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What Exactly is the Smart Grid?

By Ted Nelson
April 14, 2010
File under: Alternative Sources, Electric Sources


The Smart Grid is a hot topic these days: it’s in the press a lot, and gets tons of play in Washington DC. However, the average citizen is still pretty hazy on the details.

Tracy Crawford gave a great rundown of the debate over whether or not to implement a Smart Grid in a previous post.

Many people confuse the Smart Grid with Smart Meters; which are the Smart Grid’s most noticeable aspect, but only one piece of the puzzle. It’s all really pretty intuitive, once you see it on paper.


The term “Smart Grid” is an umbrella term, defining the modernization of the electricity infrastructure in the US. It will take a decade or more to fully revamp the grid with the latest technologies. It’s a project the Department of Energy (DOE) compares to the national interstate highway system and the internet, both of which took decades to develop.

Our electricity grid includes several components: generation, transmission, distribution, and end consumption. Electricity storage is currently inefficient and costly, but storage may be a major component of the system in the future. The “grid” refers to the portion of the electricity infrastructure between the power plant and end-user: transmission, distribution, and storage.

Smart Meters and other advanced metering infrastructure and Smart Devices which communicate digitally, more efficient transmission lines, software allowing households and businesses to voluntarily reduce demand at certain times, and energy storage technology are all components of the Smart Grid.

According to the DOE, our electricity infrastructure includes “9,200 electric generating units with more than 1,000,000 megawatts of generating capacity connected to more than 300,000 miles of transmission lines.”

The National Academy of Engineers called it: “The most significant engineering achievement of the 20th Century.” Every time we flick on a light-switch or surf the web, we have the electricity grid to thank.

Motivation for an upgrade

If the current grid is so great, why should we change it?

- New Technology:

It’s said that while Alexander Graham Bell would not recognize today’s communications infrastructure, Thomas Edison would be very familiar with our electricity infrastructure. We have the technology to digitalize the electricity grid to increase communication between its various components, we just need to implement it.

- Efficiency:

It’s estimated that $150-$180 billion are lost every year in the US due to blackouts and poor quality electricity. 7% of energy is lost in transmission and distribution. Making the grid just 5% more efficient would be equivalent to permanently eliminating greenhouse gas emissions from 53 million cars. Part of modernizing the electricity infrastructure would be realizing potential efficiency gains.

- Demand Response:

A big goal of the Smart Grid is to level out demand. Currently, there are certain time of the day and certain periods of the year when demand spikes–peak demand episodes–requiring excess capacity to deal with those rare occurrences.  In fact, according to the DOE, “10% of all generation assets and 25% of distribution infrastructure are required less than 400 hours per year, roughly 5% of the time.”

By informing users of real-time electricity prices–which rise as demand rises–the Smart Grid will allow consumers to level out demand and remove the need for many excess power plants and a lot of extra infrastructure.

- Distributed Power Generation:

Large-scale implementation of solar and wind power–above 20% of total electricity–will require advanced energy management techniques, according to the European Wind Energy Association.

With 30 states having developed and adopted renewable energy standards requiring certain percentages of electricity to come from renewable sources by certain dates (California’s being the most ambitious: 20% by 2010), this will become an important issue in the near future.

“Islanding” is another important result of distributed power generation. When power is cut off to a region because of a natural disaster, military/terrorist attack, or any other reason that region would be able to sustain some of its basic electricity needs (hospitals, grocery stores, etc.) through local energy sources such as solar panels and already charged electric vehicles.

- Environment:

Electricity generation is responsible for 40% of CO2 emitted in the US, twice as much as transportation. By allowing for more renewable sources, increasing efficiency, and reducing peak demand the Smart Grid will help reduce our carbon footprints significantly.

Click here to learn more about the Cap and Trade system.

Comments (2) Email Link
  1. Michael S
    May 27, 2009 5pm UTC

    Awesome overview. With $150 B in savings every year it seems like this would pay for itself down the line. Any idea where govt stands with this? Is it even in the hands of the government?

  2. Jake Gormish
    July 6, 2010 1am UTC

    Interesting post. I do reviews on related items and thought that the viewers who see this page might be interested in them. Feel free to check out my blog whenever you have the time Off-Grid Power

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