Existing power distribution infrastructure was implemented at the beginning of the 20th century when many of the technologies available today were not around, and the demands placed upon it were less than in today’s data driven digital economy. Now the concept of a Smart grid is slowly seeping into people’s consciousness, and as many lead users would assert, it is more than a concept but an inevitable development for power distribution infrastructure.

In traditional distribution networks power stations need to supply excess capacity in order to account for unpredictable variations in demand, and information flows are solely from the user consumption back to the utilities. The Smart grid allows generators and consuming loads to interact in real time, in both directions, with the aid of modern communications technology, which leads to a number of advantages. One of these includes the ability for homes to supply back into the grid, so excess energy from generators such as solar panels can be used by others.

This Smart infrastructure can act as a feedback mechanism to smooth out variations in peak demand, and provide more sophisticated pricing mechanisms that react instantly, rather than having simple day and night tariffs. It also acts to decentralise power generation which ultimately means that power will still be maintained even if major power supplies are put out of operation.

Role out of the Smart grid is likely to be a modular process with each utility company subject to its own investment decision process. But moves are already underway to make the Smart grid a reality. A Smart grid consortium in the US, established in December 2007 by Xcel Energy, plans to set-up a test bed community of around 100,000. This will involve making all the necessary upgrades to infrastructure and providing the capacity for 1,000 renewable generation sources that can be plugged into the grid.

Given the global scale in which the Smart grid has the potential to proliferate, it’s no surprise that there are a number of emerging players with enabling technologies seeking a piece of the pie. V2Green are a Seattle based company whose technology allows electric vehicles to be plugged into the grid and eliminate demand spikes by automatically adjusting load requirements to the availability of supply. The privately funded company which has collaborations with several US utilities companies announced it was fundraising earlier this month.

Just this week the curiously named Fat Spaniel Technologies closed a second round of funding of USD 18m, which they had announced to Library House they were seeking in November. The company provides what they call an Energy Intelligence Platform, which enables hosted data monitoring, management and control services so that utilities companies can more easily work with date flows from the more sophisticated grid infrastructures.

Perhaps one of the most important aspects of a Smart grid is that the infrastructure easily enables domestic users to sell excess power back to the grid, further incentivising a more widespread adoption of small scale generation technologies.

This broad reaching technology clearly has many stakeholders, suggesting many eyes will be focused on the success of pilot studies and early adopters, which will surely influence where the smart money goes.