Journal of Economic Perspectives: Vol. 26 No. 1 (Winter 2012)

Joskow, Paul L. 2012. "Creating a Smarter U.S. Electricity Grid." Journal of Economic Perspectives, 26(1): 29-48.

DOI: 10.1257/jep.26.1.29

This paper focuses on efforts to build what policymakers call the "smart grid," involving 1) improved remote monitoring and automatic and remote control of facilities in high-voltage electricity transmission networks; 2) improved remote monitoring, two-way communications, and automatic and remote control of local distribution networks; and 3) installation of "smart" metering and associated communications capabilities on customer premises so that customers can receive real-time price information and/or take advantage of opportunities to contract with their retail supplier to manage the consumer's electricity demands remotely in response to wholesale prices and network congestion. I examine the opportunities, challenges, and uncertainties associated with investments in "smart grid" technologies. I discuss some basic electricity supply and demand, pricing, and physical network attributes that are critical for understanding the opportunities and challenges associated with expanding deployment of smart grid technologies. Then I cover issues associated with the deployment of these technologies at the high voltage transmission, local distribution, and end-use metering levels.

Joskow, Paul L. (Alfred P. Sloan Foundation, New York, NY and MIT)

L94: Electric Utilities
L98: Industry Studies: Utilities and Transportation: Government Policy
Q41: Energy: Demand and Supply
Q48: Energy: Government Policy