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The Department of Energy (DOE) recently published "The Smart Grid: An Introduction," which identifies two key elements of smart grid technology. The first is on utility side, enabling utilities to monitor generation, flow, use, etc. Termed Phasor Measurement Units (PMUs) and referred to as the power system's health meter, PMUs constantly sample voltage and current, providing an MRI of sorts of the power system. PMUs deliver a real-time portrait of the system that can be used to shunt power to and fro, and avoid things such as congestion and blackouts.
The second technology, Advanced Metering Infrastructure (AMI), informs the consumer of real cost of energy. By determining and sharing the actual cost of power between the utility and the consumer, AMI has the potential to revolutionize our understanding and use of energy. AMI also works with "smart" appliances, which can self-regulate their use depending on feedback information from the grid. But even if every household were replete with intelligent appliances and plug-in autos, upgrading the grid's infrastructure so that power can be transmitted from new plants could entail large costs and numerous political and environmental challenges.
Distributed, or community, power could be the answer. Generated near the point of consumption, the model largely obviates the problem of transmission. In a distributed model, homes and businesses have the potential to fuel their own energy needs and feed excess capacity directly into the grid without undue modifications to the grid's infrastructure. However, the hurdles of moving to a clean energy future are high and many. Getting smart about the cost of consumption is an incredibly efficient step. But all options have relative risks, costs, and benefits and it's debatable whether any one thing is the complete solution, at least in the near future.
As for the Smart Grid, are the costs extravagant? Probably not. Even localized power production may benefit from intelligent demand management, so the two options need not be mutually exclusive. For certain, our archaic and dilapidated electric power infrastructure needs broad recapitalization. So the practical question is whether the marginal net benefits of building a smart(er) grid are more or less than the status quo or other alternatives.
The grid already does a lot of smart demand-generation-distribution-cost optimizations. What we likely need are alternate energy solutions that can complement the grid as far as possible and, more importantly, include good storage capability for backup power.
