In this paper the technical constraints imposed by the growing needs of distributed generation, DER, and demanding PQR requirements, the microgrid concept is evolving toward a potentially versatile solution. The growing body of technical publications includes analytical modeling that defines the theoretical basis; computer simulation studies that verify operation and performance: and laboratory-scale, community-scale, and utility-scale demonstrations and pilot projects that add field experience to theory and simulation. Similarly, vigorous efforts are underway to expand microgrid economic and regulatory analysis capability, but challenges remain. At the policy level, significant changes will be needed to facilitate capture of the benefits of microgrids.