Viewpoint December 17, 2009, 1:19PM EST

Smart Grid: A Must for Energy Efficiency

As world leaders debate climate change and carbon emissions in Copenhagen, an opportunity to boost energy efficiency is already at hand

Story Tools

In the run-up to Christmas, President Obama recently joked that Energy Secretary Steve Chu had asked him for a few million energy-efficient light bulbs as a holiday present.

In Copenhagen this week, world leaders are debating greenhouse gases and a number of other initiatives, including energy efficiency.

Every schoolchild knows that Thomas Edison invented the light bulb. Less attention is paid to his invention of the electrical grid—the complex system of generating stations, transmission lines, and transformers that distributes power to homes and businesses around the world. To demonstrate the practicality of the technology he developed, in 1878 Edison sold a stake in his lighting company to banking partners J.P. Morgan and Anthony Drexel. He used the proceeds to build the world's first commercial power station at 255 Pearl St. in New York's financial district, a few blocks from Drexel, Morgan & Co.'s Wall Street offices. To light up the banking halls of lower Manhattan, Edison first had to develop a steam-driven generator and an array of fuses, switches, and underground power lines. He also created the first commercial electric meter, so that his company would know how much to charge its customers for their usage.

Shortage of Data

Since the Pearl Street station's opening in 1882, the electrical grid has evolved dramatically. Alternating current supplanted the use of direct current roughly a decade later, and the grid continued to become safer, more efficient, and much, much bigger.

But one thing it did not become was smarter.

As in 1882, today's system requires utilities to generate as much electricity as their customers collectively happen to be drawing at any given moment, and each customer's usage is recorded from a meter once a month. There is no way to judge when during the month any given customer used the power they drew from the system—or even whether they intended to do so. A short circuit in someone's home system can, and occasionally does, draw large quantities of power, and a residential customer may have no idea of the problem before receiving a dramatically large bill in the mail at the end of the month.

Utilities worldwide suffer not only from a shortage of usage data that could help them plan, but from inadequate control over their own systems. Meanwhile customers commonly lack both awareness and incentives that could cause them to modify their usage patterns for the greater good.

This week at the U.N. Climate Summit in Copenhagen, world leaders will discuss an array of strategies for the reduction of greenhouse gas emissions. One of the strategies that's now ready for immediate and effective implementation is the widespread use of smart grid technology.

Smart Meter

The smart grid will look a whole lot like our existing power grid, except that it will include real-time data collection, enabled by innovative software. At the heart of the smart grid is the smart meter—a digital electronic meter that will tell the utility how much power each of its customers is drawing at any time.

This will accomplish multiple ends. It will allow utilities to employ differential pricing, providing discounts to customers who use electricity at non-peak hours. As is already true of telephone usage and airline travel, for instance, this means increased efficiency, as users are billed more for a resource that costs more to produce at times of high demand and less for that same resource at other times.

Smart meters will also let utilities pinpoint power outages immediately and automatically, without waiting to be alerted by their customers. Load-induced outages can even be avoided entirely, as system software analyze real-time consumption across multiple networks and make it possible to distribute more power to the places where it's most needed.