The electric grid is unique in that electrical supply and
demand must remain tightly balanced at all times, since
for most of the history of the electric grid there has been
no commercial solution for large-scale storage of electric-
ity to compensate for any excess or shortfall in power. In
the past, this balancing act was performed by the vertically
integrated utilities that controlled both the generation and
the delivery systems.
Power grids in the industrialized countries are aging and
being stressed by operational scenarios and challenges never
envisioned when the majority of them were developed many
decades ago. The main challenges are summarized below.
Deregulation unleashed unprecedented energy trad- ✔
ing across regional power grids, presenting power
fl ow scenarios and uncertainties the system was not
designed to handle.
The increasing penetration of renewable energy in the ✔
system further increases the uncertainty in supply and
at the same time adds stress to the existing infrastruc-
ture due to the remoteness of the geographic locations
where the power is generated.
Our digital society depends on and demands a power ✔
supply of high quality and high availability.
The threat of terrorist attacks on either the physical or ✔
the cyber assets of the power grid introduces further
uncertainty.
There is an acute need to achieve sustainable growth ✔
and minimize environmental impact via energy con-
servation, i.e., by switching to green and renewable
energy sources. We can only meet this objective by
increasing energy effi ciency, reducing peak demand,
and maximizing the use of renewable energy.
The growing consensus in the industry and among many
national governments is that smart grid technology is the
answer to these challenges. This trend is evidenced by
the specifi c provision and appropriation of multi-billion-
dollar amounts on the part of the U.S. government (in the
2009 stimulus program, for example) for research and
development, demonstration, and deployment of smart
grid technologies and the associated standards. The Euro-
pean Union and China have also announced huge levels
of funding for smart grid technology research, demonstra-
tion, and deployment.
The objective of transforming the current power grid
into a smart grid is to provide reliable, high-quality electric
power to digital societies in an environmentally friendly and
sustainable way. This objective will be achieved through the
application of a combination of existing and emerging tech-
nologies for energy effi ciency, renewable energy integration,
demand response, wide-area monitoring and control, self-
healing, HVDC, fl exible ac transmission systems (FACTS),
and so on.
march/april 2010 IEEE power & energy magazine 43
The scope of the smart grid extends over all the intercon-
nected electric power systems, from centralized bulk gen-
eration to distributed generation (DG), from high-voltage
transmission systems to low-voltage distribution systems,
from utility control centers to end-user home-area networks,
from bulk power markets to demand response service pro-
viders, and from traditional energy resources to distributed
and renewable generation and storage, as shown in Figure 1.
The transition from the present grid to a smart grid and
the key differences between the two can be illustrated by
Figure 2. One can see there is
a fundamental shift in the de-
sign and operational paradigm
of the grid: from central to dis-
tributed resources, from predict-
able power fl ow directions to
unpredictable directions, from a
passive grid to an active grid. In
short, the grid will be more dy-
namic in its confi guration and its
operational condition, which will
present many opportunities for
optimization but also many new
technical challenges.
What Makes the Smart Grid Smart?Before we attempt to answer this
question, let’s look at a familiar
but much simpler example and
identify the basic components of
an engineering system that we
generally consider to be “smart.”
Consider the cruise-control func-
tion found in most automobiles.
You just set a desired speed and
leave the control of the gas pedal to
the cruise-control function. Once
set, cruise control does its job
autonomously for you. It keeps the
engine power output steady when
the car is on a level road, increases
the engine output when the car is
going uphill, and reduces engine
output when the car is going down-
hill. All this is done automatically,
without the intervention of the
driver. Most of us consider cruise control a smart function of
cars. Beyond the basic speed control, high-end automobiles
feature collision avoidance capability, using adaptive control
and radar technologies.
Figure 3 is a schematic diagram of a basic cruise control
system. Signals for vehicle speed, driver commands (set speed,
increase or reduce speed, and so on), clutch and brake pedal posi-
tions, and fuel injection throttle positions are fed to an onboard
cruise-control computer. There control programs work on the
input data continuously and, based on control theory algorithms,
Behavior: ChaoticBehavior: Predictable
Anyone May ParticipateUtility Controls Connections
Power Flows from EverywherePower Flows Downhill
Generation EverywhereCentralized Generation
Smart GridTraditional Grid
Smart GridTraditional Grid
figure 2. Transition from the present grid to a smart grid.
