What is a Smart Grid? What are the Major Smart Grid Technologies?

Published on 06th June 2022

A smart grid (SG) is a modern electric grid with a two-way flow of electricity and data between power utilities and consumers. Unlike a conventional electric grid, a smart grid is a digital technology-based electricity network driven by automation, communication, and connectivity.


Imagine a resilient electric grid better equipped to manage varying energy demands and better prepared to handle energy emergencies because of the intelligent two-way interactive capacity.


The rise of the smart grid is due to its potential to improve grid resilience, energy independence, and reliability, among other factors. Across the world, digital technology-enabled grids are driving smarter resource use and helping consumers, as well as power industry stakeholders reduce costs, save energy, and make better energy usage decisions.


A smart grid is a vital component of the global energy transition because a smart grid helps in providing clean energy and sustaining long-term economic growth while enabling us to achieve our carbon emission reduction goals.


Let us learn more about a smart grid and understand the future of the smart grid in detail. 


Table of Contents

  • What is a Smart Grid?
  • How Does a Smart Grid Work?
  • Components of a Smart Grid
  • Smart Grid Technologies
  • Traditional Electricity Grid vs. Smart Grid
  • Benefits of a Smart Grid
  • Challenges in Deploying a Smart Grid
  • What Does the Future Look Like for a Smart Grid?
  • Wrapping Up


What is a Smart Grid?

Generally, a grid is an electricity network that delivers electricity from producers to consumers. Also known as a “power grid” or an “electrical grid,” a grid consists of a combined transmission and distribution network with a multitude of high-voltage transmission lines and local distribution lines.


However, a smart grid is an advanced electric grid that uses communication, automation, and IT systems to oversee power flows from points of generation to points of consumption.


An average family uses electricity for a variety of household purposes, including cooking, heating, refrigeration, lighting, and EV (electric vehicle) charging. But a conventional power grid is not equipped with advanced metering infrastructure (AMI) to track electricity usage or measure electricity consumption.


Moreover, time-consuming and unreliable energy management processes are not ideal for dealing with an electrical power outage and electricity network-related problems.


Governments, utility companies, power plant owners, electricity distribution companies (DISCOMs), and other smart grid industry stakeholders benefit from smart grid development and deployment for streamlining grid operations and maximizing grid-friendly and consumer-friendly energy use.


How Does a Smart Grid Work?

The transition to a low-carbon economy is made easier by an energy-efficient and eco-friendly grid such as a smart grid.


A smart grid connects every component of the electricity grid across various stages—from power generation, transmission, storage, and distribution to electricity consumption. Integrating each device on a “plug & play” basis creates an integrated data and energy grid.


In the event of an outage or equipment failure, a smart grid can automatically reroute electricity due to its two-way interactivity. For example, identifying and isolating an outage prevents a large-scale and prolonged blackout.


Compared to a conventional grid, a smart grid enables consumer participation at a deeper level and a quicker demand response (DR). 


Let’s see how a smart grid works:



A smart grid uses smart metering to identify, measure, and transmit the energy consumption details of homes, businesses, etc. Enabling direct communication with a utility company eliminates the practice of estimated bills. So, no more surprises on electric bills!


Components of a Smart Grid

A smart grid can connect millions of transmission lines to deliver electricity to an entire country. Individual components work together within the smart grid architecture to increase grid efficiency, reliability, resiliency, and stability. Furthermore, the modernized smart grid promotes consumer control and cost savings through holistic grid management.


The use of embedded systems in a smart grid allows the processing of information and communication between a wide variety of applications.


The main components of a smart grid are:

  • Cables
  • Circuit breakers
  • Collector nodes
  • Controllers
  • Distribution and transmission lines and control centers
  • Electric power generators
  • Electric power substations
  • Smart meters (SMs)


Smart Grid Technologies

A smart grid uses a broad range of technologies and communication networks to better manage power generation, transmission, and distribution, and empower customers with real-time control.


