There's something going on in Kwigillingok, Alaska--a town with just 350 residents--that could change your life. Kwigillingok is off the power grid because it is too remote to be on one and generates its own power, which now includes electricity from wind turbines. This is the epitome of a microgrid, or a small closed power system that can operate independently, or in conjunction with, the larger power grid. Such small systems could be the future of power.

Off again on again
This tiny Alaskan village is so interesting because it combines two aspects of larger power grids in a single isolated system, which makes it a perfect testing ground. There is a diesel power plant that has been combined with recently installed wind turbines, essentially a typical power plant paired with a renewable power source. So what?

Source: Seth Ilys, via Wikimedia Commons

The big deal is that the larger power grid in this country is designed to handle consistent power, and renewables like wind and solar are anything but. Their power fluctuates with nature and throughout the day. A dirty old coal plant, meanwhile, spits out power at a steady clip all the time. Kwigillingok is, in real time, figuring out how to make new power sources, renewables, play well with old ones, the diesel generator that's historically been its electric lifeblood.

If this can work on a small scale, it can work on a larger scale. The difference will be that the microgrids will likely be all renewable power and only draw in electricity from the larger grid when needed. In fact, General Electric Company (NYSE:GE) is working with National Grid Plc (NYSE:NGG), the Department of Energy's National Renewable Energy Laboratory, and Clarkson University in upstate New York on that next puzzle piece.

The project is intended to help ensure power in the Village of Potsdam if it should be cut off from the larger grid because of the region's frequent inclement weather. According to GE, "The program will be closely aligned with the specific energy needs and power resources available in and around Potsdam, with the option to include resources like 3 megawatts (MW) of combined heat & power generators, 2MW of solar photovoltaic, 2MW of energy storage and 900kW or more of hydroelectric generation."

The goal is to keep the town going for a few days if power lines go down, but a secondary goal of the project is to teach utilities, like partner National Grid, to "better leverage distributed energy resources (DER), such as solar, hydropower, and thermal, in a microgrid scenario." And, of course, GE is going to learn how to set that up for any utility that's interested.

The new boys in town
Don't think that it's just the big boys looking at this, either. For example, First Solar (NASDAQ:FSLR) recently bought an equity stake in Clean Energy Collective. That company builds what it calls community solar projects. Essentially a small solar project that locals can buy into. It sends power back to the grid, but is meant to give apartment owners, poorly located homes, and others a chance to "own" solar. That, however, is basically the start of a microgrid.

Source: Dyoder, via Wikimedia Commons

It's roughly similar to what's going on in Africa, where companies like SolarCity (NASDAQ:SCTY) are investing in solar systems that power remote towns. Projects here, however, are also testing new payment methods, like micropayments that allow customers to pay for power when they need it. While that's not likely to happen in the United States, or any other developed nation, any time soon, the changes taking place using small grids are clearly big. They can provide power to those without and, if done right, compliment reliable existing power systems.

Will you cut the cord?
Microgrids aren't new, and Kwigillingok has been a grid unto itself for a long time. But renewable power could bring microgrids to the mainstream if companies like GE, National Grid, First Solar, and SolarCity can figure out how to properly balance all the pieces. It isn't as easy as it sounds and GE's technological prowess will be put to the test to make it work in Potsdam.

But once microgrid technology makes sense, your town might just consider erecting a solar array of its own to make sure you have power in an emergency and to reduce costs when the weather is clear. Keep an eye on this space, you might be thinking about "cutting the cord" sooner than you think. Which, in turn, could turn the power industry on its head.

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Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends National Grid and SolarCity. The Motley Fool owns shares of General Electric Company and SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.