It is not often that what is essentially a new technology subject, such as Smart Grid, becomes a major topic of discussion — from the White House to Wall Street.

The International Energy Agency estimates the investment necessary in the global electricity industry over the next decade to be around $13 trillion – that's right, trillion with a 'T.' And businesses and utilities are investing right now by the billions. John Chambers, CEO of Cisco Systems, has stated that Cisco has an almost unlimited budget for the Smart Grid, and the company predicts the size of Smart Grid at 1,000 times the size of the Internet.

Why Do We Need a Smart Grid?
As our global thirst for energy grows, so will our need for a smarter grid. Billions of people around the world desire the standard of living currently enjoyed in the U.S. and Europe, and it’s predicted that world energy consumption could triple by 2050. This appetite can't be satisfied by fossil-based energy for many reasons: available resources, global political dynamics, energy security, climate change, and the basic notion that supply of a finite non-renewable source of energy cannot endure forever.

The world's populations have to be more efficient in their energy usage and move towards renewable energy sources. The need for efficiency applies to lighting, indoor environments (which impacts HVAC), and our increasingly digital lifestyles, as much as it does to personal and mass transportation.

We know a great deal about electricity and have been evolving power electronics over the past hundred years, while modifying our electric grid into one that's highly reliable – in developed countries, anyway.

There's one major problem with electricity, however; it's consumed instantaneously, and it's difficult to store in mass quantities. Electricity is generated, transmitted across hundreds of miles, distributed, metered, and delivered to our homes and buildings, and consumed by devices within milliseconds. At any one time, the electric grid has to be in perfect balance. In the past, this balance has been achieved by turning on and off generation plants to follow the demand cycles of electricity consumers. For example, on a summer afternoon in Arizona, utilities might switch on additional capacity (power plants), knowing that demand from air conditioning units will increase.

This is well and good with traditional "on-demand" generation facilities. As we move towards renewable sources – such as wind and solar – this is no longer possible; the wind will blow when it blows, and the sun shines when it chooses to, not necessarily when humans need it. To maintain the balance of power in the world of renewable electricity, we will have to move from controlling supply to controlling demand. This is where Smart Grid – and Smart Grid's link to buildings – comes into play.

What is the Smart Grid, and How Can it Help?
Simply put, Smart Grid is the application of IT (information technology) on the electric grid to provide a real-time control and automation of electricity. As HVAC professionals, you can look at Smart Grid as a massive automation system, not unlike a BAS (building automation system), that controls HVAC and other building systems. Smart Grid is made up of similar components – sensors, controllers, network communication devices, management and analytic systems, user interface components for users of varying types (consumers, system operators, etc.), and financial systems – that monitor and control the use of energy.

Smart Grid just does this on a very grand scale, with the system stretching across all generation sources – from large power plants to residential solar – all the way to consuming devices – from large industrial plants and commercial building air handlers, to home appliances. Smart Grid ensures efficient use of power, while maintaining the critical balance needed for the energy system to operate.

Much of this balancing act will involve the management of demand. When a cloud covers a vast solar plant generating energy, the appropriate signals must be distributed to numerous demand entities in real-time to curtail demand to match the reduced capacity of the solar plant. It’s likely that this will be done by price signals, to motivate the demand entities – like commercial and industrial buildings – to automatically turn off consuming devices.

A more complex scenario is that the cloud cover could, with accurate weather information, be anticipated to occur in, say, 30 minutes. A signal could thus be sent indicating that for the next 30 minutes, energy is cheap, but will increase at the end of this period. Savvy consumer HVAC systems could then automatically pre-cool or pre-heat as necessary when energy is cheaper, thereby reducing or eliminating the impact to occupant comfort, while potentially helping save the building owner some money in the process.

Where HVAC Comes In!
Buildings consume somewhere in the order of 60 to 70% of all electricity generated. Many medium and large buildings are controlled by HVAC systems that have sophisticated systems designed to ensure occupant comfort and manage energy. It should now be obvious that the above scenario of demand management is an ideal application of currently installed HVAC and BAS.

HVAC systems connected to the grid would enable building owners to automate systems to react responsibly to the circumstances on the grid, while ensuring occupant comfort. In some cases, linking HVAC systems to the grid could also provide cost savings by dramatically reducing electric loads when the price of electricity is high. Think of an energy-hungry industrial plant that could calculate (in near real-time) that it’s financially beneficial to close the plant for a number of hours when energy costs are extremely high, and "sell" that unused load on an open market.

What Stands in the Way?
For all of these systems and devices to be able to perform this real-time balancing act, they must be able to communicate with each other. Thankfully, we have the fundamental technology to do this the —Internet. Much of the Internet is now being used to manage myriad real-time systems, including our PDAs, trading systems, traffic lights, travel reservation systems, and so on. Simply put, Smart Grid is really just the overlay of the Internet atop the world's electric grid. Since the range of systems and devices that will be connected by Smart Grid is huge, and includes many sectors currently not connected with each other, there's a huge number of needed standards to ensure these devices can all work together in harmony. The key word here is "interoperability," which is necessary for any sort of real-time information exchange on the grid, and beyond the grid.

A lot of progress toward greater interoperability has been made by the Smart Grid Interoperability Panel (SGIP), created by the U.S. Congress and managed by the National Institute of Standards and Technology (NIST). SGIP was formed in 2009 to ensure that all systems and devices that will connect to the Smart Grid will work together harmoniously. Needless to say, this is a huge undertaking, most critical for the success of the Smart Grid. (See for more information.)

What's Possible in the Future?
Some progressive Smart Grid thinkers anticipate a real-time energy market where specific devices could, themselves, buy and sell energy futures. Imagine that an air-handling unit could contract for energy up to three months in advance at a certain price profile. Now imagine that this air handling unit discovers (by integration to the enterprise system) that on the next day, the facility will be closed for some reason. It’s possible that this unit could then sell the position it holds, as it has no need for that energy. Is it feasible that air-handling units could actually make a trading profit?

The HVAC industry has a huge opportunity to make this happen. It is now being clearly recognized that Smart Grid cannot happen without the participation of the HVAC and BAS industries. To better understand these opportunities, readers should consider the B2G (Building to Grid) Summit during the AHR Expo in Las Vegas on Feb. 1, 2011 (see, as well as the BuilConn conference held as part of ConnectivityWeek in Santa Clara, CA, this coming May (see

1 Lidsky, David. "Cisco's Laura Ipsen: Solving the Smart Grid Puzzle with an Almost Unlimited Budget." Fast Company. 29 November 2010.
2 The Huffington Post. "Smart Grid May be 1,000 Times Bigger Than The Internet: Cisco." 23 June 2009.
3 U.S. Army Corps of Engineers. 2005.

Anto Budiardjo is a seasoned marketing and product development professional specializing in the energy, connectivity and IT disciplines. As a founder of Clasma Events Inc. Mr. Budiardjo is responsible for organizing key conferences and events for the emerging intersection of energy and IT, including GridWeek and ConnectivityWeek. These and other events specifically focus on Smart Grid and the role of smart connected devices in the future clean and renewable energy economy. Mr. Budiardjo is a frequent speaker at industry events and is a contributing editor of He lives in the Dallas Fort Worth area in Texas and was the recipient of the Frost & Sullivan 2005 Building Technologies CEO of the Year award. He can be reached at