The existing utility grid is a centralized system where power flows in one direction, from generation resources through the transmission-distribution system to the customer.

Centralized generation of electricity. Generation may or may not be located in the same geographic area as the load being served, which can often require transmission from distant locations.

Existing utility grids may or may not include Supervisory Control and Data Acquisition (SCADA) sensors, computing, and communications to monitor grid performance.

Utility systems may depend instead on separate reporting systems, periodic studies, and standalone outage management applications.

Information to the customer is generally limited to a periodic bill for services consumed in a prior time period or billing cycle.

The smart grid is a decentralized system where power flows in both direction, from generation resources through the transmission-distribution system to the customer and vice-versa.

Several generation options throughout the grid allows power sources to be located closer to their point of use, reducing investment in transmission and distribution, and in many cases reducing energy losses.

Small generating resources are implemented that diversifies supply, reduces risks of major outages, and improves overall reliability.

Sensors, remote monitoring, automated switches, reclosers, upgraded capacitor banks, and other equipment are integrated into the grid to provide end-to-end monitoring and control of the transmission and distribution network. Sensors provide the information for better understanding of grid operation, while control devices provide options for better management of system operation.

Smart appliances with embedded price, event-sensing and energy management capability are implemented.