smart gridOur nation’s electrical grid needs to be transformed in to a Smart Grid to avoid becoming even more of an economic and security risk. It’s time for a major overhaul, complete with automation, two-way communication, real-time information, and decentralized production & distribution networks.

by Jeremy Gross, Green Economy Post

Our nation’s existing centralized electrical grid is antiquated, operating in somewhat of the same manner and on the same principles as initially laid out by pioneers like Nikola Tesla in the late 19th and early 20th centuries.

The Smart Grid promises to modernize and expand our electrical grid using both existing and new technologies, concepts, and tools.  A key benefit of the Smart Grid is providing people access to real-time detailed data, empowering smart decisions that will help save the environment and money.

As I began my Smart Grid research, I found the Department of Energy’s Smart Grid guide (see Resources section below).  Their publication is the base of this post.  It is essential reading for anyone interested in building a Smart Grid knowledge base.

So what happens if we don’t do anything about the current state of the grid?  There are a number or risks and issues which we currently face – and will continue to be impacted by.

Risks & Issues

Efficiency – The Department of Energy (DOE) estimates that if the grid efficiency increased by 5%, we would save enough energy with the same impact of permanently removing the fuel and greenhouse gas emissions from 53 million cars.

The DOE also states that if each US household replaced one incandescent light blub with a compact fluorescent light bulb, the energy savings would allow us to light 3 million homes and save more than $600 each year.  Basically, this would enable us to not build additional plants and infrastructure.

Reliability – Five major blackouts have occurred in the past 40 years.  Three of the five have occurred in the past 9 years. The DOE says that in many areas around the US, the only way utilities know about blackouts is if a customer calls them.

We’re not talking about just flipping on the lights. This directly impacts the economy – refrigerated food goes bad, traffic lights turn off, and credit card purchases stop.

Let’s look at some DOE examples of blackout economic impact:

  • A rolling blackout across Silicon Valley totaled $75 million in losses.
  • In 2000, the one-hour outage that hit the Chicago Board of Trade resulted in $20 trillion in trades delayed.
  • Sun Microsystems estimates that a blackout costs the company $1 million every minute.
  • The Northeast blackout of 2003 resulted in a $6 billion economic loss to the region.

Affordability – The cost of fuel has risen dramatically, impacting the cost of electricity – which has doubled (sometimes more).

Security – Our centralized grid is vulnerable to attacks.  If a well placed and timed attack occurred, there would be a domino effect of failure.   Think about the impact to our security and traffic systems and banking and communications industries.

Environment – It’s well known that the US has 4% of the world’s population, but generates 25% of greenhouse gases.   A lot of those gases are attributed to our energy production, largely produced by burning coal.

By becoming more efficient and plugging in renewable energy production, we can reduce our grid’s negative impact.

What is the Smart Grid?

The Smart Grid is not just one technology or system. It is an umbrella term covering many different technologies and systems that work together to form a Smarter Grid!

The Smart Grid:

  • is automated
  • has decentralized production & distribution networks
  • has a two-way flow of electricity and information
  • monitors power plants, customer preferences, and appliances
  • provides real-time information
  • enables more of a supply and demand balance

It enhances each step in our energy network: generation, transmission, distribution, and consumption.

Smart Grid Benefits & Advantages

The Smart Grid will…

  • sense overloads and reroute power to avoid or minimize outages without human interaction
  • help meet increasing consumer demand without new infrastructure
  • allow any energy source to “plug” in to the grid along with new technologies such as energy storage
  • provide real-time pricing data and details so consumers can adjust energy consumption
  • create new opportunities and markets
  • deliver reliable power without interruptions
  • be decentralized and more resistant to attacks and natural disasters
  • environmentally friendly by reducing emissions

How will the Smart Grid apply to different stakeholders?

Utilities operate, maintain, and build our electric infrastructure at a cost of many billions of dollars.  DOE estimates that the Smart Grid will ease congestion and utilize more exiting capacity, enabling our existing network to deliver 50% to 300% more electricity.  Even with our ever increasing appetite for electricity, that means less infrastructure will need to be built, allowing dollars to be invested in other projects.  Otherwise, as The Brattle Group estimates, approximately $1.5 trillion will need to be spent between 2010 and 2030 on the additional infrastructure needed to cover increased electricity needs.

A large portion of our electric bill – between 33% and 50% – covers electric infrastructure costs. With the increasing electric demand, utilities will need to invest huge amounts of money in power plants, substations, and transmission lines.  Who ultimately gets stuck with the bill?  That’s right – consumers!

