The demand for electricity continues to grow globally and the fonnation of MicroGrids is becoming a potentially attractive option to meet the expanding energy demands. A MicroGrid consists of a cluster of micro sources, energy storage systems (e.g. flywheel) and loads, operating as a single controllable system. A MicroGrid can be operated both connected to the main grid or as an island and must maintain its stability during both these modes of operation. This paper therefore investigates the important area of stability of a MicroGrid. An in-depth simulation study on stable operation of MicroGrids during faults is demonstrated and discussed in this paper with supporting PSCAD/ EMTDC results.