We have been hearing a lot about the smart grid lately.  In June the Obama administration unveiled its new smart grid initiative which includes a host of programs to update our aging power grid and make it more efficient.  Some utilities are ahead of the curve, having already installed smart meters in the homes and businesses.  The grid is a century old and hasn’t undergone any significant, nationwide modernization effort since the Great Depression. 

There is little doubt that we can build a smarter grid by adding and upgrading functionalities of the current infrastructure.  But how effective can that be?  If you start with an aged grid, there is only so much new technology can do to enhance efficiency, provide better monitoring capabilities, supply real-time information, support decentralized generation and allow for multi-directional transmission, all of which are important, if not essential, features of a truly smart grid.  It is possible that we may see better, more efficient smart grids in developing countries because mature economies may be slower or less able to adopt the necessary technologies due to their significant investment in existing distribution networks.  For example, India is moving forward with mini smart grids or micro-grids to bring electricity to relatively inaccessible areas.  These mini smart grids work on a combination of solar cells, micro-hydro power plants, wind turbines and biomass, using the national power grid and small diesel-powered generators as back-up power sources.  The first example of India’s mini grid is at Gurgaon, outside of New Delhi. 

Given that the U.S. has extensive grid infrastructure already in place, modernization must occur in a step-by-step fashion, with the goal of upgrading each area of functionality within the system.  The entire process can and will have to be done over time, rather than all at once.  Automation of generation facilities, substations, distribution, demand response and metering can evolve separately or in conjunction with one another. 

Overlying all these issues is the fact that the U.S. has been unable to agree on any meaningful smart grid standards.  We know our grid can get smarter, but exactly how smart remains to be seen.