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Smart Grid Technology


 Smart Grid Technology


Throughout the 20th century, the U.S. electric power delivery infrastructure served our nation well, providing adequate, affordable energy to homes, businesses and factories. This once state-of-the-art system brought a level of prosperity to the United States unmatched by any other nation in the world. But a 21st-century U.S. economy cannot be built on a 20th-century electric grid.

As the U.S. economy has grown and evolved, electricity’s role as an enabler of economic productivity has become ever more important. The transmission and distribution network forms the critical link between electricity generation and consumers. However, the technological sophistication of the electricity grid has not kept pace with the growing demand for high-quality, high-value services to end-users. The current grid in United States relies on outmoded technology – much of which dates from as far back as the 1930s – that causes transmission congestion and makes the grid unreliable and inefficient. It also requires an inefficient number of power plants to meet periods of peak demand, some used as little as a few hours per year.

As we move further into the digital age of the 21st century, the U.S. and rest of the world are becoming increasingly dependent upon electric power. In addition to the quantity of power consumed, the quality and reliability of power are becoming increasingly critical. As the stress on the grid increases, so does the economic impact of blackouts and power interruptions; it has been estimated that failures grid cost the American economy in excess of $100 billion per year.

Using smart technologies to spread power use more evenly and cut demand during peak times of the day will lower costs by reducing the need for power from the most expensive sources. A host of new smart energy devices and systems are emerging that can take pressure off overloaded grid infrastructure and power costs, dramatically improve grid reliability and security, and accelerate the growth of cleaner power generation. 

“Smart energy” is the application of digital information technology to optimize the electrical power system. Smart energy technologies are beginning to transform the power network into a smart grid capable of meeting 21st century economic, security and environmental challenges.  

The “smart grid” is the product of applying smart energy technology to electrical power delivery and generation. A smart grid incorporates elements of traditional and cutting-edge power engineering, sophisticated sensing and monitoring technology, information technology, and communications to provide better grid performance and to support a wide array of additional services to consumers. A smart grid is not defined by what technologies it incorporates, but rather by what it can do, including key attributes such as the following:    


The grid will be “self-healing.” Sophisticated grid monitors and controls will anticipate and instantly respond to system problems in order to avoid or mitigate power outages and power quality problems.


The grid will be more secure from physical and cyber threats. Deployment of new technology will allow better identification and response to manmade or natural disruptions.  


The grid will support widespread use of distributed generation. Standardized power and communications interfaces will allow customers to interconnect fuel cells, renewable generation, and other distributed generation on a simple “plug and play” basis.  


The grid will enable consumers to better control the appliances and equipment in their homes and businesses. The grid will interconnect with energy management systems in smart buildings to enable customers to manage their energy use and reduce their energy costs.  


The grid will achieve greater throughput, thus lowering power costs. Grid upgrades that increase the throughput of the transmission grid and optimize power flows will reduce waste and maximize use of the lowest-cost generation resources. Better harmonization of the distribution and local load servicing functions with interregional energy flows and transmission traffic will also improve utilization of the existing system assets.   

The potential benefits of an enhanced power delivery system are enormous. An upgraded grid can support the provision of important new services to consumers, including better ability to manage energy use and energy costs, and better support for use of distributed generation. Studies of potential benefits suggest that transformation of the power grid over the next 20 years could result in substantial increases in productivity and GDP growth, reduced carbon emission, and increased national security.

Enhanced grid operation will give customers access to less expensive power sources. The smart grid will increase throughput on existing lines by providing more effective power flow control. This increased line capacity reduces congestion (which requires more expensive units to run instead of lower-cost units) and thereby lowers generation costs to consumers. The ability to increase grid throughput (and the ability to support widespread distributed generation) also relieves pressure to site and build long-line transmission lines, thus avoiding the environmental and aesthetic problems caused by such projects.

