Tis the season to start thinking about electricity costs. Winter is on the horizon and with the holiday season comes holiday lights and holiday parties. As energy demand rises, how are the utilities going to keep up with demand? An important question as the country looks to reducing greenhouse gas emissions while at the same time needs to find a solution to our growing energy needs. To learn more about these issues, I read Smart Power by Peter Fox-Penner.

I must admit that I don’t know much about the utility industry but I do have fond memories of living in Texas when the state approved deregulation and all the rolling brownouts as a result of that decision. But according to experts, these could be more commonplace if the grid is not improved. Yet what is the best way to do this and who should pay? Most conversations about these issues involve in some capacity a discussion about the smart grid. However the first thing we need to understand is what exactly is the smart grid?

Penner writes, “As the industry shifts its supply sources, builds transmission, and increases its energy efficiency efforts, the technologies at the core of its operations will shift dramatically. Over the next thirty years, the industry will adopt the so-called Smart Grid, and the architecture of the system will shift from one based exclusively on large sources and central control to one with many more smaller sources and decentralized intelligence. The Smart Grid will mark a total transformation of the industry’s operating model–the first major architectural change since alternating current became the dominant system after the Chicago World’s Fair in 1893.”

This shift will cost more than $2 trillion dollars, and the jury is still out on whether the best option is large sources (nuclear, coal with sequestration, natural gas, etc.) or smaller sources that include solar and wind energy or a combination of the two.

In the book, Penner progresses the reader through a history of the grid, explains where we’re at today and where we need to be in the future. He discusses the intricacies of pricing and how energy conservation plays a role for saving consumers money while at the same time making utility companies money. He discusses privacy issues related to the smart grid (that is being developed and monitored in part by third party companies). Penner also addresses issues and challenges and offers solutions. In addition he presents scenarios of what could happen if certain paths are taken.

This is a very complicated issue with dozens of moving parts and while I understand it much better, the book is not for the newcomer. It is best suited for those working directly for utility companies or those working for companies that are providing products and services that will move the country to the smart grid. And because Penner gives very detailed future scenarios including electricity scenarios and detailed charts detailing large scale power generating technologies including costs associated with each technology relating to carbon emissions, I believe it could become a very valuable resource for high-level utility executives.