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Smart Grid: The Key to Our Energy Future

Smart grid technology is gradually transforming the way we produce and consume electrical power, but the pace of full-scale adoption is beginning to accelerate.

March 2011
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With a smart grid, the power system is equipped with intelligent monitoring systems - devices in homes and factories, on distribution lines and substations, in the transmission system, and at centralized and distributed power sources. These devices track all electricity in the system and can generate the real cost of power at different points in time. With pricing information, the consumer can make choices that put the "invisible hand" of free-market capitalism to work. Residential and industrial consumers can automatically turn appliances and factory processes on and off based on predetermined parameters for cost tolerance and device criticality.

As the grid load-curve levels itself through efficient power management and consumer actions, spinning reserves will be minimized. Inefficient and expensive peaker plants - which only run when there is high demand - can be closed, deferring investment in new and expensive generating plants. With increased asset optimization, the most efficient power plants will supply electricity, including renewable power.

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Products Flooding the Market
Grid modernization will require significant investments. Some estimates say it will take decades and trillions of dollars. But the process is already well under way. Analog electric meters with digital bi-directional smart units are already being replaced at U.S. homes and businesses. Nearly 15 million smart meters have already been deployed, and more than 50 million are expected by 2014.

The meter's ability to support two-way communication between users and producers is the key to the smart grid. Smart grid giants such as Siemens, General Electric, ABB, and Schneider offer multifaceted ways to manage low- and medium-voltage equipment, and industrial and commercial energy systems. Devices that bypass electric meters and instead use home broadband connections are now entering the market. French company Schneider Electric recently introduced Wiser Home Control, an energy management system that includes a networked thermostat, an energy display, and an Internet gateway for consumers and utilities to communicate.

New distribution, transmission, and power generation products are also arriving. Watertown, Massachusetts-based A123 Systems produces batteries that support substation-level distribution. A123 recently announced that it would supply a 20-megawatt lithium ion battery for grid storage in northern Chile. The batteries are used for "spinning reserves" to ensure grid reliability by filling power gaps.

Devices that support real-time monitoring of customer power use, system security, and power quality are emerging. Once data is captured, other products support system modeling of the automation of distribution operations, demand management, voltage control, and distributed energy resources. A robust and secure grid keeps it all running, from communication infrastructure and power transport technologies to wireless communications and data warehousing.

Location Strategy in a Smart Grid World
Companies locating manufacturing plants, distribution facilities, R&D centers, service centers, and offices must balance considerations such as operating costs, work force requirements, and, of course, electric power reliability. While corporate executives know these factors vary, it is less known how smart grids should factor into location decisions. Recognizing that we are on the brink of a new era for energy the answer is quite simple. Companies are advised to always locate in places that support smart grid concepts or are moving quickly in that direction.

The reason is simple: With the price of electric power expected to increase at a faster rate than inflation, and with grid reliability in question, companies can mitigate energy risks by choosing smart grid-equipped communities.

Start by listing states that support renewable and clean energy portfolio standards. Smart grids are needed to take advantage of renewable energy, so states that champion renewable energy are more likely to be smart grid proponents.

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