A microgrid is a section of a distribution system that can operate either in parallel with or in isolation from the network, in the case of partial or total disconnection of the interconnected power system. The operational flexibility of a microgrid reduces the vulnerability of the power system and also helps to avoid costly blackouts. In Colombia there is great potential for the creation of microgrids that use power generated by small hydropower plants (SHPs), which are considered as a low environmental impact technology. SHPs are currently unable to operate in isolation as they do not have the mechanisms required to maintain stable frequency and voltage levels after disconnection from the interconnected system. In this article a microgrid proposal is modeled and simulated using data taken from a Colombian distribution subnetwork that has three associated SHPs. In order to improve frequency stability in the microgrid when operating in isolation, the simulation of a Proportional-Integral-Derivative (PID) speed controller for the SHPs was carried out. The response of the PID) controller is taken into account in a contingency analysis that shows the operational feasibility of the studied microgrid.