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The Smart Grid is a developing network of new technologies, equipment, and controls working together to respond immediately to our 21st century demand for electricity.

What is the Smart Grid?

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The Smart Grid

Maybe you have heard of the Smart Grid on the news or from your energy provider. But not everyone knows what the grid is, let alone the Smart Grid. "The grid," refers to the electric grid, a network of transmission lines, substations, transformers and more that deliver electricity from the power plant to your home or business. It’s what you plug into when you flip on your light switch or power up your computer.

Our current electric grid was built in the 1890s and improved upon as technology advanced through each decade. Today, 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 transmission lines.

Although the electric grid is considered an engineering marvel, we are stretching its patchwork nature to its capacity. To move forward, we need a new kind of electric grid, one that is built from the bottom up to handle the groundswell of digital and computerized equipment and technology dependent on it—and one that can automate and manage the increasing complexity and needs of electricity in the 21st Century.

What Makes a Grid “Smart?”

In short, the digital technology that allows for two-way communication between the utility and its customers, and the sensing along the transmission lines is what makes the grid smart. Like the Internet, the Smart Grid will consist of controls, computers, automation, and new technologies and equipment working together, but in this case, these technologies will work with the electrical grid to respond digitally to our quickly changing electric demand.

What does a Smart Grid do?

The Smart Grid represents an unprecedented opportunity to move the energy industry into a new era of reliability, availability, and efficiency that will contribute to our economic and environmental health. During the transition period, it will be critical to carry out testing, technology improvements, consumer education, development of standards and regulations, and information sharing between projects to ensure that the benefits we envision from the Smart Grid become a reality. The benefits associated with the Smart Grid include:

  • More efficient transmission of electricity
  • Quicker restoration of electricity after power disturbances
  • Reduced operations and management costs for utilities, and ultimately lower power costs for consumers
  • Reduced peak demand, which will also help lower electricity rates
  • Increased integration of large-scale renewable energy systems
  • Better integration of customer-owner power generation systems, including renewable energy systems
  • Improved security

Today, an electricity disruption such as a blackout can have a domino effect—a series of failures that can affect banking, communications, traffic, and security. This is a particular threat in the winter, when homeowners can be left without heat. A smarter grid will add resiliency to our electric power system and make it better prepared to address emergencies such as severe storms, earthquakes, large solar flares, and terrorist attacks. Because of its two-way interactive capacity, the Smart Grid will allow for automatic rerouting when equipment fails or outages occur. This will minimize outages and minimize the effects when they do happen.

When a power outage occurs, Smart Grid technologies will detect and isolate the outages, containing them before they become large-scale blackouts. The new technologies will also help ensure that electricity recovery resumes quickly and strategically after an emergency—routing electricity to emergency services first, for example. In addition, the Smart Grid will take greater advantage of customer-owned power generators to produce power when it is not available from utilities. By combining these "distributed generation" resources, a community could keep its health center, police department, traffic lights, phone system, and grocery store operating during emergencies.

In addition, the Smart Grid is a way to address an aging energy infrastructure that needs to be upgraded or replaced. It’s a way to address energy efficiency, to bring increased awareness to consumers about the connection between electricity use and the environment. And it’s a way to bring increased national security to our energy system—drawing on greater amounts of home-grown electricity that is more resistant to natural disasters and attack.

Giving Consumers Control

The Smart Grid is not just about utilities and technologies; it is about giving you the information and tools you need to make choices about your energy use. If you already manage activities such as personal banking from your home computer, imagine managing your electricity in a similar way. A smarter grid will enable an unprecedented level of consumer participation.

For example, you will no longer have to wait for your monthly statement to know how much electricity you use. With a smarter grid, you can have a clear and timely picture of it. "Smart meters," and other mechanisms, will allow you to see how much electricity you use, when you use it, and its cost. Combined with real-time pricing, this will allow you to save money by using less power when electricity is most expensive.

While the potential benefits of the Smart Grid are usually discussed in terms of economics, national security, and renewable energy goals, the Smart Grid has the potential to help you save money by helping you to manage your electricity use and choose the best times to purchase electricity. And you can save even more by generating your own power.

