Smart Grid 101: The Electricity Ecosystem

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The electric power industry is one of the largest and most capital-intensive industries on earth. In the U.S. alone, its total asset value is more than $800 billion and annual sales are more than $300 billion, according to the U.S. Department of Energy. It is broadly divided into three segments: Generation, Delivery, and End Use.

It starts with generation

Electricity is created by converting other energy sources – for instance coal, natural gas, nuclear, hydro or renewables such as wind and geothermal. There are roughly 10,000 central power plants scattered across the U.S. that generate the bulk of the electricity. An additional 5,600 distributed generation facilities provide smaller amounts of power, typically for backup or for combined heat and power (also called co-gen). Coal-burning plants, under fire for their greenhouse gas emissions, remain the predominant source of electricity generation in the U.S. They produce roughly 50% of all U.S. electricity, followed by natural gas and nuclear with roughly 20% each.

Next comes delivery

The delivery segment is like an electricity highway that transports power from the point of generation to the point of use. Roughly 200,000 miles of transmission lines move bulk power at high voltages from generating stations to substations where the power is stepped down to medium voltages. The distribution system delivers power to end users and also handles metering, billing, and other functions associated with power sales to end users.   

Then comes end use

Rapidly changing customer needs for electricity are one of the biggest challenges facing the electric power industry. Eventually, though, every part of the electric power value chain will be digitally monitored and managed. There will be visibility and control all the way from generation through every section of the grid all the way down to individual devices in factories, offices and homes.     

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Deepen your understanding

The following documents provide more detailed information on the electric power ecosystem:

·       Enhancing Our Integrated Electricity System (pdf)

·       A Systems View of the Modern Grid - Accommodates All Generation and Storage Options (pdf)

·       Assessment of Achievable Potential from Energy Efficiency and Demand Response Programs in the US Executive Summary 2010-2030 (pdf)

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·         Smart Grid Distributed Generation and Renewables