The old wireline Bell telephone system was built for Mother’s Day. The Bell system network planners knew that this one day in May was the mother of all phone call traffic peaks in the USA. They designed their networks for that anticipated capacity. The network planners had an 11th Commandment that influenced their operations: “Thou shalt always produce dialtone.” This is a dictum that is surely a puzzling reference for anyone who’s never used a rotary phone. Outside of those forecasted peak call events, the expensive equipment needed to deliver that extra capacity was sitting idle most of the time.

Today’s electrical grid is like the telephone system of 1980s. It is engineered to supply more electricity than typically needed, because utility employees also have an 11th Commandment to “keep the lights on.” This excess supply is generally most pronounced in two areas: generation of electricity and distribution of low voltage electricity from substations to our homes and businesses.

What does this extra capacity look like in our electrical grid? It involves keeping power plants on standby, ready to deliver megawatts of electricity on a moment’s notice if a catastrophic failure shuts down an online power plant. It also means building expensive peak power plants that operate for a limited number of hours each year.

At the distribution grid, electric utilities today make educated guesses about how much electricity is flowing to any traditional electro-mechanical meter at any moment in time, and oversupply electricity to operate equipment and appliances. In other words, to ensure quality of service, utilities deliver excess quantity. That means that while our lights don’t flicker, we are also paying for more electricity than we would actually consume, and power plants are generating more electricity than we actually need.

Today’s grid operators are now challenged to deliver sufficient power for peak events, when the demand for electricity is exceptionally high. Peak events are often related to unusually cold or hot weather impacting sufficient numbers of customers in a region. If utilities continue to solve peak electricity needs with existing solutions, we will be funding construction of large power plants that operate for a limited number of hours in a year. If utilities continue to address quality of service through excess quantities of electricity at the meter, we’ll be funding construction of even more power plants for ongoing electricity consumption.

The Smart Grid introduces innovative technologies that offer new solutions to these challenges. New technologies like smart meters add intelligence to grid operations through communications capabilities that let utilities calibrate the flow of electricity to meters in realtime. Some utilities are testing voltage reduction procedures that slightly pare down the supply of electricity to homes and businesses without any adverse impacts to the quality of service. Utilities that deploy voltage reduction over their customer base enjoy sufficient reductions in overall electricity needs that can eliminate or postpone new investments in generation plants for ongoing or peak use.

Smart Grid technologies also enable placement of distributed energy resources like rooftop solar, energy storage solutions, and microgrids that obviate the need for centralized generation facilities. Distributed energy storage has the potential to reduce the need to keep large generation assets in standby mode.  Smart Grid technologies offer a new business model vision for utilities in which advanced communications, sophisticated software applications, and renewables generation innovations can significantly transform the distribution grid. Realizing this vision requires shifts in thinking on the part of utilities, policy-makers, and consumers. We’ve experienced and enjoyed similar magnitudes of change in the telecommunications sector, as evidenced with a variety of communications options for telling mom just how much she means to us on Mother’s Day. Just how differently will we produce and consume electricity on Mother’s Day thirty years from now? One thing seems certain – the Smart Grid will manage peak electricity needs very differently from today’s solutions.