The smartness of the smart grid lies in the decision intelligence layer, all the computer programs that run in relays, IEDs, substation automation systems, control centers, and enterprise back offices.
figure 1. Scope of the smart grid. (Image courtesy of ABB.)
44 IEEE power & energy magazine march/april 2010
generate control signals for the vacuum actuator. The vacuum
actuator increases or reduces the throttle valve by means of a
cable. The changes in the throttle valve position change the
engine power output and in turn the speed of the car.
We can identify four essential building blocks necessary
in this system:
a sensor system to measure system states (automobile ✔
speed, brake and pedal position, throttle position)
communication infrastructure (wires to collect sensor ✔
information and propagate control signals)
control algorithms (also known as applications that ✔
digest the information and generate control signals
intended to change the state of the system)
actuators that effect desired changes in the physical ✔
system (in this example, the throttle valve position and
the engine power output).
All four building blocks are needed for this smart function to
work. The sensor system and the communication infrastructure
let the driver know what is going on, i.e., what speed the car is
going and whether it is accelerating or decelerating. The control
algorithms (applications) are where the smartness of the system
lies. The control algorithms make intelligent decisions based
on the information provided by the communication infrastruc-
ture, the available controls, and the desired control objective
(maintaining constant speed). But without the actuator system,
we can only observe the system passively and helplessly, for the
actuator system provides the means of actually making changes
(differences) in the physical system. After all, it is a physical
car, not a virtual one, that the cruise function controls.
The four basic building blocks identifi ed here can easily
be mapped to electric power systems, as shown in Table 1.
The focus of the industry effort so far has been mostly
on the interoperability of the communication and information
model, as suggested by the National Institute of Standards
and Technology (NIST) Smart Grid Interoperability standard
road map and the International Electrotechnical Commission
(IEC) documents on smart grid standardization. In “Under-
standing the Smart Grid from Defi nition to Deployment,”
the Edison Electric Institute rightly suggested that “advanced
controls provide the ‘smart’ in smart grids.” To borrow a
phrase from the real estate business, the three value genera-
tors for the smart grid are “application, application, and appli-
cation.” To enable smart applications, we need not only good
business logic, control, and optimization theory, we also need
new hardware components that can control power fl ows in the
network, as well as the output and the consumption of power.
What Will the Smart Grid Be Like?To average consumers, the smart grid, for the most part, will
remain under the hood, working silently and invisibly. Some
interfaces will be exposed to consumers, such as the proto-
type iPhone interface by which users will be able to check
the current electricity price and electricity consumption and
remotely turn home appliances on and off. Though fascinat-
ing, such technologies represent only the tip of the iceberg.
The really important and advanced technologies of the smart
grid will remain unnoticed by the general public.
When we look beyond the horizon, we envision some
salient features of the smart grid that set it apart from the
traditional power grid. It is clear that as the system’s supply
table 1. The four building blocks of vehicle cruise control mapped to the electric power system.
Building Blocks Power System Mapping
Sensor system Current transformer (CT), voltage transformer (VT), phasor measurement unit (PMU), smart meter, temperature, pressure, acoustic, and so on
Communication infrastructure Power line carrier (PLC), wireless radio, advanced metering infrastructure (AMI), home area network (HAN), fiber-optic networks
Control algorithms (applications) Wide-area monitoring and control; microgrid management; distribution load balancing and reconfiguration; demand response; optimal power flow (OPF); voltage and var optimization (VVO); fault detection, identification, and recovery (FDIR); automatic generation control (AGC); interarea oscillation damping; system integrity protection scheme (SIPS); and so on
Actuator system/physical system HVDC, FACTS, DG, energy storage systems, reclosers, automatic switches, breakers, switchable shunts, on-load tap changers, hybrid transformers, and so on
Cruise Control
Computer
• Vehicle Speed
• Steering Wheel Controls
• Clutch Pedal
• Brake Pedal
Vacuum Valve Control
Vacuum Actuator
Throttle Valve
Cable-to-Throttle ValveThrottle Position
figure 3. Schematic diagram of vehicle cruise control.
march/april 2010 IEEE power & energy magazine 45
and consumption become more decentralized and distrib-
uted, the system’s condition will become more dynamic and
less predictable. The development of demand, supply, and
power fl ow control technologies will thus become essential
in protecting, managing, and optimizing the new grid. In the
following sections we summarize certain other features of
the future smart grid.
