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A smart grid is an electrical grid which has been digitized so that a variety of digital measures can be used to control and operate the grid. The goal of installing a smart grid is to meet energy demands intelligently, promoting energy efficiency in addition to creating a more reliable source of energy which is also less expensive. Most plans for smart grids revolve around overhauling existing electrical grids, rather than starting from scratch with an entirely new system.
Much like highways (or the Internet), the electrical grid was put together in piecemeal fashion. Various power plants were brought on to the grid at different times, and the establishment of transmission and distribution systems was highly erratic. In the early 21st century, an increasing number of nations around the world grew concerned that their electrical grids were old, outdated, and vulnerable both to outside attack and failure from the inside. In response, the smart or intelligent grid concept was developed.
With a smart grid, every step of the energy generation and transmission process is monitored digitally, as is the demand side of the equation. The digital devices within the grid can decide how to best allocate power, depending on the demand, and they may be able to control devices attached to the grid. In a simple example, a smart grid would recognize that a lot of people in one area were running air conditioners because it was hot, and opt to shuttle more power to that part of the grid. Furthermore, the smart grid might have the ability to shut down unused escalators and elevators in commercial buildings to free up power, or to adjust thermostats used for climate control to make energy usage more efficient.
Well designed smart grids are meant to be self healing, with various areas of the grid identifying problems and addressing them independently. They also promote consumer involvement, sometimes directly, in the form of meters which charge different rates depending on when and how energy is used. Some nations have argued that smart grid systems are also crucial for national security reasons because they can help a country resist a terrorist attack, and smart grids can be utilized to promote overall reductions in energy usage across a nation.
The smart grid concept met with considerable opposition when it was introduced. Many utilities were enthusiastic, but uninterested in funding smart grid projects, especially experimental ones which might turn out to be costly. National governments are also reluctant to fund such projects, even though some had actually mandated smart grid projects, and some individual citizens were uncomfortable with the level of monitoring of electricity consumers involved in an effective smart grid system.