What is a smart grid?

The grid that delivers electricity to end users – the infrastructure from high-voltage power lines and substations to house meters – is undergoing radical change and becoming intelligent.

Knowledge and communication now define modern power grids, transforming a system of wasteful force into an efficient, balanced energy system that safely manages electricity with both precision and economy.

Most power grids were built when energy was a cheap commodity that was easier to waste than to manage carefully. Excess capacity was the norm, and conservation was not the virtue it is today. But energy demands have skyrocketed, as have the costs of service interruptions. Increasingly, power comes from diverse, decentralised sources such as wind farms and solar panels. The imperative to reduce carbon emissions colours the effort green – a 5% gain in US grid efficiency would have the same effect as eliminating the emissions of 53 million cars.

A smart grid delivers electricity using digital technology to save energy, reduce cost and increase reliability and transparency. It has three main characteristics:

1) sensors such as smart meters, phasor measurement units (PMUs), and optically powered data link (OPDL)-enabled current transducers throughout the infrastructure;

2) networking via fibre optics, Wifi, and broadband over power lines (BPL) that communicates real-time data for all operations;

3) computing power and software that makes intelligence actionable and transactive.

The bottom line is a more efficient and reliable grid that supports burgeoning electrical power requirements. A smart grid can vastly reduce energy consumption among consumers while ensuring uninterrupted, balanced power availability.

The opportunity

For telecoms and technology companies, smart grids create a huge near-term opportunity. Market estimates vary widely, but there is near-universal agreement that the infrastructure of integrated communications and sensing and measurement devices, and the control structures to manage them, will require considerable, ongoing investments.

China leads the world in smart grid implementations. Germany is in the midst of a massive expansion in renewable energy and a smart grid is an integral part of the development. In the US the Department of Energy is funding $4.5 billion in 2010 for US smart grid growth.

The systems

The intermittent nature of renewable power sources is a major factor driving smart grid implementations. Conventional power sources generate electricity on demand, output is controllable and operators can plan and manage a predictable energy flow. Renewable power sources – wind turbines, concentrated photovoltaics (CPV), and other types of solar cells – depend on less predictable factors such as wind velocities and cloud cover, and operators must constantly balance the grid to accommodate constantly changing output levels. In a smart grid, OPDL-enabled current sensors and wide-area measurement systems (WAMS) consisting of thousands of PMUs and smart meters dispersed throughout the grid tell operating and control systems exactly what energy flows are happening where, how much energy each particular source is generating, and how much power each consumer is drawing.

The network infrastructure linking all these data sources varies depending on several factors. At the end-user level, smart meters can use Wifi and BPL technologies to communicate. At higher levels, fibreoptic networks ensure the fastest, most accurate data transmissions and companies like Cisco are heavily promoting Ethernet over internet protocol (EoIP) solutions to take advantage of the advanced networks.

Advanced supervisory control and data acquisition (SCADA) systems that manage smart grid data and communications are undergoing dramatic change. SCADA systems use open standards with Ethernet and TCP/IP protocols, and many solutions are software-as-a-service (SaaS) or Web 2.0 type implementations. However, security is a major concern for smart grid SCADA systems, considering the major impact of even minor service interruptions. It remains to be seen whether advanced encryption and anti-virus techniques can protect SCADA systems from malware and more sinister attacks.  

The future

It is quite unusual that such critically important systems such as our power grids have evolved with relatively limited overall command and control intelligence – the real-time knowledge of how electricity is being produced, distributed, and used. For the most part, the systems have developed incrementally and are not well integrated.

Yet this is changing, and rapidly. The deployment of smart grids are inevitable next steps in our attempts to deliver adequate power to an increasingly voracious global energy appetite. The economic opportunities are considerable for companies that can streamline and optimise the development of smart grids. Infrastructures will require advanced metering equipment, time-of-use and real-time pricing tools, and advanced switches and cables. Innovations in superconductivity, fault tolerance, storage, power electronics, and diagnostics components will contribute towards even greater grid efficiencies.

Jan-Gustav Werthen received his PhD in materials sciences from Stanford University. He is JDSU’s senior director of photovoltaics. Reach him via