First of all, traditional grids are aging and no longer effective with respect to growing electricity demand, there are three basic reasons why we need smart grid technology and applications.
To cut cost and risks
Among the biggest problems smart grid solves are wasted resources and lack of safety. Adoption of smart grid technology by households and the whole cities helps monitor and control energy use in real time and optimize it with the best interests of citizens and the environment in mind.
At the same time, improved visibility of every grid’s element — loads, equipment, transmission lines, appliances — allows management to detect any problem in time or even in advance, address it accordingly and prevent expensive and dangerous problems like outages and downtime due to untimely maintenance.
According to the Department of Energy, outages cost Americans $150 billion yearly.
To reduce emissions and carbon-heavy electricity
Not only do smart grids provide intelligence, visibility, control and communication into energy consumption process, but also enable green energy.
First of all, together with reduced wasted energy come reduced emissions. Secondly, smart grid’s topology allows including renewables into the network, which makes clean energy sources more accessible for people.
To enable independence and resilience
Today, smart grid software enables consumer-level monitoring and control of energy consumption. It makes a household resident an active participant in the grid’s lifecycle, and a decision-maker too.
Using technologies like energy storage or PV systems, a household is able to temporarily go off-grid, for example, in a case of maintenance or accidents on the line. In this case, the residents can dynamically distribute loads in the house to address their energy needs. Or they can fully rely on the energy they generate and, thus, be absolutely independent of their regional grid.