ABSTRACT By focussing on the limitations of fixed dead time (DT) in conventional reclosing methods, this paper highlights its significant adverse impact on transient stability of distributed energy resources (DERs) in microgrid. This vulnerability is particularly pronounced in systems with low inertia, arising from renewable energy‐based DERs (REBDERs) that inherently lack inertia or exhibit limited inertial response even when connected via synchronverters, as well as from small‐scale synchronous generator‐based DERs (SGBDERs). Accordingly, an improved adaptive auto‐reclosing scheme is proposed to effectively address this challenging task. The proposed scheme aims to reconnect the system in the shortest possible time while maintaining the transient stability of the microgrid during permanent faults. To this end, an adaptive DT is determined based on potential energy assessment, ensuring that the potential energy associated with the DER is minimised. To address this, two indices based on the first‐ and second‐order time derivatives of potential energy are introduced. A polynomial least squares error (LSE) method is then employed to extract the temporal trends of these indices and predict future behaviour using a minimal number of sampling instance. Hence, the proposed algorithm can be an effective solution for microgrids with low inertia generators that are prone to rapid instability.