Building and Testing the Smart Grid

The Smart Grid will consist of millions of pieces and parts—controls, computers, power lines, and new technologies and equipment. It will take some time for all the technologies to be perfected, equipment installed, and systems tested before it comes fully on line. And it won’t happen all at once—the Smart Grid is evolving, piece by piece, over the next decade or so. Once mature, the Smart Grid will likely bring the same kind of transformation that the Internet has already brought to the way we live, work, play, and learn.

Consumer Engagement

The Smart Grid offers many opportunities for consumers to save energy and for utilities to operate the grid in a more efficient, effective, and reliable way. But some features enabled by the Smart Grid also involve some sacrifice on the part of consumers, such as holding off on running your dishwasher until later in the evening.

A smart consumer will ask, "What's in it for me?" And the answer is: money. Specifically, participating in these programs will earn consumers extra savings on their energy bills. And for people who generate their own power, it can even result in something you never thought you would see: your utility could mail a check to you.

Many utilities already offer their customers ways to save extra money on their utility bills. For people with central air conditioning systems, for instance, some utilities will place a remote-control switch on the air conditioner to cycle the air conditioner on and off during times of peak power demand. In return, customers receive a credit on their electrical bill.

The Smart Grid will allow programs like these to operate in more sophisticated ways, resulting in greater energy savings with less inconvenience to businesses and homeowners. Some examples include time-of-use pricing, net metering, and compensation programs for plug-in electric vehicles (PEVs).

Time-of-Use Programs

One of the most important ways you can get involved with the Smart Grid is to take advantage of time-of-use programs when they become available in your area.

What is time-of-use pricing? Throughout the day, the demand for energy changes: it’s usually lowest in the middle of the night and highest from about noon to 9 p.m., but it can vary according to weather patterns and what’s happening during that time. Power plants and utilities have to work harder to meet the needs of electric consumers when the demand is highest.

During peak energy usage, utilities sometimes have to bring less-efficient—and often more-polluting—power generation facilities on line or purchase power from neighboring utilities at a higher cost. In the worst cases, utilities may have to institute rolling blackouts or reduce the voltage of the system, an approach called a "brownout."

Time-of-use rates encourage you to use energy when the demand is low by giving you a lower price for electricity during those times. Distributing the demand more evenly ensures that a steady and reliable stream of electricity is available for everyone.

Home energy management systems will help you to make the most of time-of-use pricing. Accessed with a home computer or hand-held mobile device, you will be able to see when prices are highest, which appliances use the most electricity, and even—at some point down the line—be alerted when prices go up, so you can remotely turn off unnecessary appliances until demand lowers and prices go back down.

Net Metering

For people that generate their own power at home—using a rooftop solar power system, for instance—net metering is an option already available in many states. In general, net metering involves the use of a meter that can record power flows back into the grid as a credit. Some mechanical meters will literally spin backwards, although today most utilities are using digital meters for net metering.

Today, most people with net-metered systems are allowed to accumulate credits for excess power generation—that is, power fed into the grid from their home power systems—on a monthly basis. At the end of the year, home power generators usually have the option of carrying over credits into the next year or receiving a check for their excess power generation. That's right, your utility can pay you for power.

The Smart Grid will enable enhancements to these net metering programs. For instance, a utility might pay more for customer-generated power during times of peak power demand, while paying less for off-peak power. Like time-of-use pricing, such a pricing structure will encourage home generators to minimize their energy use during times of peak demand so they can maximize the amount of power fed onto the grid.

Other Financial Incentives

The Smart Grid will open up countless new ways for you and your utility to interact on energy. Many of these new capabilities will offer energy savings to you, but some may also include minor sacrifices or inconveniences, and for those, utilities are likely to offer financial incentives to encourage you to participate.

For instance, smart appliances could offer countless subtle ways for utilities to shift electrical demand to off-peak hours. Your dishwasher could defer running until later in the evening, or your refrigerator could defer its defrost cycle. Your air conditioner could slightly extend its cycle time to help lower your power demand during peak hours. Unneeded lights or electrical devices could even power off.

