top of page

Smart Grids: everything you need to know in 2020

The electrical grid–the interconnected web of power plants and transmission lines that keeps the lights on throughout the country–is a feat of modern engineering. However, it was built for a different era. In order to accommodate the increase in distributed energy resources (like solar), as well as to improve the overall resilience of the electrical system, the grid of the future will be a smart grid.

Key points about smart grids

  1. Smart grids are advanced electrical grid setups, designed for the two-way flow of information and electricity.

  2. Smart grids can help utilities and their customers save money on electricity costs

  3. You can be a part of the smart grid revolution by generating your own solar power: explore your options on the EnergySage Marketplace

What are smart grids?

At its core, the concept of a smart grid is quite simple: it is a grid designed for the two-way flow of information and electricity. This may sound like a straightforward distinction, but in reality, it’s a major difference from how the electrical grid has historically operated.

Traditionally, utilities or grid operators have no insight into how end-users actually consume electricity: they see there’s demand for more electricity, so they ramp up production from power plants and supply more power to the grid. Although this approach made sense as the grid expanded originally, now electricity usage has evolved in the country. 2 million homes have installed solar on their properties, meaning they’re no longer just consumers, but now “prosumers” who both produce and consume electricity.

In order to meet these changing needs, the federal government created an official, ten-part definition of what constitutes a smart grid in the 2007 Energy Independence and Security Act, while the 2009 federal stimulus package provided grants for smart grid demonstration projects across the country.

Smart grids vs. microgrids

Recently, microgrids have received attention as a way to provide improved resiliency and reliability in California in the wake of the wildfires and public safety power shutoffs from utilities. Microgrids act as smaller, self-contained versions of the larger grid and allow certain neighborhoods or entire regions to remain energized even in the event of a blackout on the rest of the grid. Importantly, all microgrids are smart grids, but not all smart grids are microgrids.

How do smart grids work?

The fundamental technology that enables smart grids are smart meters. Smart meters, which are also referred to as advanced metering infrastructure (AMI), are what allow for the bi-directional, two-way communication between you and your utility. And, as seen below, AMI is increasing throughout the country, with over half of all electricity meters now converted to smart meters.

Previously, electricity meters had to be read by hand, or by utility employees driving from neighborhood to neighborhood with radio receivers in trucks, and the data would not be particularly granular: you might have one data point per month. Smart meters, on the other hand, provide data points every five minutes (or even more frequently) to your utility, the grid operator and, often, even to an app or web interface where you can track your own usage.

With all of this additional data comes improved insights into electricity usage profiles: how much do you use and when do you use it? With this information in hand, utilities can design rates that more accurately reflect the cost of producing electricity at different times of day or in different seasons (such as time-of-use rates), and can provide incentive programs to encourage customers to use less electricity when it’s expensive and more when it’s cheaper to produce (like demand response programs).

The applications of and abilities of a smart grid can expand much further as additional “smart” devices are added to the system. Interconnecting smart appliances–from dishwashers to programmable thermostats and more–can allow for greater visibility into electricity usage, and greater flexibility for grid operators.

For instance, if every home in a region has a smart dishwasher, instead of each house turning on the dishwasher after dinner on weeknights at a similar time, which would cause a spike in both demand for electricity and its price, everyone could set their dishwasher to run at some point during the night between 10 PM and 6 AM. The utility or grid operator could send price signals to the appliance to indicate when it’s the best time to run, or could proactively tell certain appliances to run at certain hours, smoothing demand and decreasing prices for everyone on the system.

Benefits of smart grids

There are many benefits to building a smart grid:

  1. Better integration of renewables: smart grids can more dynamically respond to any shifts in output from renewable resources (either large-scale or distributed) in part by shifting demand or by calling on storage resources, which enables better integration of renewables system-wide.

  2. Improved performance of distributed energy resources: instead of relying on a centralized network of resources, smart grids can actively manage supply and demand at a distributed level, making sure any output from distributed resources–such as rooftop solar–is used as effectively as possible.

  3. Fewer electricity losses: around 8 percent of electricity can be lost as a result of transmitting it over long distances, from far away power plants to large population centers. The ability to better integrate distributed resources means that smart grids have the added benefit of reducing electricity losses by keeping both supply and demand local.

  4. Better resiliency and reliability: with the amount of data that’s provided by smart grids, it is much easier to diagnose and solve any potential problems on the grid, as well as to restore service quicker in the event of an outage.

  5. Load balancing for lower-cost service: by better balancing electrical supply and demand, and by allowing demand to be responsive to when supply is cheapest, smart grids can reduce the cost of electricity for everyone on the grid.

Take the first step towards a smart grid with solar

To join the smart grid revolution, there are a few steps you can take. First, you can consider installing smart home devices, which will allow your home to be smarter and more efficient with how it consumes electricity. Next, consider installing solar on your property to transition from a consumer to a prosumer of electricity. Not only will installing solar help you transition to the grid of the future, but it will also save you money for decades to come. Sign up for a free account on EnergySage to receive custom solar quotes for your home from local solar companies.


bottom of page