Smart grid redefined

Smartness in the grid is generally associated with the ability to (1) sense and understand the state of the network (2) control devices in the field to alter the state of the network if necessary and (3) decision-support tools that allow the sensed information to be converted into controls.

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Jul 25, 2017
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Author: Mani Vadari


The Smart Grid is the biggest thing to hit the electric utility industry over the last 40 years. Was the grid dumb before and is now on its way to becoming smarter? Yes, and no. If you ask four people “what is a Smart Grid?” – You will get five answers. Defining it is very important and this study attempts to do just that. The study starts by defining what the Smart Grid can and should deliver and uses it to define the Smart Grid. The author also presents a construct identifying various components of Smart Grid followed by their descriptions. Understanding these components is important because as technology progresses, one or more of them may replace. The paper ends with a description of two prominent Smart Grid implementations, one in US and one in Europe followed by what the future holds for this area and the challenges that it may pose. The Smart Grid is not just a technology play but a journey that must be followed with changes in people, processes driving business transformation [1]. If these are considered in totality, then the implementation will be successful. If not, the benefits will be lower than expected.


Smartness in the grid is generally associated with the ability to (1) sense and understand the state of the network (2) control devices in the field to alter the state of the network if necessary and (3) decision-support tools that allow the sensed information to be converted into controls. The first two were somewhat sparse until now mainly because of cost. There was no single pivotal event that triggered the onset of the Smart Grid. Rather, it was a series of somewhat disconnected events and expectations that led to this revolution.

  • Changing customer expectations and actions: The customer who is more used to the iPhone era, is expecting a similar response from the utility with a better handle on outages, smartphone apps that provide quick feedback on status of outages, more choice on power use.
  • Customers are also enacting changes that impact the grid. They are installing wind farms, solar PVs, buying electric cars and others changing the delivery landscape and the relationship between the utility and the customer.
  • IT technologies that are cheaper, consume less power and are smaller in size: Sensors and controls are being designed that, thanks to cheaper access to ubiquitous communications are able to allow the utility operator to better control the flow of power at a lower cost of installation.
  • More alternatives to solving the same problem: newer OT (Operations Technologies) alternatives covered under a broad grouping called Distributed Energy Resources are providing alternatives to supply, transmission and consumption of power.

Much progress is being made is all the areas. Newer technologies are being developed, costs are coming down and more capabilities are being implemented all leading to more opportunities to support increased sensing, controls and intelligence in the network. This perfect storm that is being influenced by the changes identified above, is called Smart Grid and is altering the entire utility power system landscape.

Defining the smart grid

The smart grid can be defined as a modernised electrical grid, a transmission and distribution (T&D) infrastructure that is reliable and secure, and one that can meet demand growth in the future, while intelligently responding to the behaviour and actions of all the electric power users connected to it – delivering power in a reliable, efficient, economic, and sustainable manner.

The greater focus of smart grid is on distribution. The transmission system already has extensive sensing and control which is increasing with newer technologies such as synchro-phasors, associated controls, and decision-support systems. The long overdue move to distribution was due to several factors such as (i) increasing expectations of the customer for greater reliability; (ii) increasing complexity in the types of consumption devices being added to the grid such as newer TVs, smartphone and electric vehicle (EV) charging, and EVs leading to an increasing need for better power quality; (iii) increasing need to reduce the dependence on fossil fuels and reduce greenhouse gas (GHG) emissions resulting in increasing penetration of distributed renewables; (iv) an increasing need to reduce costs to the customer; and (v) several others [8].

The smart grid:

  • Is intelligent in sensing system overloads and taking corrective action.
  • Can accommodate renewables and distributed energy.
  • Is sustainable for the future by reducing dependence on fossil fuels and decreasing carbon emissions.
  • Is resilient to natural disasters and attacks.
  • Is efficient in meeting increased consumer demand without adding infrastructure.
  • Provides a safe environment for utility workforce and consumers.
  • Is quality focused in delivering the power quality needed for a digital economy.

This means that there are several dimensional components to a smart grid.

Dimensions of the smart grid

Fig shows the smart grid and all of its dimensions.

  • On the utility side, they are: distributed energy, energy storage, T&D automation, advanced operational systems, microgrid, and data analytics.
  • On the customer-premise side, they are: electric transportation, smart meters, smart homes and buildings, demand response, and energy efficiency.
  • Communications and cyber security cover all dimensions and are central to the smart grid.

