Interview with Dr. Alan Mantooth, IEEE Fellow, Professor of Electrical Engineering at the University of Arkansas (UA), and Executive Director of three UA research centers, by Barbara Vergetis Lundin of Dr. Mantooth defines "what is a 'smart grid'":

Smart grid consists of a utility grid's communications layer, controls, and the hardware that can be controlled to maintain and improve grid reliability.

Many people consider the communications layer as the feature that makes the grid smart. But the communications layer -- whether it's broadband over power line or another option -- is not what makes the grid smarter. I prefer to characterize smart grid by its controls: The computer-based digital sensing and the control algorithms that the grid will use to actively observe, monitor and respond to changing conditions to optimize operations and improve reliability. That is what really and truly makes a smart grid.