## 2 Current and Future Challenges of the Electric Distribution System
### Electric Distribution System and Future Smart Grids  
How exactly SGs will function is still difficult to say, however an evolution is expected both in terms of electricity generation and distribution, and in terms of system control. They must be able to react to external events and pursue efficiency objectives independently and in real time. The new network will have to allow bi-directional power flows caused by the DG, favouring in particular renewable sources and micro-generation systems. The latter allow increasing efficiency by approaching spatially the production and consumption of energy and reducing the intrinsic losses of the distribution system. The use of renewable sources also poses a problem in terms of control since the micro-generation systems are private, widespread and can belong to very different types; this makes centralized control by the distribution network operator difficult. Furthermore, the generation capacity is highly variable, it depends on the local atmospheric conditions, and it is difficult to predict. With regard to the control, it must be provided that each device connected to the network is able to communicate and receive data and react in real time to events that come from other devices or from the electrical network itself: the SG will be an energy network dotted with sensors, actuators, communication nodes, control and monitoring systems. Technical objectives to be pursued are the reduction of peak consumption, the flattening of the load curve and the creation, at least theoretically, of a constant profile over time; this would create very high economic and management advantages. In fact, the cost of energy also follows normal economic laws and, when the demand is high, the price of energy increases. A \"demand-response\" infrastructure would not only enable new pricing schemes, but would also allow, in moments of overload, the shutdown of less priority electrical devices to be requested, avoiding blackouts or total disconnections of energy. Smart grids must, therefore, be able to provide end customers with real-time information and allow identifying, quantifying and rewarding virtuous choices and behaviour. In other words, users must be directed towards eco-sustainable consumption patterns, behaviours and lifestyles. A great contribution from ICT will be necessary to put the different subjects in communication, in a safe and efficient way. In the scenario outlined, each user can potentially buy, but also sell, energy in a free market. The purchase and sale price will vary over time and will become the main tool capable of balancing the demand and supply of electricity. It is assumed that each user of this market will be represented by a software agent, who will act autonomously towards maximising their profit objectives. All this represents a real revolution compared to the current balancing system based on centralized control and with reactions very often entrusted to the intervention of the human operator. Rather widespread are reference scenarios of price-to-device where the cost of energy varies dynamically over time: the meters communicate any changes to the loads that coordinate to react and consequently adapt the consumption profile. This could be the case with electric vehicle charging: a negotiation between the vehicle and the charging station to choose the best compromise between the power required by the vehicle and the power supplied by the charging station. The latter is dependent not only on the technical characteristics of the station, but also on the technical constraints of the distribution network at that point and on the dynamic state of the network, which varies during the day according to the demand. On a closer horizon, it is possible to assume that the producers connected to the distribution network will enter into bilateral contracts for the production of energy, which will define the daily production setpoints.