Hurricane Sandy demonstrated that future upgrades to electric grids should not only be focused on making them tougher, but also making them smarter. While traditional approaches to hardening electric grids typically include burying electric lines and building tougher power poles to withstand storms, such approaches are expensive and don't account for heavy winds and mass flooding seen in storms like Sandy. More utility companies, like Commonwealth Edison in Illinois and Electric Power Board in Chattanooga, Tenn., are taking an adaptive approach, according to an article in the Wall Street Journal.

Rather than try to build an unbreakable system, new smart grid systems accept that damage will occur and attempt to isolate problems so they don't take down the whole system. Chattanooga spent $100 million in federal funds on its new grid, which uses 1,200 smart switches that direct the flow of electricity dynamically, adapting to changing grid conditions. A fallen tree or a flood, for instance, won't take out large parts of the grid, as it would with a traditional electric grid. Chattanooga's upgrades were also much cheaper than traditional methods. Burying electric lines would have cost the city as much as $2 billion, according to David Wade, chief operations officer for Electric Power Board, the city-owned utility.

Chattanooga's smart grid got its first test during a windstorm in July. About 35,000 homes and businesses lost power for as long as three days, and 42,000 locations suffered momentary outages, as the smart grid rerouted electric traffic. In a traditional system, the outages would have laster longer and been more widespread.