Fig 1: Key qualities of a smart grid

Fig 2: Key dimensions of a smart grid

Fig 3: Key components of T&D automation (adapted from source: NETL)

Fig 4: Grid4EU project partners (source:

This means that the smart grid is a lot more than just the electric grid becoming smart. Each segment of the electric value chain becomes smarter with deployment of modern technologies. These dimensions of the smart grid are very important to understand how the new infrastructure is coming together in the age of the smarter grid.

Distributed energy resources (DER)

DERs are defined as the set of small-scale power generation technologies that are located close to the load that is being served. DERs are characterised by small and modular construction with (1) outputs typically in the kW range, (2) can be based on renewable or non-renewable sources of energy and (3) are quieter and less polluting than large power plants [3,6,11].

DERs can be of various kinds some renewable and some not. The New York State renew the energy vision (REV) report classifies the following as DERs: biofuels (including biogas), cogeneration, demand response (DR), energy efficiency (EE), energy storage (including batteries, fuel cells, flywheels, thermal etc.), hydro-electric generation, PV, and/or wind. They differ in their characteristics and the services they can provide.

Energy storage

Electric energy storage is defined as a set of technologies that is capable of storing electrical energy that was previously generated and can be released at a later time. It can use chemical, kinetic, thermal, and potential energy forms to store energy so that it can be converted to electricity later on.

Energy storage has applications along the entire electric value chain. It can be used to store energy from large-scale renewable generation for use later. It can also be deployed at substations to provide power supply to substation equipment and computers. It can be installed at commercial, industrial, and residential customer premises to provide grid-independent or emergency power. There are various storage technologies in different states of development and their usage depends on their energy and power characteristics.

Energy storage is a game changer for the electricity grid. It has the potential to solve the age-old problem of having to generate and consume electricity in real time, leading to a more reliable and flexible grid.

T&D automation

T&D automation is the process of monitoring and controlling the grid via the use of intelligent devices, instruments, and advanced components. It is enabled by integrating the devices and components in the field with the analytical tools in the control centre via two-way communications networks.

The key components of automation include:

  • Advanced sensing and measurement.
  • Advanced components.
  • Advanced control methods.
  • Improved interfaces and decision support.

Automation technologies enable smarter sensing of grid issues such as faults, congestion, overloads, and real-time control to alleviate these issues leading to more optimal utilisation of existing assets.

Advanced operational and decision support systems

Advanced operational systems are the set of applications, algorithms, and technologies that enable the analysis, diagnosis, and prediction of conditions in the modern grid. They help determine and take appropriate corrective actions to eliminate, mitigate, and prevent various conditions such as outages, power quality disturbances, and so on. These systems provide control at the transmission, distribution, and consumer levels. The monitoring and control action can be at the control centre level or the local power system level.

Examples of operational systems include: supervisory control and data acquisition, energy management system, outage management system, distribution management system, and distributed energy management system (DEMS), an emerging system to manage distributed energy sources.


A microgrid is defined as a group of loads and generators that are interconnected, very often also supported by DERs within an electrical region that allow it to act as an independent entity that can be controlled independent of the larger grid. Some microgrids can connect and disconnect from the grid to enable it to operate in both grid connected and island modes [5].

Microgrids can be designed to meet the needs of the consumers it serves and can be replicated in any system where the power infrastructure is locally owned and managed. They can be deployed at university campuses, commercial and industrial locations, military bases, islands, and in communities.

There are several smart grid technologies that enable microgrids. They are distributed generation, energy storage, automated demand response, islanding and bi-directional smart inverters, and microgrid control systems.

Data analytics

Data analytics is the process of converting data collected from meters, sensors, switches, and other devices deployed in the field into actionable intelligence, for use by the utility. It provides the utility with insights into performance of the power grid, consumer energy use, peak demand, and business risks.

Utilities can benefit significantly from smart grid data analytics [4]. From an operational perspective, they can:

  • Improve outage management by aggregating thousands of outage alerts up to a common upstream node on the distribution grid, and target crew dispatch to appropriate outage zones.
  • Enhance the accuracy of load forecasting using more granular point-of-consumption data from smart meters, as well as using consumption data aggregated at distribution level.
  • Optimise the grid through smart meter voltage data aggregated, and correlated to feeder voltage upstream to optimise voltage regulation, and implementation of conservation voltage reduction for power delivery efficiencies.
  • And others.

