10 facts about the smart grid: IT's role in unlocking clean energy

The smart grid is critical to the future of energy. Here are 10 important facts about the future of standardized clean energy technology.


The electricity utility industry is undergoing massive changes. Our energy grid has been around for a long time, and it shows. It's inefficient, costly, and unreliable. The need for smart grids is becoming increasingly necessary worldwide, and utility providers need to focus on cleaner energy, smarter storage, and cost-effectiveness.

Here are 10 facts about the smart grid to get you up to speed:

1. New technologies are the core of smart grid growth

Growth in the smart grid industry encompasses many types of technology. For example, core areas include:

  • transmission gear
  • distribution automation, an intelligent distribution system that is flexible and controllable
  • smart meters
  • sensors and software

There are also grid-edge technologies such as:

  • demand response, which includes systems that monitor and regulate the timing, level of demand, and total electricity consumption
  • distributed solar PV
  • electric vehicle charging stations

2. There are various ways to handle the smart grid

The way the Department of Energy is tackling this is more theoretical — they are working from the top down to create a giant, standardized smart grid for the US. That way, the power rests in the hands of utility companies and government regulators.

"A lot of what you read [is about these] fancy control systems that are real time and control [everything] and do state modeling and make fast decisions," said Tim Hennessy, COO of Imergy Power. "That's going to take 10 years plus because you have to build up infrastructure around telecommunications that is secure and real time."

But, Hennessy said, we need to think about it in terms of micro grids. If we create microgrids within buildings or in local areas, we will be able to optimize all of the energy used, then cut back on things such as air conditioning, look at the financial side, find out what the grid is charging and then make an appropriate decision.

"It's much simpler and quicker than making whole grid smart," he added. "We'll be fighting with utilities...they have a very different mindset, much more justified around security, because they don't want to take risks. We have to start at the end user and move upwards and eventually, I think they will come down."

3. A smart grid is much more efficient

Because we have used it for so long, our grid fails more frequently, and it's costing all of us. Today's electricity system is 99.97% reliable, yet still allows for power outages and interruptions that cost Americans at least $150 billion each year — about $500 for every person, according to the Department of Energy.

"Growth in smart grid is no longer a luxury for utilities—aging infrastructure, retiring personnel and the proliferation of distributed generation resources like solar are creating a situation where the last generation of technology will no longer adequately ensure a safe, stable grid," said Richelle Elberg, senior research analyst for Navigant Research.

4. We are spending more money on the smart grid

Navigant Research's recent report "Smart Grid Technologies" outlined market obstacles and gave a detailed global view of initiatives. For example, Elberg said, in Africa today most of the focus is on extending electrification and transmission networks to places where they've never been built. In Europe, the rapid rise of solar and wind means that the utilities need better visibility to the edge of the grid.

"Each region has its own drivers—but we see strong growth ahead in virtually all parts of the world," she added.

The report stated that cumulative spending on smart grid technologies is supposed to increase to $594 billion by 2023. The report also said that the decreasing costs for devices and networks, as well as the desire for this kind of technology are the main reasons for this rapid growth. Government mandates will help push it even further. Navigant Research estimates that smart meter penetration is at about 43% right now in the US, and distribution automation initiatives are on the rise but actual penetration remains quite low.

"We are still in the very early stages of smart grid on a global basis, and even in the U.S., where stimulus funding jump-started spending a few years ago, there is still a long way to go before we can say that smart grid technology is truly widespread in the grid," Elberg added.

5. Companies are turning the smart grid into services

Hardware and software vendors are vying to turn the smart grid technology into management services. Some of the services include home energy management, advanced metering infrastructure, distribution and substation automation communications, asset management and condition monitoring, demand response, software solutions, and analytics. Navigant Research forecasts that the global market for this will grow from $1.7 billion in 2014 to more than $11.1 billion in 2023.

6. There are real risks involved with the smart grid

Relying on a smart grid comes with its own risks. Smart meters are really just computers, and they can be hacked. According to the Department of Energy, the "cons" to a smart grid are: the current low cost of electricity, the shorter life span and a less reliable track record than conventional meters, and the security breach risk.

7. Workforce development is key

In the coming years there will be a workforce shortage in all aspects of STEM careers, but one of the most pressing is the availability of jobs pertaining to the smart grid. The Department of Energy promotes the Consortium for Electric Reliability Technology Solutions to develop new methods for advancing the smart grid via universities and other institutions.

8. IT jobs in smart grid will be in demand

"I personally think that the market for IT solutions will be one of—if not the—largest categories among all of the components of a smart grid. We see the market for smart grid IT, including analytics solutions, growing to more than $23 billion in 2023," Elberg said. "The only larger category is transmission upgrades, which will be necessary for the grids of the future, but aren't 100% tied to actual 'smart' technology."

There's a lot of talk about demand for data scientists, Elberg added, but many utilities won't be able to afford them. Outsourced solutions, where a service provider can leverage one expert across multiple utility clients, are quickly becoming more popular.

9. Energy storage is the main hurdle

Energy storage systems need to be broadly deployable, widely available, and enablers of all renewable energy technologies. Unfortunately right now, they are expensive and difficult to manufacture, so storage systems need to become more cost competitive, reliable, safe, and standardized. If people purchase solar panels, their unused power is going back to the grid, and it's expensive. But, it's growing. The world energy storage market will reach $50 billion by the year 2020, according to Lux Research.

10. There are legislative mandates for the smart grid

In December 2007, Congress passed Title XIII of the Energy Independence and Security Act of 2007 (EISA). The EISA provided the legislative support for the Department of Energy's smart grid activities. There is a smart grid advisory committee and task force, regional demonstration initiatives, and allowance for the Department of Energy to develop a federal matching funds for smart grid initiatives.

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About Lyndsey Gilpin

Lyndsey Gilpin is a former Staff Writer for TechRepublic, covering sustainability and entrepreneurship. She's co-author of the book Follow the Geeks.

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