Fault current values in the microgrids fluctuate widely, depending on the microgrid's mode of operation. In the grid-connected mode, the highest fault current contribution comes from the utility grid, while distributed energy resources (DERs) contribute to it with no more than 20%. On the other hand, in the islanded mode, DERs are the only fault current sources, and the overall fault current is several times lower than in the grid connected mode. This phenomenon can significantly influence the relay protection in the microgrid, and thus microgrid fault current needs to be precisely analyzed. Therefore, the purpose of this paper is to thoroughly analyze the fault current differencies in two distinct operation modes, and consequently, to derive conclusions regarding the required improvements in fault calculations and relay protection analysis in emerging microgrids. The test results are obtained with the in-house-made software solution and verified by using industy-grade hardware-in-the-loop device. The results show that the fault currents signifficatly differ depending on the operating mode, and thus highly influence the protection system. Also, from the test results, it is obvious that the fault calculation algorithms aimed for radial distribution grids need to be further improved in order to provide precise and time-efficient results when the microgrids are considered.