Tightly Integrated Renewable Energy In the smart grid, energy from diverse sources is combined
to serve customer needs while minimizing the impact on the
environment and maximizing sustainability. In addition to
nuclear-, coal-, hydroelectric-, oil-, and gas-based genera-
tion, energy will come from solar, wind, biomass, tidal, and
other renewable sources. The smart grid will support not only
centralized, large-scale power plants and energy farms but
residential-scale dispersed distributed energy sources. These
renewable and green sources will be seamlessly integrated into
the main grid.
Proliferation of Energy StorageA smart grid has numerous energy storage centers, large
and small, stationary and mobile, that it can use to buffer
the impact of sudden load changes and fl uctuations in wind
and solar generation, as well as to shift energy consumption
away from peak hours by providing energy balancing, load
following, and dynamic compensation of both reactive and
real power. The recent development of quick-response battery
energy storage systems (BESSs) with voltage source convert-
ers (VSCs) has demonstrated the promise and potential ben-
efi ts of energy storage.
Growing Mobile Loads and ResourcesMany loads and resources connected to the future smart grid
will no longer be stationary. Breakthroughs in battery tech-
nology are making plug-in electric vehicles (EVs) commer-
cially viable. At all times of day, tens of millions of EVs will
be connected to the future grid at parking lots near homes,
workplaces, and shopping malls. These EVs will represent
both mobile loads and potential sources of power. The bat-
tery systems in these vehicles will be charged or discharged
via sophisticated coordination protocols in order to smooth
out fl uctuations in power demand in different parts of the
grid, avoid power transmission bottlenecks, and render the
grid more stable. Controllers will be able to respond to power
system condition signals such as voltages and frequencies as
well as market signals such as real-time electricity prices.
Distribution of ProductionDG (from solar, fuel cell, small wind turbine, and other
sources) and energy storage (battery, thermal, and hydrogen)
are everywhere in a smart grid. They are not marginal play-
ers but highly infl uential and integrated parts of the energy
web. They provide energy diversity, reduce demand for cen-
tral fossil-fuel power plants, and increase supply redundancy
and system reliability. The distribution of energy production
from renewable sources also increases the resilience of the
grid in the face of widespread disturbances (e.g., blackouts).
A New Level of ControllabilityIn the future smart grid, a new generation of power trans-
port and control technologies will have become mature
and widely adopted. Current-limiting and current-breaking
devices based on solid-state technology will help protect
valuable grid assets and isolate faults. Power electronics–
based transformers will be common. FACTS technology will
enable system operators to route power fl ows along the most
effi cient paths and fi nd the best power production mixes and
schedules. Advanced applications in the control center will
continuously check the state of the grid and determine the
best control strategies from among billions of possibilities
in real time.
Real-Time Grid AwarenessMassively deployed sensors will continuously collect end-
user energy consumption data, weather data, and equipment
condition and operational status and perform real-time rat-
ing in the context of actual distribution and transmission line
fl ows. The information will be disseminated through highly
available, fl exible, open (but secure) two-way communica-
tion infrastructures to any point in the grid where it can be
used to monitor the status of the grid, predict what will hap-
pen next, and develop optimal control strategies.
The Smart Prosumer and the Grid-Friendly ApplianceEnd-user equipment will no longer consist of dumb devices but
will form interactive and intelligent nodes on the smart grid.
End-user energy management systems will monitor the energy
consumption situation in residences, offi ce buildings, and shop-
ping malls. They will know the consumption patterns and pref-
erences of the occupants, as well as real-time conditions (e.g.,
market prices, grid stress). They will use the collected infor-
mation to autonomously interact with the grid to determine the
charging and discharging cycles of plug-in electric vehicles,
Multiple benefits could result from a SIM-based architecture; energy loss would be reduced to a minimum.
46 IEEE power & energy magazine march/april 2010
schedule washer and dryer cycles, and optimize HVAC opera-
tions without sacrifi cing occupants’ comfort. Appliances will
continuously monitor voltages and frequencies. When the sys-
tem experiences distress due to unforeseen disturbances, the
appliances will modulate the power consumed to reduce the
stress on the system and help prevent service disruptions.
The Resurgence of DCAdvancements in materials, power electronics, and sensor
technologies will transform the design and operation para-
digm of the smart grid. At the generation, transmission, and
distribution levels, ac and dc technologies will work together
harmoniously. HVDC networks embedded in ac networks
will power the world’s megacities but will use only a frac-
tion of the land required for transmission a generation ago.
HVDC transmissions will link clean and renewable power at
remote or offshore generation sites to the main power grid.
