A Local Energy System is a small energy system, containing both (renewable) energy resources and consumers, in which production and consumption of energy are largely balanced. There are various terms for this concept, including Microgrids, Local Energy Systems or Local Energy Communities, each with a somewhat different emphasis.
They may also contain conventional solutions with a heat production component (e.g. cogeneration) and dispatchable generation units (e.g. a diesel generator) which have the potential to reduce the overall CO2 content of energy supply.
Local Energy Systems may provide solutions to specific technical, social or economic challenges, but may also present opportunities for innovative business and ownership models.
Essentially, they are a microcosm of a conventional energy system.
Local Energy Systems typically seek to match local energy resources with local demand within a bounded, small energy system. The concept is now moving from island and remote communities into mainstream markets, from subsidy to value-driven systems. Whilst this is unlikely to result in wholesale grid defection, we expect to see increasing local autonomy.
This raises significant challenges to incumbent energy suppliers and network operators, whilst simultaneously providing opportunities for innovative technical and business models, both to incumbents and to new market entrants.