Technology: Plugging Into the Smart Grid

In Boulder, Colo., a surge of electricity on the power grid can largely go unnoticed. The grid is monitored electronically, so that if there are any sudden rushes or fallen power lines, electricity is automatically rerouted from one part of the system to another. This pilot project sounds simple enough—maybe even a little obvious. But this new type of technology could have prevented the 2003 blackout that knocked out power to much of the Northeastern United States. On that August day, a few sagging power lines brushed against some trees, and the lines shut down. This set off a domino effect, as one part of the grid taxed another. The result? By the end of that humid evening, 50 million people in eight states and southeastern Canada were left without power.

At the time, energy experts and politicians called the blackout a wake-up call about the country's antiquated power grid. Since then, major changes have been slow to take hold. The power grid has basically been the same for the better part of a century, says Ian Bowles, Massachusetts' secretary of energy and environmental affairs. That is, until the smart grid. "You have to think of the smart grid as a cell phone, as opposed to your grandmother's black rotary phone," he says.

The "smart grid" is a catchall phrase for the power grid of the future, with various test projects underway in Colorado, Massachusetts, New York, Illinois, and Hawaii. The idea is to make a system that will stop power surges from causing blackouts. It would create more energy-efficient power lines to carry electricity longer distances without losing voltage (current grids lose about 8 percent of power over distance). It would incorporate wind and solar energy into existing power grids. And it would let customers monitor the electricity they use in their homes, paying less for power consumed in off-hours.

Smart-grid plans have been on the drawing board for years, but the Obama administration has given the system, well, a jolt. The stimulus package includes $11 billion toward modernizing the electric grid, including the development of renewable energy. Within the next two to three years, cities such as Fort Collins, Colo., hope to use the stimulus money to build a "zero-energy district," where one neighborhood generates as much power as it consumes.

First, green-energy experts say smart grids have to overcome two hurdles: funding and disparate state-by-state webs of utility companies, tech startups, and municipal governments, all vying to be the rainmakers of a greener power grid. "The smart-grid industry is not ready for an overall national-scale deployment," Bowles says. "What the stimulus has done is capture the attention of all 50 states and provide 50 percent financing for significant projects."

Officials estimate that the Fort Collins project will cost roughly $350 million. The stimulus money kicks in only $4.8 million, which leaves the city to do significant fundraising. Money could come from a mix of government, private investments, utility companies, and research and development grants. "It's a ton of money, and there's no way we can do this on our own," says Mike Freeman, Fort Collins's chief financial officer and economic-development guru. "The biggest risk for us is that we won't have enough money and that this will take 20 years."

U.S. Energy Secretary Steven Chu has said updating the power grid could "cost more than $100 billion." Experts say that figure could vary widely depending on one's definition of the smart grid. It could cost significantly more if the tab includes building new transmission lines, wind turbines, or solar panels. Much of this discussion doesn't touch on the cost to consumers. Advocates argue that smart-grid technology ultimately could allow people to monitor and control their daily use of electricity, but to do this, consumers would first need to purchase a smart meter, a device that can cost a few hundred dollars. Buying smart meters for Fort Collins's 62,000 homes would cost about $20 million, Freeman says, which comes to about $322 per household.

The web of partnerships of energy-technology companies, municipalities, state governments, federal agencies, and utility companies could also pose a problem. Each has its own vision of the smart grid (not to mention self-interest). While newer energy-technology companies are rushing to develop the biggest, baddest devices, older utility companies are trying to overhaul the systems they've had in place for years.

State-by-state innovation also varies widely. Massachusetts, typically a leader in green technology, has four smart-grid pilot projects in the works. "Every state is different, and that is the challenge," says Katherine Hamilton, president of GridWise Alliance, a foundation funded by smart-grid proponents. "Each state is its own little world. It's going to be interesting to see how it all connects."

The eight pilot projects funded by $47 million of the Department of Energy's stimulus money are located in different regions of the country from Hawaii to Massachusetts. The department hopes the projects will uncover which devices or systems work best. But again, the question of success could vary depending on the area and its consumers. In rural towns, smart-grid technology may mean creating a system in which homes and businesses receive electricity without interruption. In windy Colorado, a smart grid may focus more on harnessing wind energy to supplant electrical power.

Either way, energy analysts say the smart-grid technology will transform the creation, delivery, and pricing of electricity—so much so that it's hard to predict what it will look like in 10 years. Whatever shape the grid eventually takes, the technology should prevent a recurrence of a blackout on the scale of the one that took place in 2003. But without a comprehensive plan to cover costs and consensus on a national standard, a true upgrade of the nation's system doesn't look so bright.