Smart grid

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A smart grid is an electricity network that uses digital and other advanced technologies to monitor and manage the transport of electricity from all generation sources to meet the varying electricity demands of end-users[1].

‘Energy transition’, ‘electrical grid transformation’, ‘Power Shifts’; what is all that buzz?
—confused participant of Power Shifts and really cool person

This vision of the 'energy transition;' is built around the modernisation of the electrical grid, with the gradual development of smart grids, which use information and communication technologies (ICT) to manage electricity more efficiently while adding new nodes to the electrical grid such as Renewable Energy Sources (RES), thus turning households into a consumer-producer-hybrid. The promise of the smart grid is to enable a new paradigm with a reduced energy cost and the environmental benefits of RES[2].

Breaking it down

  • Intelligent and digitised energy network
  • Two-way dialogue: Electricity and Information
  • Information + Communication + Power Grid
  • Reliable, Secure, Efficient, Modern, Manageable → Full Potential
  • The integration of power, communications, and information technologies for an improved electric power infrastructure serving loads while providing for an ongoing evolution of end-use applications. [3]
  • A marketing term, rather than a technical definition. For this reason there is no well defined and commonly accepted scope of what "smart" is and what it is not.[4]

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:


  • 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.
  • Electricity production remains uncertain and will depend on numerous factors: the growth of renewable energy and decentralised energy, the renewal of old power generation capacities, increased external dependency, CO2 charges, etc. This increases the demand for electricity networks that are more reliable, more efficient, and more flexible.
  • 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. [5]

How does the EU define smart grids?

What shale gas did to the US economy, smart grids can and should do in Europe.
—Commissioner Maroš Šefčovič (Vice-President for Energy Union)

In its April 2011 communication ‘Smart Grids: from innovation to deployment’, the Commission describes smart grids as ‘an upgraded electricity network to which two-way digital communication between supplier and consumer, intelligent metering and monitoring systems have been added. Intelligent metering is usually an inherent part of smart grid.’[6]
In its 2050 Energy Roadmap,[7] smart grids play a central role in the future decarbonised energy power systems. Their successful deployment touches all the fundamental objectives of EU energy policy – sustainability, security and competitiveness, the creation of the energy single market, as well as the 2030 climate targets[8].

Smart grids ‘and meters’?

To facilitate the development of smart grids, the Commission encourages the deployment of smart metering across EU Member States, in line with the recommendations of the 2009 gas and electricity packages, as an important first step towards smart grids.

In alignment, smart meters today remain the most advanced concretisation of the smart grids. This constitutes a paradox. Smart meters are largely a national matter. Their transnational aspects remain quite limited. The other aspects of smart grids (smart network management, integration of large scale renewable electricity, or systems of storage for example) are of a more transnational character, but their progress is limited.

EU legislation and policy documents

  • Electricity and Gas Directives 2009/72/EC and 2009/73/EC
  • Energy Efficiency Directive 2012/27/EC
  • Energy Infrastructure Regulation (EU) 347/2013
  • Electro-mobility Alternative Fuels Directive AFID, 2013/0012(COD)
  • Recommendation 2012/148/EU on smart metering roll-out
  • Recommendation 2014/724/EU Data Protection Impact Assessment Template
  • COM(2011)202 on Smart Grids
  • COM(2012)663 on the Internal Energy Market
  • COM (2013)7243 on IEM and public intervention
  • SWD(2013)442 on Demand Side Flexibility
  • COM(2014) 356 Benchmarking Report on Smart Metering & accompanying SWDs

Opportunities and challenges

It is evident from the above trends that innovative and transformative changes are not about one specific technology or energy source, but rather require long-term, system oriented goals. [2]
The smart grid is a 3-piece structure that combines power, communication and information technologies for a more efficient, reliable and manageable power infrastructure ; it is a complex system made up of interrelated systems. [3]

As the power system is upgraded with more flexibility, integrated communications, and advanced controls, it will enable large-scale integration and interoperability of a greater diversity of technologies and end-use applications.[3] This will generate data in vast quantities. To manage, store, and effectively use this data, the power system, communications, and information technologies should be coordinated using a system of systems approach; that is, achieve interoperable communications across smart grid technologies.[3]