Distribution buses in offi ce and residential buildings will sup-
ply dc power to digital appliances without the need for power
adapters. Hybrid grid (ac/dc) architectures for distribution
systems will make the grid more fl exible and reliable.
Real-Time Distributed IntelligenceIn the smart grid, advanced grid-monitoring, optimization,
and control applications track the operating conditions of
grid assets, calculate their ratings, and dynamically balance
load and resources to maximize energy delivery effi ciency
and security in real time. The increased interactivity among
producers and consumers will mean demand is dynamic
rather than static; the grid’s operating environment will
appear chaotic, and power fl ow directions will change in
response to market conditions. A new generation of protec-
tion and control technologies will be called on to maintain
the safety and security of both the system and its personnel.
The Four Technology Layers of the Smart GridThe four essential building blocks of the smart grid can be
depicted using a layered diagram, as shown in Figure 4.
An analogy can be drawn between these layers and those
that make up the human body. The bottom layer is analogous
to the body’s muscles; the sensor/actuator layer corresponds
to the body’s sensory and motor nerves, which perceive the
environment and control the muscles; the communication
layer corresponds to the nerves that transmit perception and
motor signals; and the decision intelligence layer corresponds
to the human brain.
The smartness of the smart grid lies in the decision intel-
ligence layer, which is made up of all the computer programs
that run in relays, intelligent electronic devices (IEDs), sub-
station automation systems, control centers, and enterprise
back offi ces. These programs process the information col-
lected from the sensors or disseminated from the communi-
cation and IT systems; they then provide control directives or
support business process decisions that manifest themselves
through the physical layer. Some application examples are
given below:
microgrid control and scheduling (demand response ✔
and effi ciency)
intrusion detection and countermeasures (cybersecurity) ✔
equipment monitoring and diagnostic systems (asset ✔
management)
wide-area monitoring, protection, and control ✔
online system event identifi cation and alarming (safe- ✔
ty and reliability)
power oscillation monitoring and damping (stability) ✔
voltage and var optimization (energy effi ciency and ✔
demand reduction)
voltage collapse vulnerability detection (security) ✔
autonomous outage detection and restoration (self- ✔
healing)
intelligent load balancing and feeder reconfi guration ✔
(energy effi ciency)
self-setting and adaptive relays (protection) ✔
end-user energy management systems (consumer par- ✔
ticipation, effi ciency)
dynamic power compensation, using energy storage ✔
and voltage source inverters (effi ciency and stability).
For the decision intelligence layer to work, data (infor-
mation) need to be propagated from the devices connected
to the grid to the controllers that process the information
and transmit the control directives back to the devices. The
communication and IT layer performs this task. The IT layer
serves to provide responsive, secure, and reliable information
dissemination to any point in the grid where the information
is needed by the decision intelligence layer. In most cases,
this means that data are transferred from fi eld devices back
to the utility control center, which acts as the main repository
for all the utility’s data. Device-to-device (e.g., controller-
to-controller or IED-to-IED) communication, however, is
also common, as some real-time functionality can only be
achieved through interdevice communication. Interoperabil-
ity and security are essential to assure ubiquitous commu-
nication between systems of different media and topologies
and to support plug-and-play for devices that can be autocon-
fi gured when they are connected to the grid, without human
Decision Intelligence
Communication
Sensor/Actuator
Power Conversion/Transport/Storage/
Consumption
figure 4. Smart grid technology layers.
march/april 2010 IEEE power & energy magazine 47
intervention. The accelerating deployment of AMI around
the world is a big step in building a two-way communication
platform for enabling demand response and other advanced
distribution applications.
The physical layer is where the energy is converted,
transmitted, stored, and consumed. Solid-state technology,
power electronics–based building blocks, superconducting
materials, new battery technologies, and so on all provide
fertile ground for innovations.
Example of a New Controllable ComponentOn the journey towards the smart grid, there will be many
technology breakthroughs that will have game-changing
effects on its evolution. What follows is one plausible new-
technology scenario, described here as an illustration of one
of the many potential smart grid technologies that could
change the grid’s design and operational philosophy in fun-
damental ways.
Traditional Grid Design and PremisesThe design and operation of the traditional power grid is
limited by the basic network components (lines, switches,
transformers with on-load tap changers, switchable capaci-
tors) available. The traditional grid is built on the following
fi ve premises:
The components are predominantly dumb conductors 1)
and are not controllable.
Even if they are controllable, they cannot react quick-2)
ly enough.
