By now, you've learned that smart grid implementation can significantly reduce carbon emissions, enhance energy independence, optimize renewable energy, create green jobs, help you save money, and help everyone make smarter energy choices. And most of these technologies are ready today.

So you’re probably wondering, “If this technology is so great, why aren’t we using it yet?”

Utilities Are Currently Not Rewarded for Efficiency
Under utility regulation in most states, power companies make more money by selling more electricity. This linkage creates a disincentive for energy-efficiency programs and technologies, as decreasing energy sales would cut into utility profits.

Ultimately, policy will be needed to encourage and reward utilities for driving efficiency and conservation. California has demonstrated this principle by breaking the link between a utility’s sales and profits through decoupling policies. Decoupling has led to relatively flat per capita energy usage for 30 years, while the U.S. on average has increased per capita energy usage by 50 percent.¹ States can also incent efficiency by establishing stand-alone Energy Efficiency Resource Standards (EERS) and/or enabling utilities to count “efficiency” in their Renewable Portfolio Standards (RPS). Both aimto reduce demand growth by setting energy savings targets that encourage more efficient generation, transmission and end use. Currently, 18 states have included efficiency in an EERS or as part of RPS.²

Other Incentives Can Help
For a smarter grid to become a reality, utilities will need to upgrade systems to manage the complexities of our modern society—enabling increased efficiencies, clean renewable energy sources and consumer empowerment to become everyday energy realities.

Tax incentives, such as accelerated depreciation for smart grid-related property, will encourage infrastructure investments. Accelerated depreciation essentially allows utilities to “reduce” taxable income in a given year. This tactic is used in many industries to encourage businesses to invest in new technologies.

Real-Time Pricing—Nationwide
Studies have shown that when consumers are informed and empowered by time-of-use pricing information, they can reduce peak demand by more than 15% and total demand by more than 10%. Unfortunately, not all states have time-of-use pricing in place.

National guidelines for real-time and time-of-use pricing should help the 50 state public utility commissions (PUCs) and 3,000+ electric utilities and co-ops in the U.S. more rapidly adopt these important incentives for consumer action, which will ultimately lead to quicker adoption of the smart grid and other advanced energy saving technologies.

Smart Grid Technologies Based on Open Standards
A “smart” electricity grid requires the ability to exchange information and data between the electrical infrastructure and grid-enabled devices and technologies. Because the electrical infrastructure interacts with a wide variety of products, any new technology must be capable of being integrated across several industries, such as heating and air conditioning, home appliances, and plug-in hybrid vehicles, among many others. Smart grid standards will outline the best way to accomplish this interoperability.

Open standards are the hallmark of modern American industry and commerce. By spurring innovation through the adoption of open technology standards, we have built remarkably interoperable foundations that drive our economy, ranging from the familiar electricity socket to the transformative information superhighway that is the Internet. The adoption of open internet-based protocols and standards is necessary for technologies that will support the smart grid build-out in the coming years.

The Good News
The federal government has already taken the first steps towards the realization of a smarter grid. Through President Obama’s 2009 stimulus plan, $4.5 billion has been allocated to smart grid development.³ Discussions have already begun to develop smart grid technology standards.⁴ On the regulatory front, decoupling policies have already been put in place for electric companies in 9 states.⁵

What Can You Do to Make Smart Grid a Reality?
You’re already doing it. Learning about smart grid technologies is the first step to implementation. The more people who are educated about what the smart grid is and what it means for our future, the better chance we’ll have of persuading the government and utilities to move forward.

Want to do more? Share what you’ve learned with friends. Sign up for our newsletter. Read about smart grid news. Write your congressman, or contact your power company. Become a part of the smart grid movement today.