Another way to understand the smart grid is to look at its constituent parts; in this case the technology that makes it work. The technological foundation of the smart grid is the ‘smart meter’ that is installed at the point of consumption – these are relatively common in many countries already and feature in many homes.
The next tier is a range of other sensors, and the systems that allow the communication of data, such as a broadband or WiFi connection. The role of the sensors is to provide a real-time view of the actual power consumption, so that the power demand can be determined. These sensors are linked to software and control mechanisms that enable asset switching such as different power sources, stored power, or even the storage of energy as heat.Software is a vital component, because it uses the data from sensors to understand patterns in usage, and ensure a balance of supply and demand in a dynamic and predictive way.
Another fundamental feature of the smart grid is the distributed power generation model, made up of diverse power sources including biomass, wind, hydroelectric, and solar power or other renewables. These work in parallel with conventional ‘on-demand’, centralised power sources such as fossil fuel or nuclear power. A major technological component is the batteries (and other energy storage technologies) that enable excess energy from renewables to be stored and used later.
Finally, we can also define the smart grid by looking at the function; in other words, by understanding the application of a smart grid in a practical setting.In this sense, a smart grid can be defined as a system which gives the flexibility to switch smoothly between centralised and distributed (local) power generation, and leverages the ability to adjust consumption and store excess energy (using batteries, capacitors and the storage capacity of electric vehicles and other assets). It is a two-way system, with energy and information flowing in both directions, enabling a nimble and distributed network that is highly resilient and efficient.
The smart grid stands in stark contrast to the traditional power distribution model, which relies on centralised power generation, and distribution through a strictly one-way, hierarchical system. We can imagine the traditional power grid to be ‘tree-shaped’, with a central trunk of energy being distributed in a one-way system to the branches and leaves. In the traditional power grid, centralised power stations generate electricity that is transmitted at high voltages across a regional or national power grid. It is then directly fed to the consumers via substations, which reduce the voltage to the right level. It is basically a one-way street that leaves little room for the distributed, renewable energy platform of the near future. Compared to the ‘tree-shaped’ traditional power grid, the smart grid is more ‘mesh shaped’ with a democratised system of control.
The smart grid model can provide value on a range of scales, from small local grids to integration with regional and even national smart grids. In each instance, the automatic regulation of switching processes using smart software makes a broad and seamless scope for integration.So in a simple sense, the smart grid enables energy producers to store or export energy, and for consumers to have a flexible supply that adjusts to their needs in real-time. Consumers can be producers too, and are active participants in the energy market.In all cases, energy prices will be determined based on current supply and demand levels in a dynamic and transparent way. This eliminates the need for brokerage – saving money and boosting efficiencies. The flexible ability to offer lower prices at times of high supply can encourage flexible consumers to alter their consumption patterns, and in this way peak demand curves are flattened and everyone gets a better deal.Energy consumption patterns are also easier to understand in the smart grid, because the data is readily available, if the right tools are employed.
We will examine the advantages of the smart grid more, below, but first let’s see how the smart grid works on different levels of scale.