There is no energy storage; an interruption on the 3)
transmission or distribution grid means an interrup-
tion of service.
Customer demands are not controllable, and the grid 4)
can only react passively to the change in demands
with centralized control.
The grid can only react to the changes by continuously 5)
balancing the output of the central power plants in or-
der to remain in a dynamic equilibrium.
The lack of energy storage, fast reactive and real power
regulation, and distributed generation leads to the traditional
system design. Figure 5 shows the traditional distribution
system architecture.
The main function of voltage regulators is to compensate for
the voltage drop on the feeder and to maintain feeder voltage
within acceptable range at the service point. The main function
of the switchable capacitor banks is to provide reactive power
close to the loads and reduce reactive power fl ow on the feeder
and energy losses.
New Architecture and Enabling TechnologyWith distributed generation, energy storage, and fast-
acting converter/inverter technology, a new distribution
system architecture can be envisioned, like the one shown
in Figure 6. The new architecture requires the introduction
of new building blocks. We shall refer to the new building
block technology as the smart integration module (SIM).
SIMs will have the following functionality:
connection to the grid (feeder) ✔
ac bus for ac loads ✔
dc bus for dc loads and connection to energy storage ✔
and distributed generation
voltage regulation in steady state and in transient ✔
fast real and reactive power compensation ✔
fault detection and fault current limiting and isolation ✔
autonomous distributed intelligent control for short- ✔
time-scale control
coordination and optimization for longer-time-scale ✔
control.
New Concept of Smart Integration ModuleAdvancements in power electronics design and fabrication
technology make it possible in principle to design smart inte-
gration modules (SIMs) with the aforementioned function-
ality at a competitive cost. If shown to be technologically
and commercially viable, SIM technology could change the
design and operation philosophy and practice in the distribu-
tion and transmission systems in profound ways.
Benefits and ImpactsMultiple benefi ts could result from a SIM-based architec-
ture. Energy loss would be reduced to a minimum due to
Energy
Storage DG
ac Bus
Load
SS
dc Bus
Load Load
Load Load
SIM
figure 6. New distribution system architecture with SIM.
Transformerac Bus
Load Load
Voltage Regulator
SS
Cap
Transformerac Bus
Load
figure 5. Traditional distribution system architecture.
48 IEEE power & energy magazine march/april 2010
1) maximum utilization of the distributed generation to reduce
the real power fl ow on the grid and 2) provision of reactive
power where it is consumed to reduce the reactive power fl ow
on the grid. The power electronics–enabled voltage regula-
tion capability of SIMs will ensure a high-quality power sup-
ply at every load connection point by maintaining optimized
voltage levels and compensating for voltage dips, swells, and
fl ickers. The fast fault current detection and limiting capabil-
ity will reduce the fault-breaking needs of circuit breakers on
the feeder. The energy storage will provide a short- to medi-
um-term power supply buffer so that customer service will
not be interrupted in the event of short-term disruption on the
distribution or transmission grid. This will relax the design
requirements on the transmission grid.
Data Center ApplicationSIM technology could greatly simplify the supplying of
power to data centers, a growing market segment, as well as
improve reliability and reduce energy losses. Figures 7 and
8 illustrate this solution.
Incremental Transition PathSIM technology is migration-friendly. It can be deployed
incrementally and is compatible with the existing distribu-
tion system. This is a desirable characteristic, for it allows
today’s system to be transformed gradually into tomorrow’s
intelligent system, the smart grid, by changing out tradi-
tional transformers one at a time.
ConclusionWe live in a very critical and exciting time in the evolution of
the electric power industry. Society in general and the power
industry in particular are faced with the challenges and
opportunities of transforming the power grid ushered in by
Nicola Tesla some 120 years ago into a smart grid. A smart
grid will help the world manage demand growth, conserve
Edison Electric Institute, “Understanding smart grid. From
definition to deployment,” Washington, D.C., Mar. 2009.
BiographiesEnrique Santacana is president and CEO of ABB Inc.
Gary Rackliffe is vice president of smart grids at ABB Inc.
Le Tang is a vice president and head of the U.S. Corpo-
rate Research Center at ABB Inc.
Xiaoming Feng is executive R&D consulting engineer at
ABB Inc.’s U.S. Corporate Research Center. p&e
Society in general and the power industry in particular are faced with the challenges and opportunities of transforming the power grid ushered in by Nicola Tesla some 120 years ago into a smart grid.