Major Smart Grid Technologies

Here are the major smart grid technologies that enable better energy management, optimize capability utilization, and improve the overall performance of smart grids.


Advanced Demand Forecasting

Advanced demand forecasting leverages data analytics and machine learning (ML) techniques and generates forecasting reports using autoregressive integrated moving average (ARIMA) and other statistical techniques.


As an essential component of smart grid management, ARIMA forecasting predicts annual electricity consumption and hourly electricity prices.


ARIMA forecasting also provides an additional layer of verification to detect cyber intrusion attacks on smart meters deployed to measure the electricity consumption of residential and non-residential consumers.


Advanced Metering Infrastructure (AMI)

Advanced metering infrastructure (AMI) is an integrated system of communication networks, data management systems, and smart meters that helps improve customer service and energy efficiency and manage costs effectively.


By enabling two-way communication with the customers and the utilities, AMI provides a smart grid with a broad range of benefits, such as consumption forecast, effective cash collection and theft detection, fault and outage detection, loss measurements, and time-based pricing.  


Big Data

Smart grid data has three core aspects, i.e., high velocity, large volume, and a wide variety. Handling a large volume of data on time with limited resources is a major challenge for a smart grid. This is where big data analytics can play a crucial role in increasing asset utilization, efficiency, system reliability and stability, and enhancing customer satisfaction.


Without smart grid big data analytics, it is impractical to assess petabytes of data produced by smart grid devices. Big data captures and analyzes unstructured data from different endpoints in a smart grid.


In addition, big data facilitates efficient cost reduction, resource distribution, and better customer service.


Distributed Energy Resources (DERs)

Distributed energy resources (DERs) provide energy and enhance local reliability while improving grid stability and on-site fuel utilization.


DERs include electric vehicles, solar panels, small natural gas-fueled generators, and controllable loads, such as electric water heaters and HVAC systems.


Successful DER integration improves the service quality and reliability of a grid. For example, photovoltaic systems (PVs) use the photovoltaic effect to convert sunlight into electricity that is then converted by an inverter into alternating current. The main benefit of using PVs is lower utility bills from reduced grid-provided electricity.


Non-intrusive Load Monitoring (NILM)

Non-intrusive load monitoring (NILM) or non-intrusive appliance load monitoring (NIALM) identifies the individual energy consumption of households and industrial facilities.


Breaking down the aggregate energy consumption (of active appliances) into components and providing diagnostic information is useful for identifying energy-consuming or malfunctioning appliances.


Furthermore, consumers can schedule the most cost-effective time to use energy-intensive appliances and monitor and manage energy expenses according to their power consumption.  


Vehicle-to-Grid (V2G)

Also known as vehicle-grid integration (VGI), vehicle-to-grid (V2G) technology transfers unused power from a vehicle into the smart grid. An electric vehicle (EV) battery is a cost-efficient form of energy storage.


V2G helps balance electricity consumption spikes and reduce overload on the power grid during peak hours.


For example, V2G can feed energy (unused battery capacity) back to the power grid from an electric car’s battery to improve grid stability and maximize the benefits of renewable energy.


Established and Emerging Smart Grid Communication Networks


A smart meter provides power to household appliances through the home area network (HAN) that uses various technologies like Bluetooth, Wireless Ethernet or Wired Ethernet, and Zigbee. HAN connects home appliances with the smart meter that identifies power consumption and sends the consumption details to the server for billing.



A neighborhood area network (NAN) is an outdoor access network that connects distribution automation devices and smart meters to WAN gateways like RF (radio frequency) collectors and field devices (such as intelligent electronic devices (IEDs)). NAN enables data collection from customers and supports WAN-premise area communication.