But the Smart Grid can help!  Consumers will have access to pricing details which will provide the ability to vary their usage and reduce consumption.  This is especially important during peak times where electricity costs are high. And when consumers decrease usage, less electricity production is needed, and utilities don’t need to invest in as much infrastructure.

Also, if you generate electricity at your house (i.e. solar, small scale wind), the Smart Grid allows you to sell any surplus back to the grid.

Electricity generation emits a huge percentage of our total greenhouse gases – somewhere in the ballpark of 40%.  By creating a more efficient and more renewable energy focused grid, greenhouse gas and criteria pollutant emissions will decrease.

Also, by providing real-time data, pricing, and carbon footprint information, consumers will be empowered to take steps to limit their environmental impact.

Some Definitions
As you learn more about the Smart Grid, you may hear a lot of specific terminology.  Here are a few Department of Energy Smart Grid definitions:

  1. Criteria pollutants – are six common air pollutants that the scientific community has established as being harmful to our health and welfare when present at specified levels. They include nitrogen dioxide (NOx), carbon monoxide, ozone, lead, sulfur dioxide (SOx) and particulate matter, which includes dirt, soot, car and truck exhaust, cigarette smoke, spray paint droplets, and toxic chemical compounds.
  2. Real-time Pricing – These are energy prices that are set for a specific time period on an advance or forward basis and which may change according to price changes in the market. Prices paid for energy consumed during these periods are typically established and known to consumers a day ahead (“day-ahead pricing”) or an hour ahead (“hour-ahead pricing”) in advance of such consumption, allowing them to vary their demand and usage in response to such prices and manage their energy costs by shifting usage to a lower cost period, or reducing consumption overall.
  3. Distributed Generation – is the use of small-scale power generation technologies located close to the load being served, capable of lowering costs, improving reliability, reducing emissions and expanding energy options.
  4. Off Peak – A period of relatively low system demand, often occurring in daily, weekly, and seasonal patterns. Off-peak periods differ for each individual electric utility.
  5. Peaker Plant or Peak Load Plant – A plant usually housing old, low-efficiency steam units, gas turbines, diesels, or pumped-storage hydroelectric equipment normally used during the peak-load periods.
  6. Peaking Capacity – Capacity of generating equipment normally reserved for operation during the hours of highest daily, weekly, or seasonal loads. Some generating equipment may be operated at certain times as peaking capacity and at other times to serve loads on an around-the-clock basis.

Resources – a source of news and analysis for the modernization and automation of electric power – a 2008 DOE Office of Electricity Delivery and Energy Reliability publication.  A great resource that explores “the nature, challenges, opportunities and necessity of Smart Grid implementation.”

How are you participating in our Smart Grid future? Leave a comment below!

© 2010, Jeremy Gross. All rights reserved. Do not republish.

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Author: Jeremy Gross (10 Articles)

Jeremy Gross is a beginner blogger who has always been drawn to the idea of the triple bottom line (planet, people, and profits) and green living. While studying for his B.S. in Business Management with a concentration in Entrepreneurship, he started a small, side business selling organic granola and cookies. Since granola wasn’t as lucrative as he hoped, for the last few years he has been a technically-oriented Business Analyst with a family-and-employee-owned bank in Seattle. Jeremy volunteers with a forest restoration program and an urban agriculture organization. He also enjoys working with plants, building terrariums, and spending time with his wife, daughter, and cat! If you’d like to reach Jeremy, contact him through He’d love to hear from you!

  • John

    Great article, I totally support the concept of a smart grid with decentralized generation. I was curious about the blackout examples you gave:

    – A rolling blackout across Silicon Valley totaled $75 million in losses
    – Sun Microsystems estimates that a blackout costs the company $1 million every minute

    Does this mean that the rolling blakout over the whole of Silicon Valley was for a couple of seconds?? If it was for an extended periond of time the $75M seems low, OR, it would seem like Sun was exagerating.

    Thanks, John

  • Prof.S.Shiva Kumar

    Smart Grids can no doubt,bring revolutionary changes.But the scale of operations also matter.In a country like India,the Smart Grids may be operating independently within each State.The moot question is how expensive will be the transition process from the from our present electrical grid to Smart Grids & will the present grids become redundant ?. Definitely a technology for the future with all the efficiency & environmental gains,but the thinking has to start now.