One of the great achievements of the 20th century was the creation and implementation of the U.S. electric grid. The deployment was so successful that for decades most users didn't think twice about electricity. Because electricity is inexpensive and available on demand, it's widely regarded as a driver of economic productivity and prosperity.

Most experts have a different view of the near future. Peak nationwide demand - 757,000 Mw - nearly taps out supply. And here's the bad news: Demand is expected to grow by 19 percent in the next decade, while capacity is predicted to grow by only 6 percent. Distribution is as much a part of the problem as generation - the wires and substations that connect electrical generators with consumers are also at or near capacity. The coming imbalance is anticipated to significantly stress the power grid. With fuel prices and other pricing pressures, electricity bills are expected to increase.

Among power experts, there's a consensus that continuing business as usual - building more plants and stringing more wires - isn't really an option. Because power-generating capacity must meet peak demand, new capacity may sit idly except for certain times of the year, which reduces return on investment. Lack of transmission and substation capacity may prevent the new plants' electricity from reaching consumers. And experts agree it'd take too long to build new plants and transmission lines - if they could be built at all.

The Smart Grid is envisioned as a way to generate and distribute electricity for the rest of this century. The next-generation power grid would improve upon the weaknesses of today's grid, which are that there are few ways to coordinate production, get consumer feedback and affect production. The Smart Grid relies on two-way communication to do these things and more. Power industry analysts also believe the Smart Grid is the only way to effectively integrate new power generation technologies, such as wind and solar, into the grid while matching supply to demand.

Outmoded Infrastructure

Today's electrical grid is a testament to the durability of 20th-century infrastructure. Its operation is fairly simple and straightforward. Electricity is generated, then transmitted and distributed to wholesale, business and retail users.

This straightforward design has been scaled up to be the largest power system in the world. With more than 800,000 MW of installed capacity, America has more than twice the generating capacity of China, the next largest producer. According to the U.S. Energy Information Administration, the electricity generated in America in 2006 (the latest information available as of press time) comes from many sources, but is primarily carbon-based.

But a 21st-century U.S. economy can't be built on a 20th-century electric grid. There are many signs that the existing grid can't lead us for the rest of this century:

• The outmoded infrastructure - much of which dates back to the 1930s - can cause transmission congestion, resulting in unreliable and inefficient operation. The feedback loop between users and generators is crude and often nonexistent. According to the National Energy Technology Laboratory, part of the U.S. Department of Energy's national laboratory system, 60 percent of transmission systems have supervisory control and data acquisition (SCADA) systems, a control and management solution that sends data from sensors to a central computer. However, only 2 percent of the local distribution network has SCADA.
• The grid is designed to ensure that supply meets demand, even at peak consumption. The result is too many power plants, some of which are used as little as a few hours per year. This helps to ensure that there's enough electricity, but unused electricity is lost and power generation facilities are very expensive. Even so, blackouts and power interruptions occur, with an estimated cost to the U.S. economy in excess of $79 billion per year, according to the