A wide area network (WAN) uses fiber optics, 3G/LTE (Long Term Evolution)/GSM (Global System for Mobile Communication), or WiMAX (Worldwide Interoperability for Microwave Access) for communication between a smart meter, suppliers, and the utility server. A smart meter sends notifications it receives (via HAN) from the devices to the suppliers using WAN. 



As a widely used IoT (Internet of Things) technology, LoRa (long range) is a long-range, low-power wireless platform ideal for diverse applications, such as energy management, infrastructure efficiency, and disaster prevention.


Smart electricity metering solutions and smart grid networks based on the LoRaWAN® (Long Range Wide Area Network) network protocol can better understand power demand, easily detect power outages, enhance connectivity, and identify underperforming assets.


Moreover, LoRaWAN is compatible with worldwide networks and ensures interference-free transmission to read heat meter consumption data remotely.


Traditional Electricity Grid vs. Smart Grid

Over the years, centralized electricity generation from power plants has gradually transitioned toward a distributed energy resource for adapting to a dynamic energy industry and elevating the energy experience for consumers.


The need to update the traditional electricity grid to a smart grid stemmed from several reasons, such as:

  • Availability of more renewable energy and connected technologies
  • Deregulation of the energy market
  • Electricity production changes
  • Growth of electric vehicles
  • Metering evolution
  • Need for remote grid management
  • Renewable energy directives
  • Rise of microgeneration and isolated microgrids
  • The advent of the prosumer (one who produces, consumes, shares, and sells energy)


Let us look at the key differences between a traditional electricity grid and a smart grid:


Table - Differences between a traditional electricity grid and a smart grid


Benefits of a Smart Grid

Monitoring and optimizing the interlinked components of an energy system are essential to ensure a reliable and efficient power supply while reducing energy consumption and costs.


How does a smart grid improve the efficiency and reliability of an energy system? A smart grid uses “smart meters” to minimize energy waste and maximize energy use.


Smart meters or smart measurement systems are replacing conventional electricity meters. Smart meters help in calculating the power generation, recording voltage failures, and providing grid operators with actionable data.


Smart Meter Benefits

A smart meter can:

  • Decrease grid load by reducing the demand for electricity during peak periods.
  • Offer better flexibility to consumers in leveraging account plans and “customized” tariffs.
  • Provide greater network reliability by using grid capacity effectively.
  • Provide visual feedback on consumption or power usage patterns to help consumers save on electricity costs.


Additional Benefits of a Smart Grid

Integrating established power technology with advanced analytics, automation technologies, and smart devices empowers a smart grid to respond faster to consumer demand and potential electrical network incidents.


A smart grid provides additional benefits, such as:

  • Detect fraud and electrical network faults early for incident prevention
  • Enable utilities to regulate electricity usage and lower operating costs
  • Increase the safety of grid staff and suppliers
  • Initiate a timely demand response (DR) to reduce the strain on power companies
  • Prevent electricity theft through meter tampering
  • Recognize the maintenance requirements of networked assets
  • Reduce pollutant emissions like CO2, NO2, and SO2


Challenges in Deploying a Smart Grid

Smart grid deployment is not without its challenges. Some of the significant challenges in installing and maintaining a smart grid include:


Timing Synchronization

Precision timing synchronization is crucial for real-time measurement and control (within and across substations), fault detection and location, system stability maintenance, etc. If not addressed properly, timing discontinuities have a major impact on grid efficiency and flexibility.


Multicast Tree Delay

Smart grid wide area control systems (WACS) require real-time data communications support with low latency. It is necessary to identify the multicast tree with a minimum end-to-end transmission delay of command and control (C & C) messages to remote devices.  



Communication stack and protocol heterogeneity can lead to interoperability issues between applications, devices, and systems. Successful interoperability is a must to make end-to-end secure communication possible and leverage existing grid network infrastructure.


Malicious Code Infection

A communication-enabled smart grid can be compromised physically or remotely by a malicious code infection. In addition, non-tamper-resistant SG devices are subject to the risk of getting easily compromised (physically).


