638 CHAPTER 25 Security and Privacy in the Smart Grid efficient use of the current assets. The peak demand for electricity is growing every year and so utility companies need to spend more money every year in new power plants and their associ- ated infrastructures. However, the peak demand is only needed for 16% of times and so the equipments that are required to satisfy this peak demand will remain idle for the rest of the time. One of the goals for the smart grid is to change the grid from load following to load shaping by giving incentives to consumers for reducing elec- tricity consumption at the times of peak demand. Reducing the peak demand ­ in addition to increasing the grid stability ­ can enable utili- ties to postpone or avoid the construction of new power stations. Efficiency also deals with the integration of the new and renewable generation sources, such as wind and solar power with the aim of reduc- ing the carbon footprint. In the United States, the power grid is the largest emitter of carbon dioxide of any sector of the economy [2]. If the power grid in the United States is left unchanged, it is estimated that carbon emission will rise from 1700 million tons of carbon per year in 2007 to 2300 million tons of carbon by the year 2030 [3]. The same study shows that utilities, through implementation of energy efficiency pro- grams and use of renewable energy sources could not only displace that growth, but actually have the opportunity to reduce the carbon output to below 1000 million tons of carbon by 2030. Inte- grating new renewable sources such as wind and solar power is a challenging task because the rate of generation of electric energy cannot be pre- dicted or controlled. Therefore, the smart grid needs to add new technologies such as energy storage and demand response, in order to better manage renewable sources of energy. Reliability: The second main objective of mod- ernizing the power grid is reliability. While reli- ability of power grid in the United States is above 99.9%, this number is still far below other industrialized nations. By deploying new sensors and actuators throughout the power grid, opera- tors can receive real-time, fine-grained data about the status of the power grid, that enables better introduce. In the final part of the chapter we focus on the enabling security technologies that can be used to provide security and reliability for the operation of smart grid, and to improve users' privacy. 25.2. THE SMART GRID This section provides an overview of the smart grid. The first part describes the motivation for investing in the smart grid, and the second part describes the specific technologies that are being proposed to enable the smart grid vision. 25.2.1. Rationale for Modernizing the Power Grid The power grid has been successful in transform- ing vast sources of energy including, coal, oil, rivers and other water resources, nuclear energy and the like, into electricity and then transfer- ring and delivering this electricity through com- plex networks. In approximately 130 years since its inception, electric grids have extended trans- mission lines to 5 billion people around the world, bringing light, refrigeration, and many other basic services to people across the globe. This accomplishment was recently recognized by the U.S. National Academy of Engineering that selected the power grid as the greatest engineer- ing achievement of the twentieth century. While the current power grid architecture has served well for many years, there is a grow- ing need to reform the world's electric grids to address new requirements and to take advantage of the new technologies. Although different orga- nizations emphasize different goals for the smart grid, a good overview of the rationale for mod- ernizing the smart grid was given by the U.S. National Energy Technology Laboratory (NETL) (see Table 25-1). The goal described by NETL can be clustered into three main groups: efficiency (including the reduction of our carbon footprint), reliability, and consumer choice. Efficiency: One of the main drivers of the smart grid programs is the need to make more