Thomas Edison designed and built the first electricity generating plant in the United States. His Pearl Street plant in Manhattan started operating in September 1882. It initially supplied electricity to nearly 500 lamps for about 50 customers connected in what would be labeled today as an island model of distributed generation.

Power Generation History
At the turn of the century most large businesses generated their own electricity. This vertical electric generation gave way to more convenient and lower cost electricity once utilities invested in centralized power plants with large-scale distribution infrastructure. Centralized utilities dramatically expanded over the following decades to meet the increasing demand for electricity. While such utilities offered efficient power generation, reliable transmission networks, and the lowest costs, concern about possible monopolies attracted the public’s attention. This ushered in the rate-base regulation, which continued for decades until production costs began to increase, while demand started to decrease.

• The well-established buy-sell relationship between the utilities and customers changed by the passage of the Energy Policy Act in 1992 (EPACT 1992). Basically this policy ushered in customer choices and options to purchase electricity, albeit in very complex and challenging structures. By mandating that wholesale customers have open access to the transmission system, EPACT1992 provided such access to wholesale generators that were in direct competition to the utilities. Retail open access was denied by EPACT 1992 but provisions were made for states for such open access.
• By the year 2000 deregulation of electricity became the norm for most commercial and industrial consumers. By this time residential markets were realizing a modicum of deregulation as well.
• In August of 2003 the Northeast massive blackouts brought sudden awareness to each citizen that electricity is the lifeline of our modern society and that its generation, environmental impact and sustainability is of paramount importance.

Shift to Renewable Power
Today, over fifty percent of the electricity is generated from burning coal, while generation from natural gas and nuclear energy is in the mid-to-lower twenty percent respectively. The proliferation of nuclear energy is constrained by nuclear fuel waste disposal and management, limited skilled human resources and homeland security. Additionally, fossil fuel based generation is associated with increased emissions of the combustion products such as water vapor, carbon, sulfur and nitrogen oxides.

The outcry against “acid rain” in the beginning of the ‘70s yielded stringent nitrogen and sulfur oxide emissions reduction mandates by policy and cap-and-trade. As a result new abatement technologies emerged and the levels of these specific emissions have continued a downward trend ever since.

Today, scrutiny is focused on carbon dioxide, which is considered a green house gas because of its molecular characteristics of absorption and emission in the thermal infrared electromagnetic spectrum range. Carbon dioxide levels have increased substantially due to the increased consumption of fossil fuels. For this reason, the past decade has seen rapid increase in public policy debate to reduce carbon dioxide emissions and indeed many states legislated Renewable Portfolio Standards (RPS) that require utilities to use a certain percentage of its generation from renewable sources such as solar, wind, biomass and geothermal.

Such RPS policies and goals vary widely amongst the states and countries worldwide. Feed-in-tariffs, which pay directly for any electricity generated from renewables, are also employed as a direct incentive for reduction of green gas emissions. While public policy debates on RPS, feed-in-tariffs and cap-and-trade policies are currently active on various governmental and public forums, the emergence of these policies usually takes time especially in democratic societies.

The Smart Grid
In the mean time, some countries have managed to invest heavily in modernizing the electric grid. A Smart Grid that aims at managing and optimizing the generation and use of electricity, results in higher efficiency, better resource management and increased environmental responsibility.

Power plants generate the electricity and transmit it across the extensive nationwide electric grid. The demand for electricity is determined by the specific behavior of consumers: industrial demand is much larger than the residential consumer and has a significantly different demand duty cycle. The direct storage of electricity is today very costly and inefficient; and therefore is not considered as viable for large commercial scale to balance such varying duty cycles. The utilities work diligently and constantly on balancing and optimizing its complex supply/demand dynamics to produce reliable power to all customers.

The Smart Grid, as it has emerged over the past couple of decades, aims to achieve such supply/demand balance using advanced digital computer controls. Two-way digital sensors and communication modules are distributed within nodes of the electric network. A Smart Meter is an example of a simple two-way residential metering technology. Utilities that use Smart Grid management systems embed much more sophisticated two-way systems that both interrogate and control the power flow through each grid network node. Such Smart Grid sensors help dynamically assess local demand and optimize supply routing with increased efficiency, reliability and safety.

Renewables and the Smart Grid
Renewable energy sources such as wind and solar power have unique power generation duty cycles because of the variable nature of wind energy, sun light variations and local weather. The Smart Grid could integrate such renewable energy sources with the existing base-load from fossil and nuclear power generators. However, historically utilities have not invested heavily in this research and development.

Smart Grid integration with renewable energy sources would depend on the availability of advanced sensors and control software products. Capital investment in this sector would usher the emergence of the most economical sensor and software technologies. With such technologies the Smart Grid could deliver efficient integration of renewable energy with fossil and nuclear power at higher reliability, efficiency and security, with a significant reduction of carbon dioxide emissions.

Smart Grid: Vision for Individuals
The current Smart Grid vision needs to be enlarged to include not only the growth of renewable technologies, but also focus specifically on the modern day individual node. This individual node consumes energy and should also be seen as a potential generator of energy.

Federal and state incentives, together with some feed-in tariffs, encourage people to install renewable energy technologies such as solar and wind at the residential level. These policies are increasing both domestically and overseas because they also incentivize people to use other clean technologies like emerging electric vehicles with the objective of reducing dependency on imported oil.

Distributed Generation Smart Grid

An expanded Smart Grid vision that includes the individual node, is schematically shown in Figure 1. Two representative homes are shown with roof top mounted photovoltaic solar panel and one single pole-mounted small wind turbine. Combining these renewable energy technologies reduces the individual’s electric energy consumption from the grid. The grid network is shown connected to each home via the Smart Meter, which facilitates two-way communications to the Smart Grid using Internet servers. Each of these individual homes would be able to buy and sell electricity from and to other nodes or utilities. This could easily be handled with downloaded software applications that can be simply managed using a laptop, a smartphone, or a tablet.

This Smart Grid vision increases the importance of renewable energy generation and places the individual in a powerful position - at the center. The individual is now not only in charge of power generation, but also supply and demand management. By combining clean technologies with the Smart Grid, the individual is helping to efficiently use renewable power while reducing fossil fuel usage, carbon dioxide emissions and lightening the load on the overall grid. In some cases individuals will also experience overall cost savings. The individual as an energy generation node is the ultimate goal of individual freedom, responsibility, and economic growth.