Pros and Cons of the Smart Grid - a National Power Grid for the U.S.

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The benefits and concerns of Smart Grid technology and how it can affect you.

There has been much talk about the initiative to create a “Smart Grid” for the United States electrical power grid. The problems created by the Smart Grid may be equal to or greater than the problems it is meant to solve.

A power network utilizing present computing technologies will eliminate blackouts and brownouts due to under-capacity, and will enable better overall reliability through advanced monitoring and management. Customers will become more knowledgeable in how they use electricity by gaining real-time insight into their energy costs.

The smart grid will also help prevent terrorist attacks by building-in redundancies and self-healing capabilities. And like the Internet, it will become the platform upon which new types of products and services can be built, such as using hybrid and electric cars to store energy and then sell it back to the network. It would also be easier for home generators to plug into the grid and receive payments from utilities for their excess solar power or on-site generation.

Why would anyone be against this? For one thing, the estimates say that rebuilding the grid will cost much more than the $4.5 billion in federal funds estimated and could actually be somewhere between $13 billion and $50 billion.

Real-time pricing could also adversely affect more vulnerable segments of society who may not be able to easily change their power consumption habits to accommodate continually changing prices of energy. There is also the increasing risk of privacy and security breaches, given the creation of an intelligent, distributed computing network. Just think about the increase in identity theft in recent years.

Recently the Demand Response and Advanced Metering Coalition (DRAM), a group of utilities, metering and communications companies, and public interest groups, called on Congress to retain a provision in the energy bill that would provide a tax incentive aimed at accelerating the installation of smart meters in homes and businesses across the country.

Smart meters allow electricity users to choose to lower their electricity bills by shifting their usage to lower cost periods. Such activity by users is increasingly seen by policy makers as a key part of a plan for addressing the nation's electricity needs. The utility also benefits by receiving detailed information during power outages that would shorten response time and focus repair efforts.

The fact that there are concerns with the Smart Grid doesn’t mean that we should do nothing.

The idea of the Smart Grid sprang out of the idea of deregulation and price competition. Utilities were not fully integrated in a national power grid, but instead focused on their region and local customers.

How the Smart Grid Will Work

There are 2.5 billion electrical meters, and only 8 percent of them currently have any kind of automation. Sensors and wireless components will allow the utilities to gather data on energy consumption, weather data, and transmission capacity. Energy storage will play an equally important role. Since energy must be consumed when created, today’s network is designed to always operate at peak capacity. Yet peak loads are only required about 5 percent of the year. This is why developers want to be able to use the storage option in the batteries of electric cars to store the unused electricity.

Costs and Standards

One of the biggest hurdles for implementing the Smart Grid is the costs. Utilities and the government are pushing for standardization of communication protocols that are already in existence. However, this type of widespread standardization may stifle innovation. If the telecommunications industry standardized the first cellular protocol in the 1970s, we would not have the 3G and 4G networks we currently have today.

The utilities may want to develop their own standards to block the telecom industry out of the market and protect their customer base.


Although real-time pricing appeals to many consumers, some industries will not be able to participate in this without deleterious effects. Imagine that it’s a hot day, you can choose to turn off unnecessary appliances and raise your thermostat, but what can a day-care center or hospital do? They will still need to provide a consistent level of comfort and safety for their occupants. Data centers and manufacturing will also be susceptible to substantial increases in electricity costs, which they will most likely pass on to the consumer. You may be saving a few dollars on your electric bill, but you may be paying more for goods and services from companies that must remain in operation during peak hours.


The Internet has created a world where we can be in constant communication through our computers, but it has also caused problems in the area of privacy and financial security.

The Wall Street Journal reported that spies from China, Russia and other countries had penetrated the U.S. electrical grid, leaving behind software that could be used to disrupt the system. “The Chinese have attempted to map our infrastructure, such as the electrical grid,” a senior intelligence official told The Journal. “So have the Russians.” In 2002, 70 percent of energy and power companies experienced some kind of severe cyber-attack to their computing or energy management systems. (“A Systems View of the Modern Grid,” a report published in 2007 by the National Energy Technology Laboratory for the U.S. Department of Energy.)

Malware experts have run simulations that indicate an attack on one smart meter can spread to 15,000 within one day, assuming that all the meters are the same. The malware can be written to remotely shut off the smart meters.

The overreaching concern is that the information gathered will be shared with other companies and that the government may monitor the information and limit usage based on some future, unknown formulae.

The most important thing is for consumers to be aware of is that if we are paying for the Smart Grid we should be able to benefit most from it.

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Posted on Jun 22, 2010