The purposes and the anatomy of a smart grid is a mystery to some, but I will explain that.
The Purpose of a Smart Grid
First: Most power plants (especially steam plants such as coal, natural gas, and nuclear) cannot scale their electricity production much to match electricity demand, because they take too long to do so. As a result, they operate quite inefficiently as well.
This causes utility companies to use inefficient and costly grid sustenance systems such as peaking power plants to prevent brief blackouts.
Wind and solar power plants have a different but similar issue — they are not constant power providers without energy storage. Battery energy storage, for example, makes them fully scalable — they can respond to changes of power demand instantly, at their optimum efficiency, and you don’t even have to wait for them to start.
Smart grids are intended to match electricity demand with production to minimize the amount of electricity that is wasted, and also to augment electricity production if possible in order to meet demand in the most efficient way possible, hence the term “smart.” They use advanced information and communications technologies “to gather and act on information, such as information about the behaviors of suppliers and consumers, in an automated fashion to improve the efficiency, reliability, economics, and sustainability of the production and distribution of electricity.”
In the case of the Faroe Islands, surplus electricity is transmitted across the islands in a matter of seconds to whoever needs it, using: Yes, you guessed it! Computers.
A computer is a tremendously powerful tool, unparalleled by any other.