UTILITIES HAVE 100 YEARS OF SUCCESSFUL BUSINESS experience, constructed atop bedrock commitments to service reliability and availability, as well as worker and customer safety.

The utility's entire business model is based on long-term justification of ratepayers' investment in high-quality, proven, dependable and safe equipment that sometimes comes at a very high price and always is expected to last . and last and last.

Then, along comes the "smart grid." (Even the name gets under the skin of power engineers who in some cases have already invested long careers into making the electricity-delivery facility gradually more intelligent and dependable over decades.)

Suddenly, the tried-and-true grid stands to be infiltrated with rapidly changing computer, communications and information technologies, inherently intermittent renewable power sources and a revolutionary vision of decentralization. Is it any wonder that utilities were a little wary of adapting to a changing world where, for example, Moore's Law is accepted as a fact of doing business?

While the industry's initial reluctance and skepticism were understandable, utilities are now helping drive the movement in the wake of advancements in distributed generation and renewable technologies that have brought into focus the smart grid's promise for their operations and the electric power system.

Innovations such as microgrids stand to dramatically bolster the historically robust profiles of service reliability and availability that utilities are determined to maintain throughout the smart grid's worldwide rollout.

The power of microgrids
Microgrids aggregate various distributed generators-fuel cells, solar thermal generating stations, photovoltaic fields, wind farms, diesel, natural-gas-fired turbines, microturbines and other renewable and nonrenewable sources of energy-into a concentrated cluster of power that can be an important and flexible friend to a utility. Multiple distributed-generation technologies, in fact, might be engaged over a regional sector.

The microgrid can be either connected to or isolated from the traditional power grid, depending on the utility's needs at the moment. A microgrid might be normally connected to the centralized grid in a scenario of two-way power flow, helping the utility continuously meet demand under normal or peak conditions. Then, in the event of a reliability issue, the microgrid would function independently to ensure ongoing service for a power application sector. Or, the microgrid typically could remain disconnected-or "islanded"-from the traditional facility, only to be engaged by the utility in abnormal or upset conditions, moments of unreliability or periods when the grid is completely shut down or jeopardized.

The smart grid's two-way communications and control comes into play for synchronization between the microgrid and traditional grid at points of engagement, as the transition from connected to islanded mode of operation (or vice versa) must be efficient, perfectly smooth and safe. This demands new capabilities for management and protection end-to-end across the grid, from remote substations to utility operations centers.

Employing a microgrid
Microgrids offer utilities considerable potential for key tasks such as sectionalizing the grid relative to certain emergency sectors (such as hospitals) and addressing disturbances.

As an example, say a utility has a power line from one city to another with five or six tributaries, and say one of those feeders goes down. Up the line, there's no problem, but sensors in the first of the cities down the line detect a droop in voltage. The edge point where the problem is occurring could be closed to protect the larger grid until the fault is resolved, and, in a matter of microseconds, the microgrid system could be engaged to ensure uninterrupted service to all of the affected areas in the islanded sector.

In California, where utilities are challenged by state regulation to steadily increase reliance on renewable sources of power over time, microgrid experiments are already being undertaken to help utilities evaluate their potential to contribute to the Smart Grid's ability to self-heal and avert blackouts via islanding, "smooth" periods of peak demand and more fluidly adapt to fluctuations in usage.

Ongoing development in energy storage will make microgrids more valuable in terms of increasing reliance on renewable energy sources specifically by helping offset their inherent variability. By and large, however, the technologies to enable planned islanding of distributed-generation clusters and microgrids are largely available.

Crucial interconnection and inter-operability standards are emerging, too. IEEE, for example, has about 100 globally relevant smart grid-related standards either ratified or in progress. Since March 2009, IEEE's P2030 Working Group has worked to identify interconnection and intra-facing frameworks and strategies with design definitions. IEEE P2030's representatives from the power, communications and information technology (IT) industries have already detailed more than 70 standard interfaces that will prove necessary in the smart grid's rollout, and the working group's guide is scheduled to be released for sponsor balloting within IEEE in March.

Finding equitability
Microgrids are a prime example of why politics and economics figure to be key frontiers for ongoing smart grid progress over the next decades.

Technology has advanced, interconnection standards are emerging and utility consensus has gathered around the potential of microgrids to dramatically improve grid reliability. And, yet, highly charged business questions remain before the industry moves forward in bold steps: Who pays the piper for interconnection, and how can we define ways of being equitable to sources of distributed-generation power, as well as the utilities?

Every player in the relationship has investments to be recouped, and key regulatory decisions in these areas will have to play out across jurisdictions worldwide. In the United States' regulatory environment, though the Federal Energy Regulatory Commission (FERC) mandates reliability and security of the bulk, interstate grid, each state will also have a hand in defining its own rules as the disparate public utility commissions regulate the distribution and retail levels of the power system within their own jurisdictions.

Here's another critical, related dynamic. The government has invested in smart grid demonstrations that are encouraging the development of distributed generation, renewables, microgrids and other innovative technologies.

But the private investment community will have to do something more dramatic if mass-scale production of these technologies is to take root and yield more cost-competitive products and, in turn, accelerated, wide-scale implementation. The private investment community's enthusiasm to fund that momentum will in part be driven by the data emerging from the government demonstration projects. So the millions of data points that roll in over the next years will be closely scrutinized.

While there remains technology and standards development to be undertaken in order for utilities and their customers to realize the greatest potential of innovations such as microgrids, it is these political and economic fronts where many of the smart grid's next vexing questions will be answered.