Smart grid is the future....

Inputs for this post derived from this journal.


Smart grid is the future. Reforms in the electricity industry can be achieved with better technology, increased investments on transmission and distribution lines even as it remains supported by a new regulatory compact that helps inter-state power transactions


Smart grid is a computerized system that can schedule energy transmission and distribution, correcting load imbalances even as it permits electricity to run both ways even on distribution lines. Smart grids enhance distributed generation by incorporating net metering capacity and providing real-time information on demand, supply and consumption. Smart grid improves economic and energy efficiency for the benefit of developing nations.

Smart grid will facilitate “demand response programming”, fine-tune price signals, especially so with renewable energy, and offer real-time accurate pricing for end-users. It enables energy producers and consumers to capture more surpluses and connect renewable energy sources to the traditional system. Smart grid forces utilities to expand their businesses to include energy efficiency. Smart grid investments could garner higher returns for those utilities that are also engaged in the business of sale of energy efficiency and relevant technologies.

Energy policies should “internalize the costs of the externalities” by addressing the social costs of pollution into the price of electricity. China has surged ahead in building smart grid technology and while India in collaboration with IBM has just begun to conduct cost-benefit analysis of smart grid initiatives and determine India's readiness to deploy smart energy technologies.

A step towards smart grid will be to infuse more investments into renewable energy projects and evolve a rate formula that discourages consumption, reduces the demand and promotes conservation. Renewable portfolio standards (RPS) and Renewable energy credits (RECs) are some of the obligations placed on the utilities to meet their commitment to generate power through renewable energy sources with disclosure requirements.

What seems equally important at this point in time is the development of a regulatory framework to make smart grid work effectively. Renewable energy obligations need to be imposed upon utilities through an appropriate regulatory and legal framework which can eventually tie itself up to the smart grid framework and enable purchase of power from other states with better enforcement of the renewable energy obligations on utilities. 

IEA on Smart Grids