Generating Electricity

Understanding the extent of the benefits offered by Smart Grids requires first understanding the source of the electricity running through the grid. Electricity generating power plants differ in many ways: the forms of energy they harness, rates of efficiency, maximum output capacity, ability to vary their output, byproducts, geographical requirements/restrictions, construction, operating, and maintenance costs, etc…, and, while all of these are important considerations in the overall analysis of an electrical grid’s infrastructure, somewhat limiting the scope of analysis renders the benefits of an extensive Smart Grid readily apparent.

Differentiating between power plants based on rates of efficiency, operating costs, and the ability to vary their output, the major players can be loosely divided into four groups: base load power plants, peaking power plants, load following power plants, and intermittent sources. Frequently, a single source of energy will fall into more than one category as different technologies harness it to generate electricity in varying ways. For example, different designs of hydroelectric power plants fall into all four categories.

Types of Power Generation

Base load power plants are the foundation of most electrical grids. Typically, they are large, able to efficiently harness their fuel of choice, and, relative to the large amounts of electricity they produce, inexpensive to maintain. They run throughout the year, at all times of the day and only have limited, if any, ability to safely and expediently vary their output, providing electricity at a stable rate. Typical examples are nuclear and coal power plants.

Peaking power plants, on the other hand, are the exact opposite. They do not run all the time, nor are they cheap or efficient to operate. However, their ability to increase the supply of electricity at a moment’s notice makes them invaluable for handling either unexpected surges in demand or expected peaks, like the high loads typical of hot summer afternoons. Gas turbines are the principle example of this sort of power plant. Small-scale generators, such as those used as emergency backups, are similar in their properties, chosen primarily for their ability to immediately supply needed electricity.

Load following power plants occupy the middle-ground. They are able to vary their output in response to changes in demand, but not as quickly as peaking power plants. Similarly, their efficiency and operating costs are between those of base load and peaking power plants. Load following power plants are frequently very similar to base load power plants with the added ability of being able to supply additional electricity in times of need, achieved either by curtailing their own output during standard operating modes (reserve capacity) or by storing energy during periods of low demand and releasing it during peak demand. For example, many hydroelectric power plants with large reservoirs are able to significantly vary the amount of water they pass through their turbines or even use up electricity during periods of low demand to raise their water level, adding potential energy to their reserve for times of peak demand. In the case of nuclear power plants, some designs allow for curtailing power output, whereas others do not have such capabilities.

Intermittent sources of power are a special but applicable category here; wind and solar, among others, provide electricity without any ongoing fuel costs, so, while efficiency can be measured with regard to how much energy is available and how much electricity is then generated and fed into the grid, this can’t be directly compared to the efficiency of power plants using fuels like gas or coal where the fuel must be continuously purchased. The drawback to these intermittent sources of power is in the constant variability and thus unreliability of the source of their energy. Some designs manage to mitigate the impact of this drawback by utilizing some form of energy storage to smooth variability in output.

While it doesn’t fit neatly into this sort of grouping, decentralized and distributed power generation plays a steadily increasing role in today’s electrical grids. While each individual power source is generally miniscule, their combined capacity is significant and, when fully utilized, presents a viable alternative to the established system of relying solely on large, centralized power plants.


Stability in an electrical grid is vital, with the supplied electricity needing to match the level of demand as closely as possible at any given moment. Additionally, due to inefficiencies in the transmission of electricity over large distances, it is also important to maintain the balance of supply and demand at every point in the electrical grid. Deviation from this equilibrium is undesirable, with large deviations resulting in instability and, in extreme cases, blackouts. What this translates to is that maintaining grid stability is not accomplished simply by having a maximum capacity exceeding that of peak demand, as that would be easily accomplished with the construction and constant use of a multitude of base load power plants, but rather by having a network of infrastructure capable of quickly changing the amount of supply to match constantly fluctuating levels of consumer demand ranging from the dead of night up to and surpassing expected peak demand, essentially necessitating the frequent use of inefficient peaking power plants.

Fulfilling Demand

When the grid fulfills demand for electricity, there is a specific order to the preferred utilization of suppliers. Base load power plants are used first as they provide the cheapest electricity, though this is somewhat misleading as, generally, they are always operating and therefore always being used. Load following plants then scale their output to match the remaining demand as best as they can. Peaking power plants are used as a last resort to supply additional electricity when demand outpaces supply by too large a margin or too suddenly for load following power plants to keep up. Additionally, peaking power plants are used to compensate for sudden decreases in supply due to the variability of intermittent sources or unexpected failures elsewhere in the grid.

Overall Infrastructure

The use of peaking power plants, while necessary, leads to significant expenses for both grid operators and consumers. Smart Grids come into play by employing various technologies to reduce demand, reschedule (delay) demand, or even increase supply as the situation calls for it. In terms of balancing supply and demand during peak demand conditions in the grid, the reduction of demand by a certain amount is as effective as increasing supply by that same amount, turning the ability of the Smart Grid to reduce demand into a virtual power plant. Addressing the use of peaking power plants to handle surges in demand, the Smart Grid’s ability to automatically and immediately reduce demand counteracts surges, slowing surges down to the point where load following power plants can fulfill the demand. Additionally, the same mechanisms come into play when dealing with sudden, unexpected drops in supply. As a result, fewer costly peaking power plants need to be constructed.

Essentially representing the infrastructure itself, the Smart Grid fundamentally changes the established approach to electrical grids and power generation, ushering in new technologies and allowing methods of power generation that were off limits earlier. As a whole, the Smart Grid’s mechanisms simultaneously make the network of already existing power plants more efficient, involve decentralized power generation in a significant way, and guide the development of further infrastructure.

This is the second article in a series about Smart Grids, each of which can be read independently.
The first article is an introduction to the concept of a Smart Grid.
The third article goes into greater detail about Smart Grid features.
The fourth article delves into Demand Response and its economic effects.
Also, a previously published and updated list of standards for Smart Grid Interoperability
Share on Google Plus


  1. If you live in the main Houston area, there are over 60 different energy suppliers competing for your business. Your points and all information are very useful. I must admire it all .Electricity is a necessity, so whatever companies charge is what the population has to pay. Business owners are always looking for ways to expand profit margins. I add one site where you can compare electricity rates.
    Compare Electricity Rates Houston