Present Activities

There are presently several efforts under way to articulate the architecture and needs of a smart grid. Other efforts are taking initial steps toward testing and implementation in selected regions. These efforts help to point out both the promises and challenges of a smart grid. Some of these are described below:

NETL Modern Grid Initiative

The National Energy Technology Laboratory’s Modern Grid Initiative (MGI) seeks to accelerate the modernization of our nation’s electricity grid. To accomplish this, MGI is fostering the development of a common, national vision among grid stakeholders. The initiative is also working toward a framework that enables utilities, vendors, consumers, researchers and other stakeholders to form partnerships and overcome barriers. MGI also supports demonstrations of systems of key technologies that can serve as the foundation for an integrated, modern power grid.

The intent of the Modern Grid Initiative is to accelerate the nation’s move to a modern electric grid by creating a flagship partnership between industry and DOE that invests significant funds in demonstration projects. Projects to demonstrate advanced technologies will establish the value and feasibility of developing an integrated suite of technologies and processes that move the grid toward modernization. It is envisioned that this program will consist of 10–15 projects carried out over five years. These will ultimately produce a set of modern grid design specifications for the nation. They will also support the creation of standards and guidelines for the utilities, consumers, vendors, regulators, researchers and trade associations that make up the electric grid industry.

NETL asserts that much work remains to be done to achieve this longer-term vision. The integration of existing technologies, the development of new ones and integrated testing to show their benefits are all needed. Regulatory and legislative reform to modify regulations and statutes that are inconsistent with this vision is also needed. New standards must be developed and some existing standards will require changes. Various process issues must be resolved. We also need metrics to provide the milestones for measuring our progress towards this vision. And, importantly, the totality of societal benefits must be included in the calculus of Modern Grid investments to provide the financial incentive needed to move us forward.

GridWise™ Action Plan

In 2004, the GridWise™ Alliance and the U.S. Department of Energy’s (DOE’s) Office of Electric Transmission and Distribution jointly expressed their intention to establish a reliable and efficient electric system that will (1) utilize information technologies to revolutionize energy systems as they have revolutionized other aspects of U.S. business, (2) create value for all participants by developing and deploying technology solutions that cross enterprise and regulatory boundaries, (3) enhance security and reliability through an information-rich power grid that is flexible and adaptive, and (4) empower consumers to benefit from their participation in the operation of the power grid.

As the core of this joint action plan, the GridWise Alliance proposes to address three main overarching challenges facing the industry: (1) Develop and deploy an innovative suite of technologies to realize the benefits of a transformed grid.  (2) Reinvent the industry infrastructure to support innovation. (3) Build and communicate the vision and value to catalyze transformation.

San Diego Smart Grid Study

The San Diego Smart Grid Study was commissioned by the Energy Policy Initiatives Center (EPIC) at the University of San Diego, and co-sponsored by the Utility Consumer Action Network (UCAN) and San Diego Gas & Electric (SDG&E). This study was one of the first to examine a “smart grid” strategy for a region and to demonstrate adequate benefits to justify modernization.

Applying the concepts of the NETL Modern Grid Initiative, the study brought forth three key findings: (1) Economic, technological, and regulatory trends in the San Diego region will create a desirable climate for implementation of a Smart Grid.  (2) Twenty-six technologies could be implemented to advance the current electric grid toward a smarter, more modern system.  (3) A preliminary cost-benefit analysis suggests that Smart Grid benefits adequately exceed the initial installation costs and cover the ongoing operation and maintenance costs.

In examining the economics of a Smart Grid, the study revealed that making a business case has less to do with the cost of technologies and integration, and more to do with what is within a rate case. In particular, if only system benefits such as reduced peak demand are included, the payback is lang. But if societal benefits such as reduced business losses due to outages and power quality issues were included in the business case, it becomes much more compelling,  Hence, as long as regulators look only for short-term benefits – and only benefits to the system itself—the industry will not be allowed to justify long-term capital improvements with long-term societal benefits.

IEA Electricity Networks Analysis Research and Development (ENARD)

In 2006, the International Energy Agency (IEA) formed the Implementing Agreement programme on Electricity Networks Analysis Research and Development (ENARD) to address issues involved in the development, design, operation and performance of electricity networks at the integrated system level. ENARD’s vision is to facilitate the uptake of new operating procedures, architectures, methodologies and technologies in electricity T&D networks that can enhance their overall performance in relation to the developing challenges of network renewal, renewables integration and network resilience.