To transition legacy networks into more intelligent and secure electric power infrastructure, smart grid objectives should address the needs of all stakeholders, including customers and communities, and develop the standards-based smart grid approach based on interoperable solutions and flexible business processes.[3]
The deployment of the [smart grid] will be a continuing evolution and not a single event; therefore, there is a need to adapt legacy protocols to new ICT capabilities. Interoperability in ICT has generally been improved by use of a functionally layered protocol in accordance with the International Organization for Standardization (ISO) Open Systems Interconnect (OSI) reference model.[3]

Data privacy

Privacy is generally associated with collection, ownership, access control, integrity control, distribution, modifications, repurposing, reconstruction, and disposition of personally identifiable information (PII), relating to both individuals and organizations. Definitions of privacy vary across jurisdictions. New smart grid technologies and applications like smart meters, smart appliances, or customer energy management systems (EMSs) will create new privacy risks and concerns in unexpected ways. Recognising electric signatures of smart appliances and developing detailed, time-stamped activity reports by utilities or third-party service providers for efficiency analysis also reveals lifestyle details that could be legitimately characterized as PII in most jurisdictions. [3]
Thus, many concerns have been raised over the ability of commercial actors to identify customer patterns of energy usage and as the successful roll-out of smart grids will also depend on public acceptance, adequate protection is crucial.
At the same time, as new capabilities are added [smart grid]s, potential new privacy concerns will emerge for which no legal mitigation currently exists. Hence, measures like privacy impact assessments need to be carried out for various smart grid use cases.

Security and cybersecutiry

Security programs typically focus on protection of human life, safety, and tangible and intangible assets. With a system that handles power generation, transmission, and distribution, security responsibility extends beyond the traditional walls of the data center. Two major components of smart grid security are cyber security and physical security. Physical security mechanisms protect people, data, equipment, systems, facilities, and many other assets. [3]
Another concern is the susceptibility of smart grids to cyber-hacking, as highlighted by several cases in the USA where hackers were able to access smart grids through appliances such as smart meters. The European Network for Information and Security Agency (ENISA) has outlined appropriate security measures to minimise this kind of risk in a detailed report[9]. The European Commission and its Smart Grids Task Force, which includes industry representatives, take the view that data privacy and security issues can be adequately addressed through existing legislation. [10]

Regulatory issues

Some of the main issues on the regulatory front on an EU level are:

  • the liberalisation of the electricity sector, still ongoing
  • the need to redefine roles and responsibilities of the different actors implied, such as Distribution System Operators (DSOs) and Transmission System Operators (TSOs).
  • the need redesign electricity market rules and integrate Renewable Energy Sources

Financial issues

The main obstacle here is that investments for smart grids projects deployment are rather low.

Consumers’ side

It is still rather unclear what the costs and benefits for consumers will be. As at the moment the costs tend to outweigh the benefits, there is much hostility preventing from widespread public acceptance.

Industrial policy and infrastructure


Reliability is the ability of a component or system to perform required functions under stated conditions for a stated period of time [IEEE Std 493-2007]. The extent and complexity of the smart grid architecture will introduce challenges to the reliability of the grid to a magnitude that may not exist today. Equally, the magnitude and geographical extent to which disruption of the grid can be affected will no doubt increase as complex architectures and communications facilities pervade into operations of the EPS at every level. [3]

How smart grids can be deployed


A fully optimised electricity system will deploy all the following technology areas. However, not all are need to be installed to increase the “smartness” of the grid.

Links for further research

  1. International Energy Agency, Technology Roadmap:Smart Grids
  2. 2.0 2.1 See the Category:Technological Dimension
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 2030-2011 - IEEE Guide for Smart Grid Interoperability of Energy Technology and Information Technology Operation with the Electric Power System (EPS), End-Use Applications, and Loads
  5. Egmont Institute, Tania ZGAJEWSKI, Smart electricity grids: A very slow deployment in the EU See Conclusions
  6. COM (2011) 202 - same in Recommendation 2012/148/EU (OJEU 2012, L 73/11).
  8. improve EU energy efficiency by 27%, attain a 27% EU share of renewable energy by 2030 and reduce greenhouse gas emissions.
  9. Recommended read: ENISA Appropriate security measures for smart grids
  10. European Parliament Briefing, December 2015 [ Smart electricity grids and meters in the EU Member States

What links here