A microgrid is a localized group of electricity sources and loads that normally operates connected to and synchronous with the traditional wide area synchronousgrid (macrogrid), but can also disconnect to "island mode" and function autonomously as physical or economic conditions dictate.In this way, a microgrid can effectively integrate various sources of distributed generation (DG), especially Renewable Energy Sources (RES) - renewable electricity, and can supply emergency power, changing between island and connected modes.Control and protection are challenges to microgrids.A very important feature is also to provide multiple end-use needs as heating, cooling, and electricity at the same time since this allows energy carrier substitution and increased energy efficiency due to waste heat utilization for heating, domestic hot water, and cooling purposes (cross sectoral energy usage).A microgrid is capable of operating in grid-connected and stand-alone modes and of handling the transition between the two. In the grid-connected mode, ancillary services can be provided by trading activity between the microgrid and the main grid. Other possible revenue streams exist. In the islanded mode, the real and reactive power generated within the microgrid, including that provided by the energy storage system, should be in balance with the demand of local loads. Microgrids offer an option to balancing the need to reduce carbon emissions while continuing to provide reliable electric energy in periods of time that renewable sources of power are not available. Microgrids also offer the security of being hardened from severe weather and natural disasters by not having large assets and miles of above-ground wires and other electric infrastructure that needs to be maintained or repaired following these events.