A smart grid delivers electricity from suppliers to consumers using digital technology with two-way communications to control appliances at consumers' homes to save energy, reduce cost and increase reliability and transparency. It overlays the electrical grid with an information and net metering system. Such a modernized electricity network is being promoted by many governments as a way of addressing energy independence, global warming and emergency resilience issues.
The smart grid is made possible by applying sensing, measurement and control devices with two-way communications to electricity production, transmission, distribution and consumption parts of the power grid that communicate information about grid condition to system users, operators and automated devices, making it possible to dynamically respond to changes in grid condition.
A smart grid includes an intelligent monitoring system that keeps track of all electricity flowing in the system. It also incorporates the use of superconductive transmission lines for less power loss, as well as the capability of integrating renewable electricity such as solar and wind. When power is least expensive the user can allow the smart grid to turn on selected home appliances such as washing machines or factory processes that can run at arbitrary hours. At peak times it could turn off selected appliances to reduce demand.
The amount of data required to perform monitoring and switching your appliances off automatically is very small compared with that already reaching even remote homes to support voice, security, Internet and TV services. Many smart grid bandwidth upgrades are paid for by over-provisioning to also support consumer services, and subsidizing the communications with energy-related services or subsidizing the energy-related services, such as higher rates during peak hours, with communications. This is particularly true where governments run both sets of services as a public monopoly.
Before recent standards efforts, municipal governments, have historically taken the lead in enforcing integration standards for smart grids/meters. As municipalities or municipal electricity providers also often own some fiber optic backbones and control transit exchanges at which communication service providers meet, they are often well positioned to provide good integration.
Municipalities also have primary responsibility for emergency response and resilience, and would in most cases have the legal mandate to ration or provision power, say to ensure that hospitals and fire response and shelters have priority and receive whatever power is still available in a general outage.