Smart Grid as Marketing Tool

Proponents of smart grids always seem to highlight Demand Response (DR).

Articles, such as the April 10 article in Intelligent Utility Daily, cite examples of how Demand Response can reduce demand during periods of peak load.

The article explains how water utilities have shifted their pumping loads to off-peak hours.

They write glowingly about Demand Response without seeming to realize that Demand Response has been used for decades, long before anyone spoke of the smart grid.

Virtually every industry or business has been doing whatever it could to lower costs, for as long as they have been using electricity.

Businesses, with large loads that can be shut down for limited periods, enter into agreements with their utility to allow the utility to cut off certain loads, and, in return, receive a reduced rate from the utility1.

Companies have taken other actions to reduce load. For example, plants or buildings with heavy inductive loads have installed capacitors to improve power factor, which reduces reactive load, or wattless energy … and saves money.

The “so called” smart grid is not the reason for the success of Demand Response.

Articles, such as the one mentioned above, try to extend Demand Response to individuals living in single family homes and apartments.

It assumes individuals will lower their usage of electricity during periods of peak demand.

The evidence to-date shows that individuals won’t generally lower their usage of electricity during peak hours.

There are two reasons for this: First, there are very few real opportunities for reducing the use of electricity in the home during the day. Second, the amount of money that can be saved by a homeowner is usually small.

As mentioned in earlier articles, air-conditioning is virtually the only major appliance that can be shut off, which, if done in a large number of homes, can significantly cut usage during periods of peak demand. Electric water heaters, where they are used, are an exception since they can be shut down for an hour or so without affecting the availability of hot water.

Placing thermostats and air-conditioning units under the control of utilities has not been embraced by many people.

Wherever special pricing methods have been put in place to encourage Demand Response, participation by homeowners has been small2.

The term “smart grid” is now being extended to “smart city”. Neither term has any real meaning, and is a public relations effort to get people to accept some actions that are not in their best interest.

A variety of actions are being proposed under the guise of the “smart grid”.

Smart meters are one example. They can improve communications and reliability and cut outage times, but they may not be cost effective. If they are cost effective, which includes improving reliability, utilities should be able to justify installing smart meters to their utility commission … without having to raise rates.

Smart Meter
Smart Meter

Another action being promoted under the umbrella of the “smart grid” is the installation of expensive new transmission lines to bring wind energy from distant locations to where it can be used. Bringing wind energy to your home has nothing to do with a smart grid, but everything to do with promoting renewables.

The same is true with expensive efforts to integrate unreliable wind and solar into the grid, costly efforts such as using batteries for storage.

Distributed power, using small, local generation and micro-grids, and combined heat and power (CHP) are more concepts being promoted under the umbrella of the “smart grid.”

While some proposals may have merit in specific situations, they are frequently expensive, unreliable and unnecessary. As a package, they are making the grid more complex, which in turn reduces reliability.

Each proposal should be able to stand on its own, without hype.

What it boils down to is that the “smart grid” is a marketing tool and should be recognized as such.



  1. In many instances, the utility notifies the customer and the customer disconnects the agreed upon loads.
  2. The municipal utility, SRP, serving Phoenix, has had a plan to reward homeowners who adopt demand response since 1980, but only 22% of their residential customers have elected to be on the plan.


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