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Why It Matters

The clean energy transition needs a smart grid

Fighting climate change requires 100% clean energy. To meet this challenge, renewable energy sources like wind and solar are scaling up as we speak. But while this shift in energy sources is critical in reducing greenhouse gas emissions, we also need a transformation of the entire grid system.

Unlike fossil fuel-based power plants or other clean energy source like geothermal and hydroelectric, wind and solar are intermittent. As wind and solar become more widespread, utilities and regulators around the world are asking the question: how can the grid best align electricity supply and end-user demand, keeping lights on the limiting cost?

The solution is a smart grid. For electricity supply to become renewable, the grid needs to become more adaptable than it is today. By integrating sensors and software to the existing grid, it gives utilities and consumers the information they need to understand the quickly react to changes and the supply and demand of electricity. With smart meters, consumers can plan their electricity use according to its price as it fluctuates throughout the day. Through data and automation, the smart grid can integrate and optimize solar and wind generation, even with their intermittent nature. 

This also means power generation becomes decentralized, adaptable and flexible, reducing the chances of blackouts and price fluctuations.

by itself, a smart grid doesn't reduce greenhouse gas emissions. But by acting as the foundation that can support the expansion of renewable energy, smart grids will play an essential role in a decarbonized world. Project Drawdown estimates that, to grow beyond a 25% share of generation, variable renewable energy sources require smart grids and grid flexibility.

Here are the companies making it happen.

We need companies that offer smart grid solutions to quickly expand. In the Climate Index, we take all of the companies that provide smart grid-related products and services that are traded on US stock markets. We exclude penny stocks whose share prices were lower than $0.50 in our last update. Finally, we also exclude companies that derive more revenue from fossil fuel-dependent business than they do from smart grid solutions.

If you are a Carbon Collective member, you own all of these companies through the Climate Index.

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