The electricity grid has become the principal bottleneck to the energy transition. Constructed several decades ago for centralised, static fossil-fuel generation, today’s electricity infrastructure is increasingly struggling to accommodate distributed renewable energy, electrification, artificial intelligence and rapidly growing demand from data centres. While governments and industry have invested considerable effort in modernising electricity networks, significantly more work is needed to develop complementary solutions that can accelerate the deployment of renewable energy.
One area requiring particular attention is the commercialisation of decentralised electricity systems. Although engineering solutions for microgrids have advanced considerably, comparatively less attention has been devoted to developing the financing mechanisms, governance frameworks, regulatory arrangements and business models needed to deploy these systems at scale. Emerging financing mechanisms, including micro-markets, may enable smaller transition brokers—often unable to access the capital pools of large institutional investors—to mobilise investment. Given that institutional investors collectively manage more than €8 trillion in assets, designing financial structures capable of directing this capital towards decentralised electricity systems could become one of the defining challenges—and opportunities—of the next phase of the energy transition (Trofimova-Elliot, 2026).
Today’s electricity grid was largely built for an energy system that no longer exists. Integrating intermittent renewable electricity into this infrastructure has become a multi-trillion-dollar question. Governments, regulators and industry have been designing new instruments to address this challenge for years.
During a brief conversation with Mark McAllister, Chair of Ofgem , at the Infrastructure Investor Network gathering in Berlin on 20 March 2025 ( PEI ), he explained that the UK’s Clean Power 2030 Action Plan had been developed specifically to address these barriers. The reforms include replacing the traditional “first-come, first-served” grid connection process with a “first-ready, first-needed” model, expanding transmission infrastructure, accelerating planning and consenting procedures, and introducing coordinated system planning through the National Energy System Operator.
These reforms represent an important step forward. Yet, almost two years later, I am still not convinced that either network operators or project developers believe progress is moving quickly enough—or that the current measures alone will remove the existing bottlenecks. The emergence of another major competitor for electricity capacity—AI data centres—has only intensified the challenge of integrating renewable energy projects into the grid.
As extensively discussed during the Clean Power 2030 discussions organised by Solar Media Limited (part of Informa Markets) in London, the gap between current deployment and future ambitions highlights the urgency of addressing grid access delays, supply-chain constraints, planning bottlenecks and investment uncertainty.
Yet many conversations with network operators reflected a degree of institutional inertia. The existing grid was repeatedly described as infrastructure that was designed to be left alone. “A machine would be installed and forgotten for twenty years.” Records are often incomplete. Some underground cables are fifty or sixty years old. Digital monitoring remains limited. The pace of grid reform remains slower than the pace at which electricity demand is evolving.
In this environment, I believe we also need Plan B.
By Plan B, I mean the rapid commercialisation of decentralised electricity systems—particularly microgrids supported by micro-markets—that can co-evolve alongside the national grid. Plan B is not an alternative to grid modernisation, nor is it intended to replace the national electricity system. Rather, it is a complementary strategy that reduces pressure on the grid while enabling faster deployment of renewable energy.
The rapid commercialisation of microgrids is therefore becoming increasingly important.
This article defines micro-markets as small, geographically or functionally bounded electricity markets that emerge around decentralised energy systems. If microgrids provide the physical infrastructure, micro-markets provide the economic architecture. They establish the pricing mechanisms, contractual arrangements and financing structures that enable decentralised electricity systems to become commercially viable. However, financing must also be available at scale if these markets are to be deployed successfully.
I increasingly hear this need expressed by stakeholders across the energy sector. During my Chair’s closing remarks at the Infrastructure Investor Network Global Summit – Energy Transition Forum (Trofimova-Elliot, 2025), I argued that integrating renewable energy into electricity networks remains one of the defining challenges of the transition and highlighted the need for innovative financing mechanisms capable of supporting smaller decentralised markets. Scott Jacobs (Generate) summarised the challenge succinctly:
“We need to create smaller markets.”
Practical examples are already emerging. Ms Siyao FENG 冯思遥 , Deputy Secretary General and Head of Research at the China Energy Storage Association (CESA), explained that successful deployment is already taking place across isolated islands, industrial parks and county-level microgrids. She emphasised that there is no one-size-fits-all solution.
Ms Feng also made an observation during the World Economic Forum meeting in Tianjin that particularly resonated with me:
“Industrial clusters matter because they are the critical bridge between national strategy and enterprise innovation. Many strong ideas and policy ambitions only become real at the cluster level, where they can be translated into collaboration, real-world application scenarios, standards and scalable outcomes.”
The encouraging news is that empirical settings for this research already exist.
From discussions with industry, organisations such as Northern Powergrid , Mirova , Reed Management should be able to provide case studies for designing financing structures, business models, etc. for micro-markets and broader institutional arrangements for decentralised electricity systems.
However, more work is also needed beyond engineering. Economics, finance and strategic management must evolve alongside the technologies they seek to explain. Microgrids are decentralised, dynamic systems, yet many economic models remain rooted in assumptions of centralised production, while management research—upon which many policy recommendations are based—continues to rely heavily on linear, causal frameworks that largely reflect the industrial, American paradigm of oil (e.g., Teece et al., 1987).
References:
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International Energy Agency (2025). Electricity 2025.
Intergovernmental Panel on Climate Change (2023). AR6 Synthesis Report.
Lasseter, R. H. (2002). MicroGrids. IEEE Power Engineering Society Winter Meeting.
Markard, J., Raven, R., & Truffer, B. (2012). Sustainability transitions: An emerging field of research and its prospects. Research Policy, 41(6), 955–967.
Mealy, P., Barbrook-Johnson, P., Ives, M. C., Srivastav, S., & Hepburn, C. (2023). Sensitive intervention points: a strategic approach to climate action. Oxford Review of Economic Policy, 39(4), 694-710.
Teece, D. J. (1987). The Competitive Challenge: Strategies for Industrial Innovation and Renewal. Pensacola, FL: Ballinger Pub. Co.
Trofimova-Elliot, I. (2025). Chair’s Closing Remarks and Call to Action, Infrastructure Investor Network Global Summit – Energy Transition Forum.
Trofimova-Elliot, I. (2026). Sustainability and Value Transitions: The Strategic Role of Cross-sectoral Interconnectedness and Transition Brokers. Business Strategy and the Environment. https://doi.org/10.1002/bse.71253