What is a Smart Grid?

Earlier this year, President Barack Obama promised to retrofit America by "updating the way we get our electricity, by starting to build a new smart grid that will save us money, protect our power sources from blackout or attack, and deliver clean, alternative forms of energy to every corner of our nation." To that end, the House version of the American Recovery and Reinvestment Act authorizes the Department of Energy to spend $4.5 billion dollars to stimulate the deployment of smart grid technologies. 

A smart grid means computerizing the current electric grid using advanced wireless two-way information and communications equipment, deploying an array of sensors to monitor activity, and developing the software to control and track in real time all aspects of electricity generation, transmission, and consumption. Smart-grid technology allows consumers to understand their energy usage, and gives them the option to intelligently manage, monitor and reduce the usage. In additional to smarter energy management, potential benefits include lower bills, better grid reliability, greater energy efficiency and conservation options, increased use of renewable energy sources, and options for using plug-in hybrid electric vehicles and intelligent home appliances.

Energy Information Administration (EIA) describes the current national U.S power grid as the "largest interconnected machine on earth." The U.S. electric power infrastructure is worth over $1 trillion. It consists of more than 9,200 electric generating units with more than 1 million megawatts of generating capacity connected to more than 300,000 miles of high voltage transmission lines and 5.5 million miles of distribution lines. 

Modernization would certainly help the current transmission network, which is so overburdened that blackouts are now bigger, lengthier, and more common. The EIA estimates that outages currently cost the economy as much as $150 billion per year. Even as demand for electricity has grown, transmission capacity has been lagging. In addition, Americans are projected to use about 30 percent more electricity by 2030. The Electric Power Research Institute (EPRI), the think tank of the utility industry, estimates that smart grid technologies could potentially lowerprojected annual energy consumption in 2030 by 1.2 to 4.3 percent. This would mean that fewer power plants and transmission lines would need to be built in the future.

For many proponents, however, the chief reason to create a smart grid is that it promotes energy conservation. For example, the smart grid concept envisions smart meters in homes or businesses allowing consumers to fine-tune their energy consumption, such as setting dishwashers or washing machines to turn on at night when electric power is relatively cheap and more plentiful. And consumers have the ability to grant utility companies permission to send signals that lower the temperatures on residential hot water heaters or reduce air conditioning when the grid is threatened with an overload on hot summer days. Some pilot projects report that consumers using this technology have cut their energy bills by an average of 10 percent.