I hadn’t heard of the “smart grid” until I arrived in Oregon.  Our department is pushing for a sustainability research collaboration initiative, SENERGI, and so it wasn’t long before I heard our former director, Terri Fiez, talking about the smart grid.  Now, at INFORMS in San Diego, I’m listening to a keynote on the smart grid by Richard O’Neill, the Chief Economic Advisor to the Federal Energy Regulatory Commission

For the unenlightened, the smart grid is the idea of changing the price structure of electricity as well as the appliances that use electricity to manage congestion.  As we move toward more electricity use (i.e. from gas-powered cars, to electricity-powered cars) and electricity generated from renewable and time-constrained resources, congestion could cause more frequent brown-outs than we’ve seen.  Some concrete examples of “smart” include:

• Appliances equipped to decide when it is best to run: refrigerators that turn off and on to minimize draw on the grid during high-demand hours, dishwashers that wait for low demand hours to run.
• Batteries equipped to charge by use time: if you arrive home from work in your car (which I’ve been told is possible, but have yet to experience), and plug your electric powered car in along with everyone else who works 9-5, but you don’t need your car again until 6 AM, then the battery will decide to not charge until the middle of the night, perhaps according to some neighbourhood schedule.
• Batteries used as storage devices on the grid: if you don’t use your car during the week because you do walk or bike or bus to work (congratulations), then the grid could use the battery as a storage device on the grid, charging during low-demand hours and discharging during high-demand.  (Of course, if you don’t need a car during the week, consider not owning a car.  Renting a car almost every weekend is often cheaper than owning a car.)

Of course, for such a system to work, there are significant engineering (after all, even my dishwasher’s simple “delay-start” timer doesn’t work), design and optimization challenges.  The market will become much more complex – will every appliance be considered a player on the market?  Sheesh!  Currently for the (much simpler, I imagine) pricing problems, the cost functions are linearized, which apparently isn’t a great approximation – essentially treating AC current as DC current.  In a system that is worth $10^12/year, a 1% savings is huge news.

I worry though … what if my laptop tells me I can’t write an email at 2AM because I woke up in the middle of the night wracked with algorithmic thoughts because my battery has been discharged so my neighbour can run their washing machine.