Smart Grid

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What Does Smart Grid Mean?

A smart grid is an electricity network based on digital technology that is used to supply electricity to consumers via two-way digital communication. This system allows for monitoring, analysis, control and communication within the supply chain to help improve efficiency, reduce energy consumption and cost, and maximize the transparency and reliability of the energy supply chain. The smart grid was introduced with the aim of overcoming the weaknesses of conventional electrical grids by using smart net meters.


Many government institutions around the world have been encouraging the use of smart grids for their potential to control and deal with global warming, emergency resilience and energy independence scenarios.

Techopedia Explains Smart Grid

Smart grid technology is an extended form of analog technology that has also been introduced for controlling the use of appliances by employing two-way communication. However, the prevalence of Internet access in most homes has made the smart grid more practically reliable to implement. Smart grid devices transmit information in such a way that enables ordinary users, operators and automated devices to quickly respond to changes in smart grid condition systems.

Smart grid is equally advantageous for enterprises, retail stores, hospitals, universities and multinational corporations. The entire smart grid system is automated for tracking the electricity consumption at all the locations. Grid architecture is also combined with energy management software for estimating the energy consumption and its associated cost for a specific enterprise. Generally, electricity prices increase along with demand. By providing consumers with information about current consumption and energy prices, smart grid energy management services help to minimize the consumption during high-cost, peak-demand times.

A modern smart grid system has the following capabilities:

  • It can repair itself.
  • It encourages consumer participation in grid operations.
  • It ensures a consistent and premium-quality power supply that resists power leakages.
  • It allows the electricity markets to grow and make business.
  • It can be operated more efficiently.

A smart grid’s key features include:

  • Load Handling: The sum/total of the power grid load is not stable and it varies over time. In case of heavy load, a smart grid system can advise consumers to temporarily minimize energy consumption.
  • Demand Response Support: Provides users with an automated way to reduce their electricity bills by guiding them to use low-priority electronic devices when rates are lower.
  • Decentralization of Power Generation: A distributed or decentralized grid system allows the individual user to generate onsite power by employing any appropriate method at his or her discretion.

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Margaret Rouse
Technology Expert
Margaret Rouse
Technology Expert

Margaret is an award-winning technical writer and teacher known for her ability to explain complex technical subjects to a non-technical business audience. Over the past twenty years, her IT definitions have been published by Que in an encyclopedia of technology terms and cited in articles by the New York Times, Time Magazine, USA Today, ZDNet, PC Magazine, and Discovery Magazine. She joined Techopedia in 2011. Margaret's idea of a fun day is helping IT and business professionals learn to speak each other’s highly specialized languages.