EPRI does cost benefit analysis for smart grid

Palo Alto, Calif., April 7, 2011 — The Electric Power Research Institute said that the cost of a fully implemented smart grid could cost up to $476 billion — nearly three times as costly as EPRI’s earlier estimates — but could deliver trillions in benefits to the U.S.

EPRI released a broad assessment of the costs and benefits to modernize the U.S. electricity system and deploy what has become known as the smart grid.

Factoring a wide range of new technologies, applications and consumer benefits the investment needed to implement a fully functional smart grid ranges from $338 billion to $476 billion and can result in benefits between $1.3 trillion and $2 trillion.

The report was released a day after President Barack Obama’s town hall meeting at a Gamesa wind turbine factory in Pennsylvania, where the first question concerned plans for deploying a smarter energy grid.

Obama said a smart grid would have much to offer the country in the way of energy efficiency, pollution reduction and keeping energy costs low.

He added that a smart grid would be a boost to the renewable energy industry by enabling the integration of distributed wind and solar power. He also mentioned that advanced energy storage could be a critical component of the smart grid.

Both Obama and EPRI concluded that cooperation between the government and private industry would be crucial for smart grid deployment.

The EPRI estimate reflects new technologies related to the grid, information, and communication technologies; market structures; demands of an increasingly digital society; more widespread deployment of renewable power production and its integration into the grid; expansion and maintenance of existing infrastructure; and technologies and systems to address grid security.

The report balances costs with benefits, which include:

* More reliable power delivery and quality, with fewer and briefer outages;

* Enhanced cyber security and safety with a grid that monitors itself and detects and responds to security and safety situations;

* A more efficient grid, with reduced energy losses and a greater capacity to manage peak demand, lessening the need for new generation;

* Environmental and conservation benefits, better support for renewable energy and electric-drive vehicles; and,

* Potentially lower costs for customers through greater pricing choices and access to energy information.

The analysis updates EPRI’s 2004 assessment, which estimated the cost of implementing a smart grid at $165 billion. The updated analysis assumes steady deployment of smart grid technologies beginning in 2010 and continuing through 2030.

Mark McGranaghan, EPRI vice president of Power Delivery and Utilization, says the increased costs of the current analysis reflect a more advanced and expansive vision for the smart grid.

“This cost assessment factors in new technologies and customer benefits that create a more resilient, self-healing and interactive grid that were not available when the 2004 analysis was completed,” said McGranaghan. “It can serve as a valuable resource for the industry, policymakers and key stakeholders, first to help us appreciate just how far the state of the art has advanced, and second, to help the industry make prudent investment decisions going forward.”

The project team analyzed projected costs over the next 20 years, looking at core smart grid technologies in four areas: transmission, substation, distribution and customer interface. It then subdivided estimates into two segments:

* Investment required to meet load growth and to correct deficiencies — such as power flow bottlenecks and high-fault currents that damage critical equipment — through equipment installation, upgrades and replacement.

* Investment needed to develop and deploy advanced technologies to achieve smart functionality of power delivery systems.

The assessment found that deploying a smarter grid will require careful policy formulation, accelerated infrastructure investment, and a greater commitment to public-private research, development and demonstrations to overcome barriers and vulnerabilities.

To view the assessment “Estimating the Costs and Benefits of the Smart Grid – A Preliminary Estimate of the Investment Requirements for a Fully Functioning Smart Grid” (Report # 1022519) click here.

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EPRI does cost benefit analysis for smart grid

Palo Alto, Calif., April 7, 2011 — The Electric Power Research Institute said that the cost of a fully implemented smart grid could cost up to $476 billion — nearly three times as costly as EPRI’s earlier estimates — but could deliver trillions in benefits to the U.S.

EPRI released a broad assessment of the costs and benefits to modernize the U.S. electricity system and deploy what has become known as the smart grid.

Factoring a wide range of new technologies, applications and consumer benefits the investment needed to implement a fully functional smart grid ranges from $338 billion to $476 billion and can result in benefits between $1.3 trillion and $2 trillion.

The report was released a day after President Barack Obama’s town hall meeting at a Gamesa wind turbine factory in Pennsylvania, where the first question concerned plans for deploying a smarter energy grid.

Obama said a smart grid would have much to offer the country in the way of energy efficiency, pollution reduction and keeping energy costs low.

He added that a smart grid would be a boost to the renewable energy industry by enabling the integration of distributed wind and solar power. He also mentioned that advanced energy storage could be a critical component of the smart grid.

Both Obama and EPRI concluded that cooperation between the government and private industry would be crucial for smart grid deployment.

The EPRI estimate reflects new technologies related to the grid, information, and communication technologies; market structures; demands of an increasingly digital society; more widespread deployment of renewable power production and its integration into the grid; expansion and maintenance of existing infrastructure; and technologies and systems to address grid security.

The report balances costs with benefits, which include:

* More reliable power delivery and quality, with fewer and briefer outages;

* Enhanced cyber security and safety with a grid that monitors itself and detects and responds to security and safety situations;

* A more efficient grid, with reduced energy losses and a greater capacity to manage peak demand, lessening the need for new generation;

* Environmental and conservation benefits, better support for renewable energy and electric-drive vehicles; and,

* Potentially lower costs for customers through greater pricing choices and access to energy information.

The analysis updates EPRI’s 2004 assessment, which estimated the cost of implementing a smart grid at $165 billion. The updated analysis assumes steady deployment of smart grid technologies beginning in 2010 and continuing through 2030.

Mark McGranaghan, EPRI vice president of Power Delivery and Utilization, says the increased costs of the current analysis reflect a more advanced and expansive vision for the smart grid.

“This cost assessment factors in new technologies and customer benefits that create a more resilient, self-healing and interactive grid that were not available when the 2004 analysis was completed,” said McGranaghan. “It can serve as a valuable resource for the industry, policymakers and key stakeholders, first to help us appreciate just how far the state of the art has advanced, and second, to help the industry make prudent investment decisions going forward.”

The project team analyzed projected costs over the next 20 years, looking at core smart grid technologies in four areas: transmission, substation, distribution and customer interface. It then subdivided estimates into two segments:

* Investment required to meet load growth and to correct deficiencies — such as power flow bottlenecks and high-fault currents that damage critical equipment — through equipment installation, upgrades and replacement.

* Investment needed to develop and deploy advanced technologies to achieve smart functionality of power delivery systems.

The assessment found that deploying a smarter grid will require careful policy formulation, accelerated infrastructure investment, and a greater commitment to public-private research, development and demonstrations to overcome barriers and vulnerabilities.

To view the assessment “Estimating the Costs and Benefits of the Smart Grid – A Preliminary Estimate of the Investment Requirements for a Fully Functioning Smart Grid” (Report # 1022519) click here.