Post # 63 - Two New Reports Highlight the Benefits (and Costs) of Smart Grid Development

The past week saw the release of two major studies that emphasize both the benefits of fully implemented smart grid technologies and the costs of implementation.

First, and from an international perspective, a new report from the International Energy Agency (IEA), an autonomous organization of 28 member countries (including the U.S.) created to pursue reliable, affordable and clean energy initiatives, says that widespread smart grid deployment can play a significant role in enabling nearly all clean energy technologies, including renewables, electric vehicles and energy efficiency.

The IEA report, Smart Grids Technology Roadmap, provides a consensus view from more than 200 government, industry, academia and consumer representatives on the current status of smart grid technologies, and charts a course for expanding their use from today to 2050. As well as addressing current concerns with existing electricity systems, such as ageing infrastructure and increasing peak demand, the IEA report highlights smart grid technologies as important elements for expanding the use of a number of low-carbon technologies, such as electric vehicles. The report also outlines the potential for smart grids in rural areas of developing countries further down the line. Small "remote‟ systems - not connected to a centralized electricity infrastructure and initially employed as a cost-effected approach to rural electrification - could later be connected easily to a national or regional infrastructure. Further, smart grids could be used to get electricity to sparsely populated areas by enabling a transition from simple, "one-off" approaches to electrification (e.g. battery-based household electrification) to community grids that can then connect to national and regional grids.

IEA recommends greater international collaboration in sharing experiences of pilot programmes and in leveraging national investments in the development of required technology. It also stresses a need to develop common standards between countries that will help optimise and accelerate both the development and deployment of necessary technology while at the same time, reduce costs for all stakeholders - governments, industry, and the public.

But, as a second (and pro-smart grid report) indicates, there is a price tag. The Electric Power Research Institute (EPRI), an independent, non-profit company that conducts research and development relating to the generation, delivery and use of electricity, has just released a broad assessment of the costs and benefits to modernize the U.S. electricity system and deploy smart grid technologies.

The EPRI assessment, Estimating the Costs and Benefits of the Smart Grid, factors 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.

EPRI's 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: (1) more reliable power delivery and quality, with fewer and briefer outages; (2) enhanced cyber security and safety with a grid that monitors itself and detects and responds to security and safety situations; (3) a more efficient grid, with reduced energy losses and a greater capacity to manage peak demand, lessening the need for new generation; (4) environmental and conservation benefits, better support for renewable energy and electric-drive vehicles; and (5) potentially lower costs for customers through greater pricing choices and access to energy information.

The analysis updates EPRI's 2004 EPRI 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.