Smart Grid: A Must for Energy Efficiency

By Léo Apotheker of Business Week on December 17, 2009

Utilities worldwide suffer not only from a shortage of usage data that could help them plan, but from inadequate control over their own systems. Meanwhile customers commonly lack both awareness and incentives that could cause them to modify their usage patterns for the greater good.

This week at the U.N. Climate Summit in Copenhagen, world leaders will discuss an array of strategies for the reduction of greenhouse gas emissions. One of the strategies that's now ready for immediate and effective implementation is the widespread use of smart grid technology.

The smart grid will look a whole lot like our existing power grid, except that it will include real-time data collection, enabled by innovative software. At the heart of the smart grid is the smart meter—a digital electronic meter that will tell the utility how much power each of its customers is drawing at any time.

This will accomplish multiple ends. It will allow utilities to employ differential pricing, providing discounts to customers who use electricity at non-peak hours. As is already true of telephone usage and airline travel, for instance, this means increased efficiency, as users are billed more for a resource that costs more to produce at times of high demand and less for that same resource at other times.

Smart meters will also let utilities pinpoint power outages immediately and automatically, without waiting to be alerted by their customers. Load-induced outages can even be avoided entirely, as system software analyze real-time consumption across multiple networks and make it possible to distribute more power to the places where it's most needed.

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