Many of the benefits of implementing a smart grid are associated with the way the technology is used, or the "application" of this technology. Once a system of connectivity and control between supply and demand is created, numerous ways in which this can be used to improve energy efficiency become possible. Much of the analysis presented by IMS Research is centered on the hardware that is used to implement the smart grid. However, "applications" will mostly be implemented as software in and around the smart grid infrastructure.
Some of the most common applications of a smart grid that will contribute to greater energy efficiency are:
- Peak load shedding
- Demand response; virtual power
- Time of use pricing
- Meter data management
- Energy management
- Energy storage
- Grid-tied distributed generation
The evolution of the smart grid application market is limited by the hardware roll-out of smart grid technology, such as smart meters, sub meters and communication infrastructure, and therefore is a relatively small market today. However, undoubtedly as smart grid hardware becomes more prevalent the applications market will gain substantial traction.