For any such program, your utility will probably offer some financial incentive for your participation. The result could be a double savings for you: a direct energy savings on your electricity bill and the extra benefit of earning an incentive payment from your utility.

One future area of potential financial incentives involves the use of plug-in electric vehicles (PEVs) as sources of stored energy for the utility. If you own a PEV, your utility might pay you an incentive for occasionally drawing power from your battery pack. Because extra cycling of your battery pack could shorten its useful life (at least in today's battery packs), your utility could provide you with extra compensation to help account for the slight degradation in the useful service life of your batteries.

Overall, the Smart Grid will open the door to many new possibilities for utilities and their customers to reach agreements on ways to save energy. The financial incentives available could encourage a wide range of new consumer options. You may be willing to pay a bit extra for a smart appliance, for instance, if it can also become a new source of revenue for you. And utility incentives could also encourage you to install a home generation system, such as a small wind turbine or solar power system. The result is a win-win-win: a win for you, for your power provider, and for your community.

Grid Operation Centers

Today's electrical transmission system—including the giant power lines and transmission towers that snake across our landscapes—operates much like a system of interconnected streams. Power flows through the transmission system along the path of least resistance, finding multiple paths between the power plants and the cities that are demanding the power.

Grid operators actually have very little control over today's system. Their primary task is to make sure that as much power is being generated as is being used—if not, the grid's voltage could drop, causing the grid to become unstable. Operators generally know which lines are in service and when relays have opened to protect lines against faults, but they have limited control capabilities.

Unfortunately, like water in a bathtub, power can "slosh around" within the grid, developing oscillations that, under the worst of conditions, could lead to widespread blackouts. To compound the problem, grid operators also have limited information about how the power is flowing through the grid.

The Smart Grid will help solve this problem by adding new capabilities for measurement and control of the transmission system. These technologies will make the grid much more reliable and will minimize the possibility of widespread blackouts.

The 2003 Blackout

August 14, 2003, is a date that few grid operators in North America will ever forget. Although power demand was high that day, the situation seemed under control until a relatively insignificant power line in Ohio overheated and tripped offline. Like throwing a rock in a pond, that power line failure triggered oscillations in the transmission systems that line the shores of the Great Lakes and provide power to the Northeast and parts of Canada.

Those oscillations eventually overloaded the system, causing a massive blackout that stretched from Michigan and Ohio, through the Northeast, and into Canada. With subways down, many commuters in New York City struggled to find a way home. The blackout affected an estimated 10 million people in Ontario, Canada, and 45 million people in eight U.S. states.

The Smart Grid Solution

Smart Grid technologies offer a new solution to the problem of monitoring and controlling the grid's transmission system. New technologies called Phasor Measurement Units (PMU) sample voltage and current many times per second at a given location, providing a snapshot of the power system at work. PMUs provide a new monitoring tool for the Smart Grid.

In our current electric grid, measurements are taken once every 2 or 4 seconds, offering a steady-state view into the power system behavior. Equipped with Smart Grid communications technologies, measurements can be taken many times a second, offering dynamic visibility into the power system. This makes it easier to detect the types of oscillations that led to the 2003 blackout.

The "Self-Healing" Grid

Smart Grid technologies also offer new means of controlling the transmission system. New high-power electronics function essentially as large-scale versions of transistors, adding a new level of control to the transmission system. New technologies could also help dampen unwanted power oscillations and avoid unproductive flows of current through the grid that only serve to waste energy.

The combination of new measurement and control technologies also enables a new automated approach to controlling the grid. Software could potentially monitor the grid in real time for potential disturbances that could lead to blackouts, and it could take actions to check the disturbances. Such monitoring software could act to dampen out oscillations in the power grid, or it could even reroute power through the grid to avoid overloading a transmission line.

