The American electric grid is the largest machine on earth, and has heroically served its purpose for many years: to deliver affordable, reliable energy with nearly universal access. One way of understanding the electrical system is as a “one-to-many” and fundamentally linear system. The electricity grid was built around large, centralized generation from power plants, transmitted one-directionally across transmission and distribution lines, to wasteful consumers who had very little insight into the real costs of their energy use. In this model, demand fluctuates but can’t be managed. The only thing the grid can do is respond by turning on more power plants. The diagram above maps out this linear system, with the physical infrastructure (generation, transmission and distribution, and end users). Along with the functions of each of those pieces of infrastructure (supply, management, and demand), there are a set of technologies which enable these functions, from power plants to high voltage lines and appliances in homes.
The problem is that new technologies are emerging that are turning this model on its head. Whether software enhanced (such as demand response) or hardware based (like distributed generation behind the meter), these technologies present a host of challenges for the traditional utility business model. They also present a tremendous opportunity for economic growth and employment, if managed correctly.