Data analytics is the critical piece that ties data from T&D automation to advanced operator decision making in real time.

Electric transportation

Electrification of transportation is the use of hybrid electric or all-EVs instead of pure petroleum-based vehicles. It also includes the infrastructure to charge the EVs.

An EV's propulsion system contains one or more electric motors that contribute, partly or entirely, toward providing the motive force to drive the vehicle. Innovation in the areas of power electronics and communications is also paving the path for ‘vehicle-to-grid’ or ‘V2G’ in which a fully charged EV could provide temporary power to a residence or the grid during a power outage.

Smart meters

Advanced metering infrastructure (AMI) is defined as a system that collects, measures, and analyses energy usage data via a two-way communications network connecting advanced meters, called smart meters, and the utility's back-office systems. The smart meter measures, collects, and stores end-user energy consumption data. Smart meters provide greater granularity of usage data that enables accurate billing and other services. AMI enables remote meter reading for billing, remote connect/disconnect capabilities, outage detection and management, tamper and theft detection – all of which lead a more reliable and smarter grid.

Smart homes and buildings

Smart homes and buildings present the integration of building energy systems with information and communications technologies. Empowered by its automation system, the building provides actionable information, that enables the owner, or facility manager to optimise energy usage, space, and services provided to the occupants.

Characteristics of a smart home or building include tools and technologies for energy conservation and environmental sustainability; proactively monitoring premise energy usage; providing actionable information regarding the performance of building systems and facilities; and integrating with systems for real-time reporting and management of energy, and operations for occupant comfort.

Demand response and energy efficiency

The US DOE, defines DR as ‘changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized’. Similarly, EE is the overall reduction of energy consumption through the incorporation of specific changes while still providing the same or improved level of service to the end user [7].

DR and EE are critical pieces of the smart grid puzzle [2]. The normal mode of operation in an electric grid is one in which load changes based on customer use and supply follows load. DR and EE present, for the first time, a set of mechanisms in which load is also controlled thereby allowing both the utility and the customer to become partners in the supply–demand equation.


Communications is the backbone of the smart grid architecture. It is the key enabler to transfer of information from devices and applications to where it is needed for the right decisions to be made at the right time. It is the foundational medium that integrates the smart grid dimensions and their applications.

Communications happen at different levels – inside the customer's premise, in the grid, inside the utility all to carry different types of data and controls from the source to the destination. Communications ties utility-side as well as consumer-side technologies to enable a smarter grid.

Cyber security

The grid is facing an ever-increasing amount of data and controls being generated from an ever-increasing number of sensors. Much of the communications is happening using IP-based protocols thereby opening up a communications network that until now was very much closed. Along with this opening up, these changes have also increased the amount of vulnerabilities in the grid due to the increased potential of external points of entry either authorised or unauthorised [1315].

Cyber security is the set of collective measures and processes setup to address the security concerns of IT and communications infrastructure of the smart grid. It must address vulnerabilities from deliberate attacks as well as inadvertent compromises, to enable reliable and secure operation of the electric grid.

Ongoing challenges and the future

Achieving the smart grid is not easy. Grid modifications are expensive and investments needs to be considered based on their business benefits. In addition, innovation is happening at so many levels that an implementation performed today may become obsolete and replaced with new technology within a few years. Some examples of innovation causing challenges are provided below:

  • Residential meters: Just in the last 10+ years, technology has moved from electro-mechanical meters to automated meter reading (AMR) to AMI. Utilities that invested in AMR are now facing stranded investment because AMI has the ability to provide much more capabilities than AMR or the old electro-mechanical meters. Moreover, business cases that expected electro-mechanical meters to last 30–40 years now have to plan for smart meters that last about 10+ years.
  • Telecommunications: The smart grid is heavily dependent on a ubiquitous telecom network to take data from where it is created to where it is needed and processed. Telecommunications at utilities have moved from completely utility-owned private networks to public networks for some implementations to cases of some major utilities even considering cellular-based networks. Any telecommunications implementations need to be ready to take advantage of improvements so that investments can be protected.
  • Automation (sensing and control): The smart grid is heavily dependent upon sensors that provide information on the state of the grid and the ability to react to adverse conditions by changing that state. Advanced power electronics has demonstrated the ability to dramatically reduce the costs of these devices that allow the grid to be smart. As a result, the utility needs to be careful in spending on automation by focusing on priority problems instead of doing something system wide.
  • DR against energy storage: Five years ago, the advent of American Recovery and Reinvestment Act of 2009 (ARRA) [12 ] effort in the USA led to the identification of DR as a low hanging fruit for smart grid implementations focused on peak shaving. Now, energy storage has the same demonstrated ability to perform peak shaving but with no customer involvement. It also has the ability to support DERs by smoothening out the load profile.
  • Privacy: With increased access to customer data, there is an increased concern for privacy.

