A smart grid is a modernized electrical grid that uses analogue or digital information and communications technology to gather and act on information, such as information about the behaviours of suppliers and consumers, in an automated fashion to improve the efficiency, reliability, economics, and sustainability of the production and distribution of electricity.  Smart grid policy is organized in Europe as Smart Grid European Technology Platform.  Policy in the United States is described in 42 U. S. C. ch. 152, subch. IX § 17381.
Roll-out of smart grid technology also implies a fundamental re-engineering of the electricity services industry, although typical usage of the term is focused on the technical infrastructure Features of the smart grid The smart grid represents the full suite of current and proposed responses to the challenges of electricity supply. Because of the diverse range of factors there are numerous competing taxonomies and no agreement on a universal definition. Nevertheless, one possible categorisation is given here. Reliability
The smart grid will make use of technologies, such as state estimation, that improve fault detection and allow self-healing of the network without the intervention of technicians. This will ensure more reliable supply of electricity, and reduced vulnerability to natural disasters or attack. Although multiple routes are touted as a feature of the smart grid, the old grid also featured multiple routes. Initial power lines in the grid were built using a radial model, later connectivity was guaranteed via multiple routes, referred to as a network structure.
However, this created a new problem: if the current flow or related effects across the network exceed the limits of any particular network element, it could fail, and the current would be shunted to other network elements, which eventually may fail also, causing a domino effect. See power outage. A technique to prevent this is load shedding by rolling blackout or voltage reduction (brownout).  Flexibility in network topology
Next-generation transmission and distribution infrastructure will be better able to handle possible bidirection energy flows, allowing for distributed generation such as from photovoltaic panels on building roofs, but also the use of fuel cells, charging to/from the batteries of electric cars, wind turbines, pumped hydroelectric power, and other sources. Classic grids were designed for one-way flow of electricity, but if a local sub-network generates more power than it is consuming, the reverse flow can raise safety and reliability issues.
 A smart grid aims to manage these situations.  Efficiency Numerous contributions to overall improvement of the efficiency of energy infrastructure are anticipated from the deployment of smart grid technology, in particular including demand-side management, for example turning off air conditioners during short-term spikes in electricity price. The overall effect is less redundancy in transmission and distribution lines, and greater utilisation of generators, leading to lower power prices. Load adjustment/Load balancing
The total load connected to the power grid can vary significantly over time. Although the total load is the sum of many individual choices of the clients, the overall load is not a stable, slow varying, increment of the load if a popular television program starts and millions of televisions will draw current instantly. Traditionally, to respond to a rapid increase in power consumption, faster than the start-up time of a large generator, some spare generators are put on a dissipative standby mode.
A smart grid may warn all individual television sets, or another larger customer, to reduce the load temporarily (to allow time to start up a larger generator) or continuously (in the case of limited resources). Using mathematical prediction algorithms it is possible to predict how many standby generators need to be used, to reach a certain failure rate. In the traditional grid, the failure rate can only be reduced at the cost of more standby generators.
In a smart grid, the load reduction by even a small portion of the clients may eliminate the problem. Peak curtailment/leveling and time of use pricing To reduce demand during the high cost peak usage periods, communications and metering technologies inform smart devices in the home and business when energy demand is high and track how much electricity is used and when it is used. It also gives utility companies the ability to reduce consumption by communicating to devices directly in order to prevent system overloads.
Examples would be a utility reducing the usage of a group of electric vehicle charging stations or shifting temperature set points of air conditioners in a city.  To motivate them to cut back use and perform what is called peak curtailment or peak leveling, prices of electricity are increased during high demand periods, and decreased during low demand periods.  It is thought that consumers and businesses will tend to consume less during high demand periods if it is possible for consumers and consumer devices to be aware of the high price premium for using electricity at peak periods.
This could mean making trade-offs such as cycling on/off air conditioners or running dishes at 9 pm instead of 5 pm. When businesses and consumers see a direct economic benefit of using energy at off-peak times, the theory is that they will include energy cost of operation into their consumer device and building construction decisions and hence become more energy efficient. See Time of day metering and demand response. According to proponents of smart grid plans,[who?
