The “smart grid” is a broad term designed to summarily describe the capabilities of an advanced electricity transmission and distribution grid. Anticipated smart grid features include improvements in reliability, two-way communication capabilities for electricity pricing, demand and remote diagnosis and control of components of the transmission and distribution system, and integration of renewable energy. Although all of the specific contours of the smart grid have yet to emerge, the reality of a more intelligent grid is on the horizon.

Smart grid proponents cite several reasons in support of its development. Smart grid technologies have been estimated to have the potential to reduce power disturbance costs to the U.S. economy by $49 billion per year and to eliminate the need for approximately $46 billion in infrastructure investments over the next 20 years.1 New storage capabilities, initially achieved in large part through charging all-electric vehicles in off-peak hours, will increase utilization of renewable energy by mitigating variable output. Consumers will benefit through greater ability to control costs and conserve energy by obtaining detailed, contemporaneous usage data to inform their consumption choices. Similarly, utilities will benefit through improved ability to control and utilize load. Finally, proponents argue, the smart grid is not a question of preference; it is a necessity. For each of the past 28 years, peak demand for electricity has outpaced transmission growth by almost 25 percent. The electricity delivery system is overburdened and without improvements, will not keep up with the nation’s needs.2

2007 (EISA 2007),4 Congress expressed its support of the development of a smart grid. EISA 2007 established a grant program to be administered by the Department of Energy, and directed the Federal Energy Regulatory Commission to adopt standards and protocols related to smart grid functionality and interoperability. In the American Recovery and Reinvestment Act of 2009,5 Congress dangled the carrot for which smart grid proponents had been waiting by funding the Smart Grid Demonstration Program (SGDP) and Smart Grid Investment Grant (SGIG) program originally established by EISA 2007. The SGDP projects are intended to benefit either regional demonstrations of advanced technologies for use in planning and operations of the electric power system or grid-scale energy storage demonstrations. An example of the winner of a SGDP is FortZED in Ft. Collins, Colorado.6 FortZED encompasses more than 7,000 customers and is aiming to be the world’s largest active zero energy district.