MainStreet Explains: Smart Grids


There has been a lot of talk about improving the nation's aging power infrastructure, some stemming from President Barack Obama's plan to provide incentives for energy upgrades and "smart-grid" technology to boost the economy.

So, what's a smart grid and what does it mean for you?

A smart grid would turn our energy system into an interactive network connecting power stations, meters and home appliances. Utility companies would be able to collect real-time information about demand and supply to avoid blackouts, repair problems and get consumers to conserve. Some companies are already on board.

Electricity providers have been installing meters they can read remotely. Exelon (Stock Quote: EXC) uses them to spot outages before angry customers start calling.

Whirlpool (Stock Quote: WHR is developing appliances that can exchange information with power companies. Utilities could use that data in a Web site that would show consumers the devices using the most juice in their homes.

Companies ranging from Google (Stock Quote: GOOG) to little-known Comverge (Stock Quote: COMV) are developing tools to help consumers track their power usage. The idea is that if we know how much it costs to run energy-guzzling appliances, we'll use air conditioners less and wash clothes in cold water.

Demand is expected to grow twice as fast as capacity in the coming years, according to the North American Electric Reliability Corp. Our consumption already outpaces that of other Western nations on a per capita basis. Studies show that being able to track power usage typically leads consumers to cut back by 5% to 15%.

Consolidation Edison's (Stock Quote: ED) handling of New York's outages last summer reveals the "dumb" state of our grid. The utility provided an online map that showed the locations of outages and repairs. But the clumsy map was updated every half hour based on phone calls from customers and Con Ed workers.

A smart grid would use a wired and wireless network to help utilities identify the source of the biggest power drains. This would help them stave off blackouts during heat waves and keep the current flowing when they need to shut down a plant for maintenance.

After remotely spotting the outages, they might be able to reroute power and even fix broken lines remotely. All this means better service and fewer involuntary candlelight dinners.

The next step would be to allow utility companies to ratchet down customers' power use during critical periods. For example, they would be able to send a signal to your dryer to spin without heat to avoid brownouts during the summer.

The Pacific Northwest National Laboratory tested this smart-grid scenario in Washington state and Oregon in 2006 and 2007. The group brought dryers and water heaters online using technology developed by IBM (Stock Quote: IBM) and General Electric (Stock Quote: GE). Consumers in the study didn't notice when their energy flow was reduced, the lab said.

Still, it might seem intrusive, or at least inconvenient, to allow a company to reach into one's home that way. I expect utilities to provide incentives like rebates and lower rates to entice customers to sign on.

We use electricity without much thought about how much we need, where it comes from or how much it costs. If a smart grid makes it easier for us to wise up, I'm all for it.



—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at

Show Comments

Back to Top