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What is Smart Grid Technology?

Demand for electricity is expected to continue growing at historical rates for the foreseeable future. While utility companies strive to meet that demand by financing and constructing new power-generating plants, fueled by coal, atomic energy, wind, sunlight, and water, they’re also scrambling to create a “smart grid.”

The essence of the smart grid technology is using information technologies to better manage the generation, flow, and most important, the consumption of electricity over the course of each day and each season. By monitoring and managing the flow of current at a much finer scale than is possible today – metering its usage down to the level of individual office buildings and homes and even specific light sockets and appliances – it should be possible, experts say, to better match supply and demand on a minute-by-minute basis and thus conserve electricity and save everyone significant money.

As it is, the nation’s hundreds of electrical power-generating facilities pour their electricity into a vast network of long-distance and local power lines – the electrical grid. Much like water in a set of tanks connected by pipes, this electricity sloshes around within this grid and the grid’s managers do their best to move current to wherever demand is highest – to the time zone where it’s morning, for instance, and millions of people are switching on lights, showering, shaving, cooking breakfast, and starting their clothes washers.

Unfortunately, all the grid’s managers can do is increase supply as best they can. They have no control over demand. They cannot, for instance, charge Mrs. Jones more for running her washing machine at breakfast time rather than in the middle of the night, when overall demand for electricity is particularly low. Instead, the power companies always have to be ready to supply power to every Mrs. Jones at any moment of the day. This has meant constantly building more and bigger generating stations.

Smart grid technology would change this scenario by enabling market signals to be collected, distributed, and interpreted in more or less real-time. As demand rose in a particular area – due to unexpectedly hot weather, for instance – residential and office air-conditioners might be remotely adjusted by the power company to run a bit warmer in return for a break in the price of electricity.

Ultimately, by providing more control over the consumption of electricity, the use of smart grid technology could save the U.S. billions of dollars.