The development and integration of active network management measures, control and automation have all emerged as key priorities for tomorrow’s networks; the present ageing infrastructure provides the opportunity to adopt such measures as part of overall network renewal strategies. ENARD’s workshop on Distributed Generation (DG) System Integration, held in Vienna, March 2007, succeeded in establishing the basis for a proposed new Annex in this area.  The increased penetration of distributed generation and the consequential requirement to accommodate, and preferably to integrate, such smaller and distributed power sources within the network clearly presents a whole series of challenges to the distribution engineer. This will undoubtedly require a transition from today’s passive distribution networks to future active networks in which advanced automation and control measurements will contribute increasingly to network performance and to realizing the potential of distributed generation in terms of system support and network development. Key enabling technologies to advance such developments would include energy storage, demand-side management, dynamic operation of electrical plant, FACTS, current limiters and solid state substations.

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 References, Sources, and Other Useful Data

Anderson, Roger N., Columbia University, "The Distributed Storage-Generation “Smart” Electric Grid of the Future," from workshop proceedings, “The 10-50 Solution: Technologies and Policies for a Low-Carbon Future.” The Pew Center on Global Climate Change and the National Commission on Energy Policy

The present U.S. electric grid will not work on any scale—local, state, national or international—at the higher loads and more diverse generation sources required in the future. In order to be able to utilize massive amounts of renewable energy sources, it is necessary to first modernize the grid by installing digital controls, electronic switches, and higher capacity transmission lines

Detchon, Reid, Executive Director, Energy Future Coalition, "Testimony before the Senate Committee on Energy and Natural Resources," March 12, 2009

The Energy Future Coalition, in partnership with the Center for American Progress and later the Energy Foundation, began a series of listening sessions with a wide range of stakeholder groups to determine where the areas of agreement and disagreement were. We found remarkably broad support for a new network of extra high-voltage lines (345 kilovolts or above) to bring high-quality renewable energy resources – wind in the Great Plains, solar in the desert Southwest – to market. The group agreed that a national Clean Energy Smart Grid is an economic, environmental, and national security imperative – vital to renewing America’s economic growth, strengthening national security, and addressing the threat of global climate change. This testimony describes some of the benefits and policies that are needed.

Electric Power Research Institute, "The IntelliGrid Consortium," (Product ID 1012029, May 18, 2006)

The IntelliGrid Consortium is a collaboration of utility, manufacturers, researchers, and government leaders, all working together to make the intelligent, self-healing power system of the future a reality. In 2004, EPRI took a major step toward facilitating such integration with the publication of the IntelliGrid Architecture — the first comprehensive technical framework for linking communications and electricity into a “smart grid” that will offer the unprecedented flexibility and functionality required by an increasingly digital society. To create the IntelliGrid Architecture, EPRI brought together a consortium of diverse industry stakeholder, including utilities, equipment manufacturers, and government agencies. With input from these stakeholders, a team of experts developed the standards and guidelines needed to provide a high-level view of systems integration that will cut across traditional operating boundaries and business entities. The architecture is already being used to bring a coherent approach to integrating and managing large utility information technology and control systems.

Energy Future Coalition, "The Smart Grid,"

The Energy Future Coalition has assembled a Smart Grid Working Group made up of a broad range of stakeholders.  With input from this group, the Coalition is drafting a plan to develop a National Clean Energy Smart Grid to unlock our renewable potential, to make our grid more efficient and reliable, and to empower consumers to reduce their energy costs. The plan calls for the U.S. to (1) Develop New Regional Transmission Plans to Bring Renewable Power to Market, (2) Create New Incentives for Investments in Smart Grid Technologies, and (3) Make Grid Security a Priority.

Gridwise™ Alliance, Home Page

GridWise™ Alliance is a consortium of public and private stakeholders who are aligned around a shared vision. A vision of an electric system that integrates the infrastructure, processes, devices, information and market structure so that energy can be generated, distributed, and consumed more efficiently and cost effectively; thereby achieving a more resilient, secure and reliable energy system. The Alliance members recognize that emerging energy and information technologies have the potential to radically improve the efficient use of the nation’s energy system. The Alliance and its members advocate change locally, regionally, and nationally to promote new policies and technology solutions that move us closer to this vision.