] this will reduce the amount of spinning reserve that electric utilities have to keep on stand-by, as the load curve will level itself through a combination of “invisible hand” free-market capitalism and central control of a large number of devices by power management services that pay consumers a portion of the peak power saved by turning their device off.. Sustainability The improved flexibility of the smart grid permits greater penetration of highly variable renewable energy sources such as solar power and wind power,
even without the addition of energy storage. Current network infrastructure is not built to allow for many distributed feed-in points, and typically even if some feed-in is allowed at the local (distribution) level, the transmission-level infrastructure cannot accommodate it. Rapid fluctuations in distributed generation, such as due to cloudy or gusty weather, present significant challenges to power engineers who need to ensure stable power levels through varying the output of the more controllable generators such as gas turbines and hydroelectric generators.
Smart grid technology is a necessary condition for very large amounts of renewable electricity on the grid for this reason. Market-enabling The smart grid allows for systematic communication between suppliers (their energy price) and consumers (their willingness-to-pay), and permits both the suppliers and the consumers to be more flexible and sophisticated in their operational strategies. Only the critical loads will need to pay the peak energy prices, and consumers will be able to be more strategic in when they use energy.
Generators with greater flexibility will be able to sell energy strategically for maximum profit, whereas inflexible generators such as base-load steam turbines and wind turbines will receive a varying tariff based on the level of demand and the status of the other generators currently operating. The overall effect is a signal that awards energy efficiency, and energy consumption that is sensitive to the time-varying limitations of the supply.
At the domestic level, appliances with a degree of energy storage or thermal mass (such as refrigerators, heat banks, and heat pumps) will be well placed to ‘play’ the market and seek to minimise energy cost by adapting demand to the lower-cost energy support periods. This is an extension of the dual-tariff energy pricing mentioned above. Demand response support Demand response support allows generators and loads to interact in an automated fashion in real time, coordinating demand to flatten spikes.
Eliminating the fraction of demand that occurs in these spikes eliminates the cost of adding reserve generators, cuts wear and tear and extends the life of equipment, and allows users to cut their energy bills by telling low priority devices to use energy only when it is cheapest.  Currently, power grid systems have varying degrees of communication within control systems for their high value assets, such as in generating plants, transmission lines, substations and major energy users. In general information flows one way, from the users and the loads they control back to the utilities.
The utilities attempt to meet the demand and succeed or fail to varying degrees (brownout, rolling blackout, uncontrolled blackout). The total amount of power demand by the users can have a very wide probability distribution which requires spare generating plants in standby mode to respond to the rapidly changing power usage. This one-way flow of information is expensive; the last 10% of generating capacity may be required as little as 1% of the time, and brownouts and outages can be costly to consumers.
Latency of the data flow is a major concern, with some early smart meter architectures allowing actually as long as 24 hours delay in receiving the data, preventing any possible reaction by either supplying or demanding devices.  Platform for advanced services As with other industries, use of robust two-way communications, advanced sensors, and distributed computing technology will improve the efficiency, reliability and safety of power delivery and use.
It also opens up the potential for entirely new services or improvements on existing ones, such as fire monitoring and alarms that can shut off power, make phone calls to emergency services, etc. Provision megabits, control power with kilobits, sell the rest The amount of data required to perform monitoring and switching one’s appliances off automatically is very small compared with that already reaching even remote homes to support voice, security, Internet and TV services.
Many smart grid bandwidth upgrades are paid for by over-provisioning to also support consumer services, and subsidizing the communications with energy-related services or subsidizing the energy-related services, such as higher rates during peak hours, with communications. This is particularly true where governments run both sets of services as a public monopoly. Because power and communications companies are generally separate commercial enterprises in North America and Europe, it has required considerable government and large-vendor effort to encourage various enterprises to cooperate.
Some, like Cisco, see opportunity in providing devices to consumers very similar to those they have long been providing to industry.  Others, such as Silver Spring Networks or Google, are data integrators rather than vendors of equipment. While the AC power control standards suggest powerline networking would be the primary means of communication among smart grid and home devices, the bits may not reach the home via Broadband over Power Lines (BPL) initially but by fixed wireless.