Chapter 3. Smart Energy

The first power grids emerged in the 1890s, driven by pioneers such as Thomas Edison and George Westinghouse and companies such as General Electric and Westinghouse Electric Corporation. These grids were highly centralized, isolated systems. Over the following decades, local grids became more and more interconnected. By the 1960s, electric grids had matured into highly interconnected systems. These grids were dominated by large power plants (usually based on fossil fuels such as coal, gas, and oil) that used high-capacity power lines to connect with the centers of electricity consumption, from which lower-capacity lines delivered electricity to the end users. Due to limitations in metering technologies, fixed tariffs were often used to bill end users.

From the very beginning, a key challenge faced by electric power grids involved dealing with varying energy demand. The main problems here related to very limited energy storage capacities and high costs for adding additional power-generation units on demand. Adding peak-time generators such as gas turbines with low startup times is a relatively costly solution, for example. Initial attempts were made to solve the problem on the demand side. For instance, dual tariffs were introduced to encourage customers to increase their usage of electric power at night, when demand is generally lower. Demand-aware devices (e.g., air conditioners, refrigerators, and heaters) were also introduced; these can sense the load ...

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