Thinking about a microgrid for your business? Smart move—but the upfront costs can feel like a punch to your bottom line. Installing a microgrid system is a significant investment that requires careful planning and budgeting. Whether you’re customizing solar panels for your roof space, exploring battery storage, or making a full-blown overhaul of your energy strategy, the price tag depends on everything from system size to location. But before you start crunching numbers, let’s find out what goes into a proper installation. And here’s the kicker: there’s a way to get all the benefits without the upfront costs (wink, wink). Sound like something you’d be interested in? Keep reading for a cost breakdown of the key components.
Equipment and Installation
According to the Department of Energy, the largest portion of upfront costs typically goes toward equipment and installation, accounting for a whopping 75% of the total budget! This includes:
- Generators: Natural gas generators cost about $700 to $1,000 per kilowatt, while diesel generators may be more expensive.
- Energy Storage: What if you want to store the energy your microgrid produces? Battery storage systems will run between $300 and $400 per kilowatt-hour of discharge capacity.
- Renewable Energy: Other renewable energy sources like solar panels add to the cost, with prices varying based on capacity and technology.
- Control Systems: Microgrid controllers, considered the “brain” of the microgrid, can range from $50,000 to $90,000 for systems depending on how many elements (sensors, assets, or site-specific solutions) you need to control. These costs can increase significantly for more complex setups.
The Cost of Location
Construction oversight and project management account for about 15% of the total cost. This includes labor, site preparation, and logistical expenses. Geographic and environmental factors also play a key role in costs, and projects in remote or challenging environments may incur higher costs due to transportation and installation challenges since they often lack existing infrastructure to support a system of this magnitude. Regions with extreme weather conditions or limited grid access will require equipment that can better support those conditions, including extensive interconnection upgrades, further increasing out-of-pocket expenses.
Design and Engineering
Design and engineering make up roughly 10% of the upfront costs. This includes surveying the electrical system, running analyses, creating plans, and ensuring compliance with environmental and regulatory standards. Complex projects may require additional engineering expertise, increasing this portion of the budget.
The Price of Regulations and Permitting
Navigating the regulatory landscape can be expensive. Aside from grid interconnection and environmental compliance, permitting may vary by jurisdiction, but can delay projects and increase overall expenses.
Economies of Scale
Larger microgrid projects (between 2 MW and 10 MW) tend to benefit from scaling up—like buying in bulk to save more, reducing the cost per megawatt. However, smaller projects, especially in the small-to-mid-sized commercial sector, often have higher normalized costs, averaging around $4 million/MW.
Next Steps
Worried about all that financial planning and budgeting? You needn’t be concerned! Catalyst Power eliminates these expenses through our fully owned and operated Connected Microgrid®. This solution delivers immediate savings and energy resilience without the pressure of upfront costs. By handling the maintenance and installation of the system, we remove the high-cost barrier to entry, making sustainable energy more accessible to your business. By leveraging on-site solar generation and optional battery storage, you can immediately lower your energy bills and achieve better budget certainty for your bottom line. Contact an Energy Expert today!