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added image on traditional grid!
==Traditional grids==
Traditionally, energy systems from power generation to homes are one-directional and based on more predictable, controllable and centralised power generation, looking something like this:
[[File:Traditional-system-diagram-NEW-Jun-2014.png|thumbnail|[http://www.edsoforsmartgrids.eu/home/why-smart-grids/ Source: European Distribution System Operators (EDSO) for Smart Grids]]]
===Challenges===
* Electrical power is increasingly substituted for other forms of energy. Electricity demand will increase in the future (notably because of new needs in transport and heat sectors), although it is currently stagnant, mainly because of the economic crisis. Unless a major alternative energy source is discovered, electricity will become the central energy pillar in the long term.
* Europe’s current electricity networks are ageing, and, as already indicated by the International Energy Agency, many of them will need to be modernized or replaced in the decades to come.
* The growing impact of energy trading also needs to be taken into account. <ref name="egmont">Egmont Institute, Tania ZGAJEWSKI, [http://www.egmontinstitute.be/wp-content/uploads/2015/03/new-egmont.papers.74.U2334_16x24.pdf Smart electricity grids: A very slow deployment in the EU]</ref>
==How does the EU define smart grids?==
{{Quote|text=What shale gas did to the US economy, smart grids can and should do in Europe.|sign=Commissioner Maroš Šefčovič (Vice-President for Energy Union)}}