Answering the Question: What is a Smart Grid?

By Jeff MacKinnon, P.Eng., PE


The North American power grid is an incredible thing. Stretching from coast to coast, through mountains and forests and valleys, it is a massive network of power plants and transmission lines that deliver electricity to homes and businesses across the continent.

And it's old.

In the last couple of years, when talking about power grids, you may have heard a new term thrown around: "smart grid".

"The smart grid is the future of power generation."

"The smart grid is the future of energy management."

"We need smart grids to implement renewables and reduce carbon emissions."

So clearly, smart grids do a lot. However, what does the term "smart grid" really mean? If you look up "smart grid", you'll find that smart grids can do a lot of different things. From IEEE:

What is the Smart Grid?

Smart Grid deployment is imperative, not just in the United States but around the globe. But the smart grid is a revolutionary undertaking—entailing new communications-and-control capabilities, energy sources, generation models and adherence to cross-jurisdictional regulatory structures. Successful rollout will demand objective collaboration, integration, and interoperability among a phenomenal array of disciplines, including computational and communications control systems for generation, transmission, distribution, customer, operations, markets and service provider."

That's all well and good, but it doesn't actually tell us what a smart grid is: it just gives us some vague notions about what needs to be done for a smart grid to be deployed.

ABB has a similar take on it, but tries to give us a more concise definition:

"A smart grid is an evolved grid system that manages electricity demand in a sustainable, reliable and economic manner, built on advanced infrastructure and tuned to facilitate the integration of all involved."

This definition tells us what a smart grid is, but it still leaves more questions than it answers. Maybe we aren't asking the right question. Instead of asking, "What is a Smart Grid?", maybe we should be asking "What makes a grid smart?" has an answer to this question: "In short, the digital technology that allows for two-way communication between the utility and its customers, and the sensing along the transmission lines is what makes the grid smart. Like the Internet, the Smart Grid will consist of controls, computers, automation, and new technologies and equipment working together, but in this case, these technologies will work with the electrical grid to respond digitally to our quickly changing electric demand."

So the "smart" in smart grid has to do with how the grid handles communication and power control. Here's my list of what I believe to be a "smart grid".

A Smart Grid Monitors and Gathers Data About All Loads and Supplies

Smart grids monitor and gather data using smart metering technologies. For example, a home connected to the smart grid could be communicating with the utility via smart monitors such as the Neurio. This data can be used by the consumer to reduce their electricity demand (by not using electricity during peak power generating hours). Even better is if the monitor communicates directly with the utility, allowing the utility to cut the power to certain circuits in the home when necessary (think not being able to run your clothes washer, your dryer, your dishwasher, and your air conditioning all at the same time during peak power cost hours).

A Smart Grid Uses Gathered Data to Optimize Energy Generation

Optimal energy generation can mean different things depending on who you are talking to. For most people, optimal energy generation means producing as much energy as needed for the lowest cost. Traditionally this has been done with coal and gas fired plants, but smart grids can better use a combination of energy storage, renewables, and fossil fuels to achieve this goal. Let's be honest here: fossil fuels are never going away. Fossil fuels have one advantage that current renewables cannot match: on demand generation. When you need power, you burn more fuel. What a smart grid can do is crunch the numbers to reduce fossil fuel consumption. Since the smart grid is collecting all the data from the loads attached to the grid and the generation sources supplying the grid, it can determine when to use which resource when. For example, let's say you have a system with a far away coal fired plant, and closer solar, hydro, and wind resources attached to batteries. The smart grid will attempt to use 100% of these renewable resources (storing whatever it doesn't need at the moment in batteries), and will have a schedule for bringing on power from the coal fired electricity based on :

  • The load profile of the whole system.
  • The generation profile of each electricity source.
  • The cost of burning fuel and transmitting that fuel powered energy across long distances.

And it'll do all of this automatically.

The Smart Grid is Predominantly Made Up of Distributed Generation Sources

Right now the power grid is heavily centralized: large, expensive power plants in urban and industrial centers generate power and distribute it hundreds of kilometers (or miles) away from the source along large networks of transmission lines. The smart grid is all about distributed generation. This distributed generation is a result of two big things:

  • Improved communications and controls that you get with the data monitoring and optimization that I talked about above.
  • Improved efficiency and widespread adoption of renewable energy resources.

It makes sense for loads to be close to their supplies, but you can't just build renewables wherever you like. Solar panels need enough sun, windmills need enough wind, hydro needs access to a river or dam, tidal needs to be on the coast, and geothermal needs a massive underground heat source. These of course have to be combined with smaller fuel based power plants for times when extra energy is needed on demand (since energy storage technology isn't good enough yet to forgo fossil fuels entirely). All of this means that integrating renewables with the grid causes generation to be distributed more widely. These distributed sources won't have as much capacity individually, but combined can match large, centralized power plants. There are two big upshots here:

  • All of the renewables being used reduce fuel consumption and carbon emissions.
  • More distributed generation sources means electricity doesn't have to travel as far, reducing transportation costs.

In short, more distributed generation with efficient renewable usage reduces power costs.

The Smart Grid Reacts Faster and is More Reliable than the Traditional Grid

Because the smart grid is constantly gathering data and monitoring the power system, it can react fast to any instability or service interruptions. Because there is so much distributed generation and the grid is optimizing supply usage, there are many available power sources that loads can be shifted to. If there is a problem with one supply, loads can be shifted to another supply to maintain service.


To sum it up, smart grids do four key things better than the traditional power grid:

  • The smart grid monitors and gathers more data than the traditional grid.
  • The smart grid has better control and optimization of energy resources than the traditional grid.
  • The smart grid has more distributed generation than the traditional grid.
  • The smart grid is faster and more reliable when faced with abnormalities than the traditional grid.

Hopefully now you know a little more about smart grids! If you have any questions, feel free to shoot me an email at Even better, sign up for our newsletter! Every week, we provide all sorts of cool information about power systems and electrical safety. We might even answer questions you didn't know you had! As always, thanks for reading!