A smart grid is a form of electricity network using digital technology. A smart grid delivers electricity from suppliers to consumers using two-way digital communications to control appliances at consumers' homes; this could save energy, reduce costs and increase reliability and transparency if the risks inherent in executing massive information technology projects are avoided. The "Smart Grid" is envisioned to overlay the ordinary electrical grid with an information and net metering system, that includes smart meters. Smart grids are being promoted by many governments as a way of addressing energy independence, global warming and emergency resilience issues.
The idea of two way communications from suppliers to consumers to control appliances is not new, and systems have been implemented using analog technology for many years. The growth of an extensive digital communication network for the internet has made it practical to consider a more sophisticated type of smart grid. The increased data transmission capacity has made it conceptually possible to apply sensing, measurement and control devices with two-way communications to electricity production, transmission, distribution and consumption parts of the power grid at a more granular level than previously. These devices could communicate information about grid condition to system users, operators and automated devices, making it possible for the average consumer to dynamically respond to changes in grid condition, instead of only utilities and very large customers.
Like existing utility grids, a smart grid includes an intelligent monitoring system that keeps track of all electricity flowing in the system, but in more detail. Like the existing grid, it also has the capability of integrating renewable electricity such as solar and wind, but has the potential to do so more effectively. When power is least expensive the user can allow the smart grid to turn on selected home appliances such as washing machines or factory processes that can run at arbitrary hours. At peak times it could turn off selected appliances to reduce demand. There are many technical obstacles to be overcome to make this practical for the average homeowner; for example, if wind speeds decrease in the middle of a wash cycle, would consumers want their laundry "becalmed"?
A widely overlooked fact about the smart grid is that it is not a substitute for a real grid, but only an enhancement. The construction of a larger and better infrastructure of high-voltage transmission lines for the efficient delivery of electric power is a prerequisite to the construction of an effective smart grid.
Other names for a smart grid (or for similar proposals) include smart electric or power grid, intelligent grid (or intelligrid), futuregrid, and the more modern intergrid and intragrid.