In the event that a power line needs to be removed from service, control software could reroute the power in a way that causes minimal disruptions to the grid. This approach is often referred to as the "self-healing" grid. The ideal self-healing grid will involve a combination of transmission system monitoring and control software and comparable measures for the local distribution systems that deliver the power to individual homes and businesses. These distribution system measures are sometimes referred to as distribution intelligence.

“Seeing” the Smart Grid

Another contributor to the 2003 blackout was the limited situational awareness of the various grid operators involved. At the time, there was limited data sharing and transparency among the grid operators in different regions of North America, making it hard for the individual grid operators to see the big picture.

By including new standards that make it easier for grid systems to interact with one another, the Smart Grid will make data sharing among regional grid operators easier to accomplish. Potentially, grid operators will be able to explore the state of the grid at the national level and switch within seconds to explore specific details at the local level. These technologies will provide rapid information about blackouts and power quality as well as insights into system operations for utilities.

Distribution Intelligence

"Distribution intelligence" refers to the part of the Smart Grid that applies to the utility distribution system, that is, the wires, switches, and transformers that connect the utility substation to you, the customers. The power lines that run through people's back yards are one part of the power distribution system.

A key component of distribution intelligence is outage detection and response. Today, many utilities rely on customer phone calls to know which areas of their distribution system are being affected by a power outage. Along with smart meters, distribution intelligence will help to quickly pinpoint the source of a power outage so that repair crews can be immediately dispatched to the problem area.

A utility's outage response can also improve. Most utilities count on complex power distribution schemes and manual switching to keep power flowing to most of their customers, even when power lines are damaged and destroyed. However, this approach has its limitations, and in many cases an automated system could respond more quickly and could keep the power flowing to more customers.

By having sensors that can indicate when parts of the distribution system have lost power, and by combining automated switching with an intelligent system that determines how best to respond to an outage, power can be rerouted to most customers in a matter of seconds, or perhaps even milliseconds.

It may even be possible to react quickly enough to power disturbances so that only those in the immediate neighborhood are affected, while other customers' power source are rerouted fast enough to avoid any interruption in power. This capability could be the first example of the highly touted "self-healing" aspect of the Smart Grid in action.

The "Self-Healing" Power Distribution System

Outage response is one aspect of distribution intelligence that is commonly referred to as distribution automation (DA). DA may actually be the oldest segment of the Smart Grid, because utilities have been automating their distribution systems since the 1960s. But while DA initially focused just on remote control of switches, the Electric Power Research Institute now considers distribution intelligence to mean a fully controllable and flexible distribution system.

Combining DA components with a set of intelligent sensors, processors, and communication technologies will lead to distribution intelligence. When fully deployed, distribution intelligence will enable an electric utility to remotely monitor and coordinate its distribution assets, operating them in an optimal matter using either manual or automatic controls.

Helping the Grid Run More Efficiently and Reliably

Along with outage detection and response, another potential application of distribution intelligence is the ability to optimize the balance between real and reactive power. Devices that store and release energy, such as capacitors, or that use coils of wire to induce magnetic fields, such as electrical motors, have the ability to cause increased electrical currents without consuming real power; this is known as reactive power.

A certain amount of reactive power is desirable within a power system, but too much reactive power can lead to large current flows that serve no purpose, causing efficiency losses as they heat up the distribution system wires. An intelligent distribution system can use power electronics to maintain the proper level of reactive power in the system.

Distribution intelligence can also help to protect and control the feeder lines, the power lines that make up the distribution system. Most feeder lines are now protected by breakers or relays that trip when high currents flow through the line, a situation normally caused by a fault somewhere in the system. These relays sometimes incorporate time delays to allow for momentary flows of high current, which may be caused by industrial equipment powering up, rather than a fault. Protection systems are often a combination of instantaneous breakers with high current settings and time-delayed breakers or relays with lower settings.

These systems of automated breakers and relays end up being a balancing act: they must allow the system to operate with high currents when needed but protect the system and the people around it from high current flows when a fault exists. Distribution intelligence can provide a more elegant approach to protecting the feeder lines, using sophisticated monitoring and controls to detect and correct for faults while maintaining the highest level of system reliability during non-fault conditions.

