The term “Smart Grid” brings together a number of ideas about the future development of the electricity grid. As a result, it means different things to different people. The following definition was produced by the Electricity Networks Strategy Group :

“A Smart Grid as part of an electricity power system can intelligently integrate the actions of all users connected to it - generators, consumers and those that do both - in order to efficiently deliver sustainable, economic and secure electricity supplies.”
In essence, a Smart Grid represents the application of digital computing and communications technologies to address pressing challenges that will be encountered on electricity networks during the next few years.

What is a Smart Grid?

Notice that consumers of electricity can also be producers, and that power flows within the distribution network are now bi-directional. A Smart Grid can intelligently coordinate the behaviour and actions of all users connected to it to ensure that supply and demand are kept in balance both locally and nationally, and that the network is operated as securely, efficiently and cleanly as possible.


A Smart Grid has the following features:

Adaptive - adapt all types of generation sources

Interactive - interact with customers via smart meters

Integrated - integrated protection, communications & control

Predictive - collect near real-time data

Optimised - network configuration self-healing

Why are Smart Grids needed?

Above illustrates a traditional electricity network in which power is generated mainly in large power stations, and flows across the network to the end usersUnfortunately, this model is based on a number of assumptions that are no longer valid. For example:



A traditional electricity network in which power is generated mainly in large power stations, and flows across the network to the end users.

The traditional electricity network is becoming increasingly unsuitable to meet the new demands of the 21st century, and fundamental changes are required. One of the key changes will be the transition from “dumb” to “smart” grids.

Most definitions of Smart Grids suggest that they are driven by a range of desirable objectives such as improved efficiency, increased sustainability, lower costs and higher reliability. However, careful analysis shows that the reality is rather different: The fundamental driver for Smart Grids is carbon reduction. If global warming were to disappear, then the business case for Smart Grids would almost certainly disappear with it.

The need to meet challenging environmental objectives has two major consequences for the electricity grid:

• Increasing use of renewable power sources
• Increasing demand for electricity

If global warming were to disappear, then the business case for Smart Grids would almost certainly disappear with it”.

Smart Grid challenges

The migration to Smart Grids will present a wide range of technical, commercial, regulatory and organisational challenges. These will include:

• Handling of very large amounts of data
• Data privacy & security
• Technology standardisation and interoperability
• Maturity & operational readiness of smart grid technologies
• Smart Grid operating & maintenance skills
• Capital constraints
• Policy and financial incentives
• Cooperation between stakeholders
• - power utilities
  - energy wholesale and retail companies
  - telecoms network operators & ICT suppliers
  - governments and regulators
  - municipalities
  - landlords and householders
  - operators of car parks
  - vehicle and appliance manufacturers
• Difficulties in defining the business case
• - costs are not always borne by the stakeholders who will benefit most
• Consumer engagement & behaviour changes