GridwiseT™ Alliance and U.S. Department on Energy Office of Electric Transmission and Distribution, "GridWise™ Action Plan",

In a Memorandum of Understanding signed March 25, 2004, the GridWise™ Alliance and the U.S. Department of Energy’s (DOE’s) Office of Electric Transmission and Distribution jointly expressed their intention to establish a reliable and efficient electric system that will: (1) Utilize information technologies to revolutionize energy systems as they have revolutionized other aspects of U.S. business.  (2) Create value for all participants by developing and deploying technology solutions that cross enterprise and regulatory boundaries. (3) Enhance security and reliability through an information-rich power grid that is flexible and adaptive. (4) Empower consumers to benefit from their participation in the operation of the power grid. The MOU also calls for developing a joint action plan for realizing this vision by establishing working groups, forums and other vehicles that engage a broad array of stakeholders including the utility industry, regulatory organizations, energy, telecommunications and information technology vendors, consumer groups, government and non-governmental organizations. It calls upon DOE to implement those actions that it determines are prudent and consistent with its mission, scope, and resources, and asks DOE and the Alliance to specify activities that will be collaboratively pursued.

International Energy Agency, "Smarter Electricity Grids for Competitive Markets," IEA OPEN Energy Technology Bulletin Interview, (Issue No. 42, May 2007)

IEA's Implementing Agreement on Electricity Networks Analysis, Research and Development (ENARD) is one of some forty international IEA Implementing Agreement energy technology R&D programmes operating within the IEA’s collaborative framework. ENARD is contributing energetically to the knowledge and solutions essential for modern, equitable, resilient electricity transmission and distribution (T&D) networks. This interview with John Baker, Annex I Operating Agent, discusses several issues and challenges related to implementing smarter electricity grids in competitive markets.

Jamais Cascio, WorldChanging.com, "Smart Grids, Grid Computing, and the New World of Energy," (February 20, 2005)

It's likely that smart grids are coming, even without an aggressive shift to renewable energy. On top of dealing with variable, dispersed inputs, smart grids allow more efficient routing of power, with fewer idle or wasted generators. Smart grids would, in principle, allow an overall lower level of generation to support continued levels of use (or, more hopefully, a growing level of use of in turn more efficient buildings and devices). Smart grids are, in the end, a fundamental part of building post-oil, bright green communities. As more renewable energy production is connected to the general power grid, the more we will need smart systems managing the result.

Kate Green, MIT Technology Review, "Making the Power Grid Smarter" (May 12, 2006)

In a project launched in 2006, researchers have modified power-hungry appliances -- such as water heaters and dryers -- in hundreds of homes in Washington state to test how networked technology can both save homeowners money on electricity bills and relieve the strain on power grids. The experiments are done under an umbrella project called GridWise, a DOE-supported initiative to modernize the country's power grids by installing telecommunication, sensor, and computer technology into the existing power infrastructure. By networking major appliances to the Internet in order to monitor real-time electricity prices, and equipping others with specialized chips to track grid stability, the researchers hope to overhaul the antiquated electricity infrastructure and harness the power of real-time tracking to optimize energy use.

Patrick Mazza, Climate Solutions, "Powering Up the Smart Grid: A Northwest Initiative for Job Creation, Energy Security and Clean, Affordable Electricity" (July 2005)

In 2001 and 2003, Northwest energy and economic development organizations joined in the Poised for Profit partnerships to identify the region’s leading opportunities for developing clean energy technology industries. This paper focuses on practical steps to fully realize the potential of one of the top prospects uncovered by Poised for Profit, smart energy, the convergence of information technology and electric power. This paper is the outcome of a year-long collaborative process that began in summer 2004 which engaged regional and national energy and economic development experts in interviews, meetings and peer reviews.

Senator Maria Cantwell, "Press Release of Senator Cantwell: Cantwell Announces New Plan to Improve Efficiency of Nation's Outdated Power Grid" (Wednesday, April 25, 2007)

U.S. Senator Maria Cantwell (D-WA) announced landmark legislation to accelerate and encourage the development of a new nationwide intelligent grid system. A smart grid system and broader use of new technologies will improve energy efficiency, save consumers money on electricity bills, and help in the drive for energy independence. Reducing peak demand has the potential to save hundreds of billions of dollars in outage costs and in reduced need for expensive, inefficient power sources. Pacific Northwest National Laboratory calculates savings between $50 and $100 billion over the next 20 years.