An intelligent system could even detect and isolate faults in specific pieces of equipment and route power through a backup system instead, maintaining power reliability. Distribution intelligence can also incorporate more sophisticated ground-fault detectors to minimize the possibility that people can be shocked or electrocuted when encountering downed power lines.

Most utilities are only starting on the road to true distribution intelligence, but the market is expected to boom in the coming years.

Renewable Energy

President Obama has called for the United States to secure 25% of our electricity from clean, renewable resources by 2025. And yet, renewable sources other than hydropower still provide only about 5% of the electricity supply for our grid. What’s holding us back?

Our grid is partly to blame. The physical reality is that the wind, solar, and geothermal resources are usually located in remote places, while much of the power demand is in urban areas. Like the interstate highway system, we need an electric superhighway that provides infrastructure for electricity to get from North Dakota to New York City easily and efficiently.

Geography issues aside, the current grid has difficulty accommodating variable sources of power like wind and solar energy, the fastest-growing sources of renewable power on the grid. As these resources begin to supply increasing percentages of power to the grid, integrating them into grid operations will become increasingly difficult.

The Smart Grid will be able to make better use of these energy resources. It will give grid operators new tools to reduce power demand quickly when wind or solar power dips, and it will have more energy storage capabilities to absorb excess wind and solar power when it isn't needed, then to release that energy when the wind and solar power dips. In effect, energy storage will help to smooth out the variability in wind and solar resources, making them easier to use.

Building an electric superhighway can also help solve the problem, as it will help to ship the power to where it is needed. Studies have shown that connecting wind resources from a diversity of geographic locations helps to balance out fluctuations in wind power. In other words, when the wind isn't blowing in Iowa, in may be blowing in North Dakota or Wyoming. Having such geographically diverse wind resources on a single electric superhighway will result in a more steady supply of wind power to the nation's power grid, making it easier for grid operators to make full use of this resource.

Plug-In Electric Vehicles

Plug-in electric vehicles (PEVs) are now being rolled out to consumers throughout the United States. General Motors Company is producing the Chevrolet Volt, a plug-in hybrid. Ford Motor Company is producing the Ford Electric Focus and Nissan Motors is manufacturing the Leaf, both of which are all-electric vehicles. And a number of startup companies are producing specialty PEVs, the most prominent being Tesla Motors, producer of the all-electric Tesla Roadster.

The Smart Grid will have the infrastructure needed to enable the efficient use of this new generation of PEVs. PEVs can drastically reduce our dependence on oil, and they emit no air pollutants when running in all-electric modes. However, they do rely on power plants to charge their batteries, and conventional fossil-fueled power plants emit pollution.

To run a PEV as cleanly as possible, it needs to be charged in the wee hours of the morning, when power demand is at its lowest and when wind power is typically at its peak. Smart Grid technologies will help to meet this goal by interacting with the PEV to charge it at the most optimal time. But sophisticated software will assure that your PEV is still fully charged and ready to go when you need it. And you'll still be able to demand an immediate recharge when you need it.

In the future, PEVs may play an important part in balancing the energy on the grid by serving as distributed sources of stored energy, a concept called "vehicle to grid." By drawing on a multitude of batteries plugged into the Smart Grid throughout its service territory, a utility can potentially inject extra power into the grid during critical peak times, avoiding brownouts and rolling blackouts. PEVs also have the potential to help keep isolated parts of the grid operating during blackouts. They could also help integrate variable power sources into the grid, including wind and solar power. Financial incentives may be available for PEV owners that allow their batteries to be used this way.

Enabling a Charging Infrastructure for PEVs

One of the key factors for acceptance of PEVs in the marketplace will be the availability of charging stations. Currently, a number of entities are building charging stations in cities throughout the United States, some of which are supported with DOE funding. For now, many municipalities and private companies are offering free recharges to PEV owners as an incentive for these clean vehicles. However, as PEVs gain market penetration, this "free refueling" is likely to come to an end, and charging station owners will be seeking a convenient way to charge PEV owners for their "fill-ups."

