Are Smart Electricity Grids Too Smart?

What’s the Latest Development?

New household electricity meters, which constantly monitor the price of power, are meant to save consumers money and better match supply with demand, but new research shows that if too many people wait until electricity is cheapest, a dangerous spike in demand will result. If the spike is big enough, the demand placed on power grids could be enough to bring them down. The same research, done at M.I.T., shows that price controls could mitigate the effects of a demand spike, but that stability would come at the cost of real-time pricing efficiency. 

What’s the Big Idea?

Currently, the price of electricity varies according to demand—energy producers sell power to the grid at a higher price when there is more demand for it—but demand does not vary according to price. While consumers’ bills indicate the price of electricity over several months, the market price of power changes every five minutes. Equipping consumers with that knowledge, in the form of smart electricity meters, could, in principle, make the energy market more efficient, saving consumers money and reducing energy waste as well as pollution.