Utilities are faced with these challenges every day and need to make tough decisions. A set of key considerations critical for utilities to consider on their journey to the smarter grid are included below:

  • Always focus on the business benefits and not technology for the sake of technology.
  • Invest in technology but based on business need and where benefits justify the cost. Anticipate the technology, the costs, and the benefits to change over time.
  • Anticipate and expect new technologies to declare existing solutions obsolete – re: the example of energy storage against DR.
  • Train your personnel as well as your customers. Employees need to learn about new technologies and how they will impact operations. Customers need to understand how these changes will impact services provided to them.
  • Anticipate new players to come in and threaten the utility business model and the sources of revenue.

It is important to note that while the challenges of the smart grid are many, the benefits are even more. The smart grid has delivered an electric utility future in which (i) distributed and centralised renewables can play a significant part leading to reduced GHG emissions, (ii) a more reliable grid with fewer outages, (iii) more choice for the customer in terms of service providers, all with the increased potential for lower costs of electricity at the home/premise [17,18].


The smart grid will change everything in the grid. It will change what the grid looks like, it will change how the grid works, and it will even change everything we know about the utility business [16]. Some of the major changes that we can expect in the future will include:

  • The entity known today as the consumer (or customer) will both consume and generate power by installing one or more DERs within their premise.
  • The utility of today could morph into becoming the wires provider for transmission and/or distribution.
  • Service providers such as telecom, security systems, internet service, or others could take on the role of providing electricity as a service to the customer and bundle it along with the other services being provided by them.
  • Microgrids could form and depending on their business need, could partially or completely separate themselves from the utility grid.
  • And many others.

The smart grid is a journey, not a destination. The smart grid is a journey of continually improving the operations of the grid through increasing levels of intelligence and the ability to use this intelligence to improve the operational efficiencies of the grid and a better service to the customer.


The author acknowledges the support of Ms Mrudhula Balasubramanyan. The material for the paper came from the training content that is delivered by Modern Grid Solutions to its clients and the materials were developed by Ms Balasubramanyan.


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Case Studies

USA: AEP Ohio gridSMART ® demonstration project

The gridSMART ® project introduced multiple technologies to AEP Ohio project service territory. These technologies include AMI which enables two-way communication between smart meters and utility control centre; distribution automation circuit reconfiguration which is the automation of distribution assets; volt VAR optimisation which involves voltage control and optimisation; consumer programs which provide cost-saving opportunities to customers through enhanced communication.

The deployment of these technologies enabled two-way communication with consumers and allowed for tailoring of consumer-related programs and products. It provided significant cost, reliability, and environmental benefits for the utility and its consumers. The success of this holistic approach to smart grid implementation enabled AEP Ohio to move forward with the gridSMART Phase 2 (Phase 2) filing [ ].


Grid4EU is a large-scale demonstration project of advanced smart grids solutions in Europe. It is a consortium of six European energy distributors – ERDF, Enel Distribuzione, Iberdrola, CEZ Distribuce, Vattenfall Eldistribution, and RWE. With an overall cost of €54 million, with €25 million financed by the European Commission, it is the biggest smart grid project to be funded by the European Union. It is slated to be completed in early 2016.

The main objectives of the project [10] are to develop and test innovative technologies, define standards through the setup of demonstrators, guarantee the scalability of these new technologies, guarantee the replicability over Europe, and analyse smart grid cost-benefits.

The projects focused on: using more DERs connected to distribution networks; implementing active and more efficient participation of customer to electricity markets; securing energy supply and increasing network reliability; improved supervision and automation of MV/LV network; improving peak load management through increased interactions between network operation and electricity customers; incorporating DR, energy storage, and microgrids. In short, it was intended to be as complete as possible demonstration of the smart grid incorporating almost all the dimensions.

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Mani Vadari

President, Modern Grid Solutions

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