Smart Grid Newsletter

Smart Grid Newsletter (SGN) is the insider's guide to this rapidly growing market. Sponsored by the Department of Energy, the GridWise Alliance, Pacific Northwest National Laboratory and other Smart Grid leaders, SGN serves the business, financial, utility, and entrepreneurial communities. It is also widely read by researchers, policymakers, government agencies, economic development groups, and others who have a stake in the progress of the electric system.

United States Department of Energy, National Energy Technology Laboratory, "The Modern Grid Strategy (MGS) -- Moving Toward the Smart Grid"

NETL’s Modern Grid Strategy (MGS) seeks to accelerate the modernization of our nation’s electricity grid. To accomplish this, MGS is fostering the development of a common, national vision among grid stakeholders. MGS is also working toward a framework that enables utilities, vendors, consumers, researchers and other stakeholders to form partnerships and overcome barriers. MGS also supports demonstrations of systems of key technologies that can serve as the foundation for an integrated, modern power grid.

United States Department of Energy, National Energy Technology Laboratory, "The Modern Grid Initiative:  Modern Grid v2.0 Powering Our 21st-Century Economy"  (January 2007)

Between now and 2020, more than $200 billion will be spent to maintain and expand our electricity transmission and distribution infrastructures, according to EIA. But without a modern grid perspective much of this money will be spent based on 20th century technology. This document describes the Modern Grid Initiative — its scope, stakeholder roles and responsibilities, project plan and timeline. It begins to explain why America needs to modernize its grid, as well as some of the associated challenges and opportunities. It also offers readers an opportunity to engage in the process of refining these concepts into a national plan for modernizing the grid.

U.S. Department of Energy, “National Transmission Grid Study” (May 2002)

DOE conducted an independent assessment of the U.S. electricity transmission system and found that our U.S. transmission system facilitates wholesale electricity markets that lower consumers’ electricity bills by nearly $13 billion annually. The National Transmission Grid Study made clear that without dramatic improvements and upgrades over the next decade our nation's transmission system will fall short of the reliability standards our economy requires, and will result in higher electricity costs to consumers. There is growing evidence that the U.S. transmission system is in urgent need of modernization. The system has become congested because growth in electricity demand and investment in new generation facilities have not been matched by investment in new transmission facilities. Transmission problems have been compounded by the incomplete transition to fair and efficient competitive wholesale electricity markets. Because the existing transmission system was not designed to meet present demand, daily transmission constraints or “bottlenecks” increase electricity costs to consumers and increase the risk of blackouts.

United States Department of Energy, Office of Electric Transmission and Distribution, "Grid 2030: A National Vision for Electricity’s Second 100 Years" (July 2003)

On April 2-3, 2003, 65 senior executives representing the electric utility industry, equipment manufacturers, information technology providers, Federal and state government agencies, interest groups, universities, and National Laboratories met to discuss the future of North America’s electric system. The intent of the meeting was to identify a national vision of the future electric system, covering the entire value chain: generation, transmission, distribution, storage, and end-use. The focus was on electric delivery – “the grid,” or the portion of the electric infrastructure that lies between the central power plant and the customer – as well as the regulatory framework that governs system planning and market operations. This document  describes the common vision articulated at that meeting. DOE will use this vision to help implement President Bush’s call for “…modernizing America’s electric delivery system” and the 51 recommendations contained in the National Transmission Grid Study.

United States Department of Energy, Office of Electric Transmission and Distribution, "National Electric Delivery Technologies Roadmap" (January 2004)

This Roadmap outlines the key issues and challenges for modernizing the grid and suggests paths that government and industry can take – both separately and together – to build America’s future electric delivery system. Elements of the Roadmap's Action Agenda include (1) Design the “Grid 2030” Architecture, (2) Develop “Critical” Technologies, (3) Accelerate Acceptance of Advanced Technologies, (4) Strengthen Electric Market Operations, and (5) Build Public-Private Partnerships.

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