Smart Grid refers to the a next generation electric power network that makes use of IT and high technologies. Compared to the telecommunication network, the electric power network have not developed remarkably in terms of creating innovative technologies. However, smart grid by revolutionising the electric power network and being almost as powerful as the internet, is attracting many attentions among various industries.

Smart grid is a system that enables two-way communications in between consumers and electric power companies. In a smart grid system consumer’s information is received by the electric power companies in order to provide the most efficient electric network operations. In addition to the efficient operations of a power plant ,smart grid also make it possible to control power demand and distributed energy, including renewable energies. By installing an intelligent meter (smart meter) on the consumer side, especially households, monitoring the use of energy becomes much easier and even helps to reduce carbon dioxide emissions.

A SMART GRID delivers electricity from supplier to consumers using two-way digital technology to control appliances at consumers’ homes to save energy, reduce cost and increase reliability and transparency. It overlays the electricity distribution grid with an information and net metering system. Power travels from the power plant to your house through an amazing system called the power distribution grid. Such a modernized electricity networks is being promoted by many governments as a way of addressing energy independence's, global warming and emergency resilience issues. Smart meters may be part of smart grid, but alone do not constitute a smart grid.

A smart grid includes an intelligent monitoring system that keeps track of all electricity flowing in the system. It also incorporates the use of superconductive transmission lines for less power loss, as well as the capability of the integrating renewable electricity such as solar and wind. When power is least expensive the user can allow the smart grid to turn on selected home appliances such as washing machines or factory processes that can run at arbitrary hours. At peak times it could turn off selected appliances to reduce demand.

How “smart” should a smart power grid

The utilities get the ability to communicate with and control end user hardware, from industrial- scale air conditioner to residential water heaters. They use that to better balance supply and demand, in part by dropping demand during peak usage hours.

Taking advantages of information technology to increase the efficiency of the grid, the delivery system, and the use of electricity at the same time is itself a smart move. Simply put, a smart grid combined with smart meters enables both electrical utilities and consumer to be much more efficient.

A smart grid not only moves electricity more efficiently in geographic terms, it also enables electricity use to be shifted overtime-for example, from period of peak demand to those of off-peak demand. Achieving this goals means working with consumers who have “smart meters” to see exactly how much electricity is being used at any particular time. This facilitates two-way communication between utility and consumer. So they can cooperate in reducing peak demand in a way that it’s advantageous to both. And it allow to the use of two way metering so that customer who have a rooftop solar electric panel or their own windmill can sell surplus electricity back to the utility.