Me, I always thought grids and electricity were two pretty smart inventions, particularly the American electricity grid – 99.97 percent reliable. Hard to beat that. But as it turns out, maybe that can get even smarter.

Businesses lose $80 - $150 billion due to outages and power quality yearly according to industry observer Tom Cross (News - Alert). Not smart. Especially when, according to Cross, “the totle annual revenues for electrical power are approximately $330 billion,” and “the cost to build a smart grid is estimated to cost $160 billion.” 

According to a report prepared by the Department of Energy, America’s electric power infrastructure – “the grid” – is rapidly running up against its limitations. 

'Our lights may be on, but systemically, the risks associated with relying on an often overtaxed grid grow in size, scale and complexity every day,” the report said.

Cross mentioned interest growing in a smart grid to alleviate such problems. The benefits include user control and management and the fact that a smart grid can accommodate all types of electric power sources – coal, nuclear, solar, hydrogen, wind, bio, geo, water, auto and others. 

Such a grid could sense system overloads and reroute power to prevent or minimize a potential outage, and on certain issues could work faster than humans could respond. 

Assets on the grid can be optimized in terms of load balancing and peak use management to deal with those pesky surge and sag demands as well.

And real-time pricing is likely to be the killer app for consumers, allowing them to set discretionary consumptions for when prices are low – like setting the washing machine to start when prices fall to a certain level. 

Electrical companies are keen on building a groundswell of support for smart grid – you might recall the Super Bowl ad last year from GE of the singing scarecrow? Those 30 seconds set GE back a cool $3 million. That’s how invested they are in getting you to learn to love the smart grid, which the New York Times recently admitted is a hard sell.

As Cross explained, the key to smart grid is “the ability to communicate to and from all the points in the power system. Two-way communications gathering information and transmitting decisions will be the critical tool to adding and removing/reducing loads (users) and reducing outages and failures.” 

Don’t look for this tomorrow – the DoE report said a true smart grid represents “the longer-term promise…universally considered to be a decade or more from realization.” 

Yes, challenges abound – government research showed that people would like a smart grid – as long as it is simple, accessible and in no way interferes with how they live their lives. In other words, “set it and forget it” technology with clear ROI for residential consumers. And we all know how easy that is to achieve. 

And there is no technological silver bullet for the smart grid. Industry experts said it’s more likely to require a “silver buckshot” approach, combining many technologies. 

And, in the end, of course, the most valuable asset of all might be simple information. Kurt Yeager, executive director of the Galvin Electricity Initiative, told the New York Times that “there’s a fair amount of skepticism because a lot of the initiatives are indeed focused on providing that intelligence to the utilities but not the consumer.”

“A lot of people wonder if this is another thing that’s going to benefit the utility at the expense of the consumer,” Yeager added. 

It will succeed, of course, if consumers agree that it is, in fact, smart for them.

Learn more about Smart Grid technology at the Smart Grid Summit, an event collocated with ITEXPO East 2010, to be held Jan. 20 to 22 in Miami. This is the event you need to attend if you want to understand the role that IP communications technologies will play in how the Smart Grid evolves – not just for making utilities more efficient, but also for enabling the Smart Home and a new generation of communications innovations. Register now.