Smart Grid: New Investment in Electricity

We take electricity for granted when flipping a switch to light a room. If Wall Street suddenly comes down due to a blackout, we’ll begin to think that a smart grid is necessary.

What is a smart grid anyway? It is an updated version of the decades-old electricity distribution system existing in many countries especially the United States. Billions of dollars are now being invested to help the utility companies build a smart grid for the future.

A smart grid has to fulfill the following requirements:
• To guard against disruptive blackouts.
• To provide capacity for future growth.
• To minimize electricity loss during transmission.
• To monitor consumption at end points in order to produce electricity efficiently, especially during peak hours.
• To take in surplus renewable electricity from solar and others generated by households, offices, wind farms, etc.

Up to now, utility companies in the US produce electricity by mainly burning fossil fuels like oil, gas, or coal. These used to be abundant and cheap. So cost efficiency in production and distribution has not been a big issue. Rising oil prices have changed the equation entirely. It’s a big challenge now to produce enough electricity for peak hours during the day, and reduce supply to save costs during nights and weekends. In addition, the dangers of warming climate have forced the use of clean energy to gradually replace fossil fuels.

To save fuels and costs, a smart grid must have two new features: to monitor consumption by allowing feedback from consumers, and to transmit surplus renewable electricity fed into the grid by end users. These features will enable utility companies to adjust production in real time to achieve better efficiency.

(July 2010)

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