Most current electricity grids were designed 40 to 50 years ago. Technology has moved on, and smart puts this new technology to work.

“Smart” represents a step forward in delivering modern, efficient energy systems.

By making better use of IT and new communication structures, and actively involving energy customers, smart will change the way we:

• Produce energy — Generation is currently centralized and heavily reliant on fossil fuels. In addition to traditional energy sources, smart grids can accommodate renewables (such as solar and wind) and other decentralized energy sources (such as micro-generation) more easily — which means they can play a much greater role in generation than they have in the past.
• Deliver energy to customers — Traditional electricity grids send energy one way, from the power plant to the customer. Smart grids send both energy and information two-ways. They use automated tools and sensors to improve network performance, as well as to measure energy flows between consumer and power sources — giving utilities more flexibility in how they manage supply and demand.
• Use energy — Smart homes and smart meters communicate with the smart grid — providing detailed information on energy consumption. For example, consumers can see how much energy their appliances are using in real time, and through “demand response,” they can take a more active role in how they use power and when. Demand response has two objectives: to reduce total consumption and, significantly, to change the timing of power consumption to avoid periods of peak demand and high prices.

So how is this possible? Most current electricity grids were designed 40 to 50 years ago. Technology has moved on, and smart puts this new technology to work.

Smart has three key components:

• The smart grid balances actual energy demand with energy generation. Smart grid activities — generation, transmission and distribution — are the domain of power and utilities (P&U) companies and are often referred to as “above the meter.”
• The smart meter is a device that can be read remotely. It measures actual energy consumption in real time for homes and businesses and relays that information to the grid.
• The smart home responds to remote signals from the utility through devices such as smart thermostats, which can be used to automatically reduce demand during peak times. Activities in the smart home are typically managed by supply and retail companies as well as energy service companies, and are often referred to as “below the meter.”