What Is the Smart Grid?

Over the past few years, the electric power industry, federal and state regulators, and government agencies have confronted the challenge of updating the nation’s aging electric power infrastructure. Experts generally agree that updating the electrical infrastructure must include securing the capacity of the power grid to meet ever-increasing demand while, nonetheless, operating with greater overall efficiency. The final goal of these discussions and subsequent regulations has been dubbed the “Smart Grid.”

The Smart Grid is a National Priority

The U.S. Energy Independence and Security Act (EISA) was signed into law in 2007, and contains an entire section dedicated to the Smart Grid. One fundamental assertion of EISA is that, with the proper control mechanisms in place, the power grid’s existing transmission and distribution (T&D) system is capable of delivering greater overall efficiency. As such, adding more generators and transmission lines is not the only solution to America’s energy needs. Through the use of advanced, information-based technology to increase the power grid’s efficiency, reliability and flexibility, Smart Grid technology can reduce the need for building additional electric utility infrastructure. EISA contains billions of dollars in financial incentives through 2012 for the research, development and implementation of Smart Grid technologies, generating significant interest from equipment manufacturers, software developers, venture capitalists, energy companies and other energy industry stakeholders.

Using Information-Based Technology to Make the Power Grid Smarter

The Smart Grid will use a variety of technological and information-based mechanisms to increase efficiency and capacity. EISA sets forth several objectives for the development of the Smart Grid, including:

  • Increased use of digital information and controls technology to improve the electric power grid’s reliability, security and efficiency;
  • Integration of distributed generation (DG), or “behind-the-meter” generators, including renewable resources like wind turbines, solar generators and combined heat and power systems;
  • Incorporation of demand-response resources, which will allow consumers to reduce energy consumption in exchange for compensation based on wholesale market prices;
  • Incorporation of demand-side and energy-efficiency resources, including measures for reducing consumer demand through advanced heating and cooling systems, lighting devices and appliances, and measures to shift loads to off-peak hours;
  • Deployment of “smart” technologies in appliance, and consumer devices, including real-time, automated, interactive technologies that optimize the physical operation of appliances and consumer devices;
  • Deployment and integration of advanced electricity storage and peak-shaving technologies, including electric vehicles and thermal-storage air conditioning.

The Smart Grid to Come

While much of this technological innovation is already changing the nature of the power grid, the shape of the final, idealized Smart Grid, as envisioned by EISA, remains to be seen. What is clear is that the aging electric power infrastructure faces higher demand than ever, a situation further complicated by constraints from the diminishing supply and increased cost of fossil fuels, as well as the need for power plants to comply with tightening greenhouse gas emissions laws. In such a climate, smart businesses will innovate with today’s Smart Grid objectives—and tomorrow’s Smart Grid technologies—in mind.