ○ 2,000+ ○ Not sure
Q3. > Which utility serves your site? > > ○ PG&E ○ SCE ○ SDG&E ○ Municipal CA utility (LADWP, SMUD, etc.) ○ Out of California / different state ○ Not sure
Q4. > How long does your facility need to ride through a grid event? > > ○ Up to about 4 hours is fine — short outages don’t seriously hurt us > ○ Most of a workday (4–12 hours) — we need to keep operating > ○ Multi-hour isn’t enough — we need to operate through multi-day events > ○ Not sure / depends on what kind of event
Q5. > What’s driving your interest in a microgrid? (Select all that apply.) > > ☐ Demand charges are dominating the energy bill > ☐ Total cost is rising every year and we can’t predict the increases > ☐ Bills are fine — resilience or sustainability/ESG is the actual driver > ☐ We don’t pay much attention to the bill — it just gets paid
Q6. > Do you own or lease the facility? > > ○ Own > ○ Lease (long term, 10+ years remaining) > ○ Lease (short term, less than 10 years remaining) > ○ Multi-tenant — depends on tenant
Q7. > Are your facility’s energy needs unusual or advanced enough that a standard product likely won’t fit? > > If any of these apply, pick Yes: portfolio-scale objectives across multiple sites; advanced controls and automation; ADR (automated demand response) revenue participation; heat recovery integration; geothermal integration; tax-equity or balance-sheet structuring needs that go beyond standard PPA/lease. > > ○ No — a standard, packaged tier is what I’m looking for > ○ Yes — my needs go beyond a packaged tier > ○ Not sure
What a commercial microgrid is not.
Not a backup generator
A generator runs on diesel or natural gas, sits idle 99% of the time, and only earns its keep during outages. A microgrid runs every day — shaving demand charges, dispatching solar, stabilizing the energy bill — and also keeps the lights on during outages. The economics work because it’s earning during normal operations, not just standing by.
Not solar by itself
A solar-only system produces power only when the sun is shining, exports the surplus to the utility (now under NEM 3.0’s reduced credit), and shuts down during a grid outage. A microgrid pairs solar with on-site battery storage and the controls to dispatch both — including during outages. Self-consumption with storage is the architecture that NEM 3.0 incentivizes; solar-only is not.
Not a UPS
A UPS — uninterruptible power supply — bridges seconds-to-minutes of grid loss for a small set of sensitive equipment, like a server rack or a control room. A microgrid is sized for hours to days of facility-scale operation. The two can complement each other; they are not substitutes.
Not a residential battery scaled up.
A residential battery is a sub-20-kWh appliance optimized for one home’s needs. A commercial microgrid is a different class of system entirely — typical Faraday installs are hundreds of kilowatts of solar paired with multi-megawatt-hour battery capacity, with industrial-grade controls, switchgear, and interconnection. The two share underlying chemistry; almost nothing else.
Faraday’s commercial microgrid product line in one screen.
Faraday packages California commercial microgrids into four pre-engineered tiers — each scoped to a specific facility profile, each priced as an integrated system, each delivered on a fixed timeline. Most California commercial sites land at Endurance. The tiers below are starting points; the Feasibility Study confirms the right fit for your site.
The Feasibility Study is how you find out if it pencils for your site
The reading is the starting point. The Study is the answer.
Microgrid 101 reading and the self-assessment both give you a directional view of whether a commercial microgrid is right for your facility. Neither one knows your actual interval data, your specific rate schedule, your critical-load list, your incentive eligibility, or the on-site constraints that determine whether the system pencils for your particular building. The Feasibility Study does. It’s a fixed-fee, fixed-scope, fixed-timeline engineering and financial analysis that returns a recommended tier, a system concept sized to your loads, financial models for PPA and equipment-lease and cash-purchase paths, an incentive-stack assessment, and a clear go-or-no-go recommendation. The fee credits 100% toward your install project if you proceed. We’d rather show you the answer than ask you to take it on faith.
Common questions, quickly answered
The right framing is monthly expense, not lump-sum cost. Most California commercial buyers finance the system through a PPA (Power Purchase Agreement) or an equipment lease — paying a predictable monthly amount lower than the utility expense it replaces, with no capex out-of-pocket. The Feasibility Study delivers the exact pricing for your site, in PPA, lease, and cash-purchase forms.
The Feasibility Study takes about 30 days from data authorization to delivered report. From signed install contract to commissioning is typically 12–24 months, depending on tier scope, utility interconnection timeline, and equipment lead times. PSPS season and utility queue position both influence the schedule.
Yes — most leased commercial sites can host a microgrid under the right financing structure. PPA financing is well-suited to long-term leases. Multi-tenant sites and short-remaining-term leases need additional structuring; the Feasibility Study screens for these issues early so you don’t commit to a path that can’t close.
PPA agreements are structured with assignment provisions and counterparty protections. The physical system stays at your site; the financing is a contractual obligation that can be assigned to another counterparty. The Feasibility Study walks you through the specific protections in the financing structure proposed for your site.
The Study is real engineering and real financial analysis — load-data review, sizing, incentive-stack analysis, financial modeling, system concept. Free studies subsidize themselves by upselling unnecessary scope. A paid, fixed-fee, fixed-scope Study aligns our incentives with yours: we get paid to give you a clear answer, including “no” if the project doesn’t pencil.
Find out if a Faraday Microgrid is a fit for your site.
A free 30-minute screening call. If your facility is a fit, the next step is a 30-day, fixed-fee Feasibility Study.