There is a widespread expectation in the United States and around the world today that the smart grid is the next big thing, a disruptive technology poised to transform the electric power sector. The belief is that the use of smart meters and other devices and systems will allow consumers to manage their own electricity use to radically reduce energy costs. The implementation of a smart grid system will enable the widespread use of renewable energy sources, allow more-distributed electricity generation, and help reduce carbon emissions.
The reality, however, is more complex and sobering. The smart grid idea is more accurately characterized as an extension of innovations that have been ongoing for decades. Change will continue but will be incremental because the technology is still evolving and because most consumers do not want the more flexible and uncertain pricing schemes that would replace the predictable and stable pricing of today's system. Indeed, it appears that most consumers, at least in the short term, will not benefit from moving to a smart grid system. Although a smart grid would probably help slow increases in electricity bills in the long run, it will not reduce them, because too many other factors will be pushing prices and power usage up in the years ahead.
The evidence from an IHS Cambridge Energy Research Associates study, which draws on the knowledge and experience of those closest to smart grid implementation, is that the smart grid "revolution" is off to a bumpy start and that there will be many more bumps in the road ahead. That road is still worth pursuing, but we will need to develop a more realistic understanding of how the electric power system in the United States is evolving. Instead of a demand-side-driven transformation of consumer behavior and the elimination of future capacity needs, expect a supply-side, engineering-driven application of smart grid technologies to improve network operation and reliability in the short term and to slow growth in generating capacity needs in the long run. In many respects, we already have a smart grid in the United States. In coming decades, we will be moving to a "smarter" grid. The pace will be gradual, but the eventual benefits will be real.
The smart grid narrative
In the United States and other developed countries, an appealing and optimistic vision of the future smart grid has gained credence, even though the move toward a smarter grid is likely to turn out quite differently. In the current narrative, the United States and others are currently crippled by a balkanized "dumb" grid with endemic cascading failures, a result of continued reliance on antiquated, century-old technology. The solution is the smart grid: a continental-scale network of power lines incorporating advanced meters, sensing, and communication and control technologies that are linked through universal standards and protocols. It will be coordinated with advanced two-way broadband communication technologies that feed data into complex optimization software systems, allowing control technologies to deliver a more secure, self-healing, higher-quality, and lower-cost power network.
Smart grid deployment, the story continues, will dramatically reshape power use. The smart grid will present consumers with real-time power prices and displays of information regarding power use by specific end uses. These price signals and information streams will empower consumers to have more control over their power consumption. Consequently, the smart grid will alter consumer decisions either directly through behavioral changes or indirectly through preprogrammed smart appliances and control applications. As a result, market failures will be fixed and much of the low-hanging fruit of the efficiency gap will be harvested. These efficiency gains will provide enough savings to drive monthly power bills lower. In addition, the gains in reducing peak power …