What is a smart grid?

The best way to answer this question is to start by explaining the electrical grid we have in place now. Before the advent of microprocessors, both residences and businesses used far less electricity than we do now. Our current electrical grid was originally built in 1890. Over the years the grid has been updated as technology changed. However, the rate of demand has increased exponentially. Today we are faced with a grid that no longer adequately meets the needs of residences and businesses and is rife with costly disruptions and failures.

The grid of yore is a one way transmission of energy; from power plant to transmission lines, substations and transformers to your home and to businesses. Plug in your smartphone and voilà you have electricity. Through the 9,200 generating units and the 300,000 miles of transmission lines, the current grid's generating capacity is 1 million megawatts. While impressive, we have patched this antiquated system to the point where the underlying structure is no longer viable enough to meet the needs of the 21st century and beyond.

Back to the question – what is a smart grid? Watch this video to gain a better understanding from the US Department of Energy site explaining The Smart Grid Video. A smart grid not only carries electricity from a power plant to the source of need, it also carries information to and from all points of interaction. Using the binary blessing of digital technology, two–way communication can be built into the grid to give utility companies moment to moment knowledge of electrical demand and disruptions. Using automation and computers as well as existing and emerging technologies and equipment, the smart grid will also make smart utility companies, smart homes, and smart businesses to augment the entire electrical exchange making efficiency the premier benefit of the smart grid.

What are the Benefits of Building a Smart Grid?

Efficient transmission of electricity
Peak demand will be leveled off, which will help to reduce overall electrical rates
Integration of solar and wind power, micro–grids and large–scale systems will be included
Interruptions in electrical service can be recovered more quickly through rerouting
Increased security by improving native energy sources and making the grid less prone to disasters or attacks
Produces opportunity for new markets, products and services

What’s in it for you?

You will be able to manage your own electrical usage to save money
Smart meters are becoming more common and allow you to see how much electricity is used and when and the cost of it simply by logging on to your online account
Monthly statements may simply be a way of collecting money – your online account will be able to give you real time information about how and when you can change your power demands to reduce your costs
This is especially beneficial if you have a solar or wind system on your home or business so you can regulate and even out demand to get the most from your renewable energy systems

The Future of The Smart Grid

Between necessity and need lies invention and progress. Industry, corporate & government money, and technology are pressing forward on building a Smart Grid. However, it isn't just the U.S. that needs to build a Smart Grid; this is a worldwide necessity. A report done by Memoori Business Intelligence Ltd, titled The Smart Grid Business 2011 to 20161 found:

Smart Grid equipment alone will require $2 trillion to "achieve full penetration of the world's existing grid . . . to 2030"
Smart Grid equipment alone will require $2 trillion to "achieve full penetration of the world's existing grid . . . to 2030"

Smart Grid progress in the U.S.

Although currently progress is piecemeal, it is growing and it is evolving. Corporate and industrial demand is pushing progress forward and will only increase as people continue to require more efficient and cost effective electric services.