Smart Grid technologies offer a potential solution to this problem, at least within the area served by the energy provider of the PEV owner. With the Smart Grid, PEVs can identify themselves to the charging station when they are plugged in, and the electricity used can be automatically billed to the owner's account. The technology will not only simplify transactions for the charging station owners, but also allow PEV owners to charge up without the need for cash or a credit card.

The Smart Home

How will the Smart Grid affect your home? It won’t look very different, but behind the scenes a lot will be happening. Even right now, in many cities across the nation, new equipment, appliances, and software are available that use emerging Smart Grid technologies to save energy, seek out the lowest rates, and contribute to the smooth and efficient functioning of our electric grid.

A key element that allows all of the emerging Smart Grid technologies to function together is the interactive relationship between the grid operators, utilities, and you. Computerized controls in your home and appliances can be set up to respond to signals from your energy provider to minimize their energy use at times when the power grid is under stress from high demand, or even to shift some of their power use to times when power is available at a lower cost.

Smart Meters and Home Energy Management Systems

Smart meters provide the Smart Grid interface between you and your energy provider. Installed in place of your old, mechanical meter, these meters operate digitally, and allow for automated and complex transfers of information between your home and your energy provider. For instance, smart meters will deliver signals from your energy provider that can help you cut your energy costs. Smart meters also provide utilities with greater information about how much electricity is being used throughout their service areas.

This energy information coming to and from your home through your smart meter can be run through a home energy management system (EMS), which will allow you to view it in an easy-to-understand format on your computer or hand-held device. A home EMS allows you to track your energy use in detail to better save energy. For instance, you can see the energy impact of various appliances and electronic products simply by monitoring your EMS while switching the devices on and off.

An EMS also allows you to monitor real-time information and price signals from your utility and create settings to automatically use power when prices are lowest. You can also choose settings that allow specific appliances and equipment to turn off automatically when a large demand threatens to cause an outage—avoiding peak demand rates, helping to balance the energy load in your area, and preventing blackouts. Your utility may provide financial incentives for doing so.

Smart Appliances

In your smart home, many of your appliances will be networked together, allowing you to access and operate them through your EMS. An EMS provides the ability to turn on your heater or air conditioner from work when you’re about to go home or keep track of the energy use of specific appliances or equipment—like tracking the energy use of your pool pump, or seeing how much energy you saved with your new Energy Star dishwasher.

Smart appliances will also be able to respond to signals from your energy provider to avoid using energy during times of peak demand. This is more complicated than a simple on and off switch. For instance, a smart air conditioner might extend its cycle time slightly to reduce its load on the grid; while not noticeable to you, millions of air conditioners acting the same way could significantly reduce the load on the power grid. Likewise, a smart refrigerator could defer its defrost cycle until off-peak hours, or a smart dishwasher might defer running until off-peak hours.

Of course, these smart appliances will include consumer controls to override the automated controls when needed. If you need to run your dishwasher right away, regardless of the cost of power, you'll be able to do so.

One unique type of smart "appliance" is the plug-in electric vehicle, or PEV. See the PEV Section for information on how PEVs will interact with the Smart Grid.

Home Power Generation

As consumers move toward home energy generation systems, the interactive capacity of the Smart Grid will become more and more important. Rooftop solar electric systems and small wind turbines are now widely available, and people in rural areas may even consider installing a small hydropower system on a nearby stream. Companies are also starting to roll out home fuel cell systems, which produce heat and power from natural gas.

The Smart Grid, with its system of controls and smart meters, will help to effectively connect all these mini-power generating systems to the grid, to provide data about their operation to utilities and owners, and to know what surplus energy is feeding back into the grid versus being used on site. A potential feature of the Smart Grid will be to allow your community to use your solar array—and your neighbor’s—to keep the lights on even when there is no power coming from a utility. Called “islanding,” it will allow a home to grab power from “distributed resources,” such as local rooftop solar, small hydropower, and wind projects, until utility workers can bring the grid back online.

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