Remote Deployment Safety

Smart grid devices deployed at a large scale in remote places are easily accessible with no physical perimeter protection. Robust SG security solutions are mandatory to prevent tampering with the SG devices.


Resource Constraints

Limited resources prove to be a major drawback during the massive deployment of smart grid solutions, especially security solutions based on public-key cryptography (PKI).


Other challenges in smart grid installations comprise the criticality of data delivery, impersonation (identify spoofing), data tampering, and low accessibility to electricity in underdeveloped nations.


However, advancements in smart grid technology are facilitating the inclusion of vital security features, such as authentication, authorization and control access, confidentiality, data integrity, and end user’s privacy.


In addition, smart grid data protection and standardization are also gaining momentum in keeping with the legal framework applicable for individual projects.


What Does the Future Look Like for a Smart Grid?

The future outlook looks bright for a smart grid. According to Blackridge Research & Consulting, the global smart grid market is expected to grow at a CAGR of 15.5% during the forecast period 2022–2028.


The requirement for a smart grid is going to get bigger with key drivers, such as:

  • Accelerating demand for power system reliability and resiliency
  • Booming renewable energy sources (such as solar power) market
  • Growing R&D in smart grid technologies and usage of smart appliances
  • Increasing concerns about environmental protection
  • Increasing customer choice and participation
  • Rising global power consumption and electrification of various sectors
  • Soaring investments in smart grid infrastructure (in different countries, including China, Europe, and the United States)
  • Surging demand for asset optimization and energy storage


As the backbone of the modern smart city, a smart grid leverages technology-driven innovation to provide cost-effective, consistent, and clean energy while improving asset management and reducing T&D (transmission and distribution) losses.


A smart grid is a hallmark of a smart city that thrives on making smart energy available for consumers.


Grid modernization is essential to replace the aging electric grid infrastructure with a strong and responsive smart grid. Several smart grid improvements and smart grid initiatives (planned, undertaken, and in progress) are optimizing the potential of smart grid technologies.


Let us look at a few examples below:


The Electric Power Research Institute (EPRI) conducted the global smart grid implementation assessment to assess the development and deployment of smart grid projects worldwide.


Duke Energy—one of the largest energy holding companies in the U.S.—is investing heavily in smart grid technologies for a more customer-centric, efficient, and reliable grid.


Duke Energy has partnered with government agencies, research labs, utilities, and vendors to develop and commercialize the Open Field Message Bus (OpenFMB™). This field device interoperability framework aims to reduce implementation complexity and integration costs.


The Government of India established National Smart Grid Mission (NSGM) to plan and monitor smart grid policy and program implementation in the country. NSGM also offers capacity-building and training support to State Level Project Management Units (SLPMUs) for smart grid activities.


Schneider Electric’s smart grid solutions are valuable in building a decarbonized, decentralized, and digitized world. For example, the EcoStruxure™ Grid provides an end-to-end software cycle to help electricity utilities mitigate cyber risk and sustain operational confidence.


Wrapping Up

Using IT in the energy sector is transforming how energy consumption is measured and managed across local, state, and national-level energy systems. Smart grids make it easier to establish efficient links between power grids, power-generating facilities, and power consumers.


Active consumer participation in tracking electricity usage through smart meters is also helping utility companies provide better control over energy usage to consumers.


Furthermore, government policies, grants, subsidies, and other utility incentive programs are enhancing smart grid adoption and promoting energy-efficiency projects, globally.


In the coming years, smart grid devices and systems will play a significant role in fulfilling the energy supply needs of businesses, utilities, industrial and residential customers.


Augmenting or replacing traditional grid applications with smart grid applications is a proven way to provide a more dependable, efficient, secure, and versatile power system with a positive environmental impact.


A smart grid is an agile and adaptable electricity grid capable of meeting all types of energy needs. In the future, there are only greater possibilities ahead for the new-age smart grid.

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