A report released last week by the Electric Power Research Institute (EPRI) that broadly assesses the costs and benefits to modernize the U.S. power system suggests that investments needed to deploy a fully functional smart grid range between $338 billion and $476 billion—but could result in benefits of $1.3 trillion to $2 trillion.
The report, titled “Estimating the Costs and Benefits of the Smart Grid: A Preliminary Estimate of the Investment Requirements and the Resultant Benefits of a Fully Functioning Smart Grid,” analyzes a wide range of technologies related to the grid. It also looks at 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.
A smart grid, it says, could provide more reliable power, enhanced cybersecurity and grid safety, and a more efficient grid. The costs associated with deploying a smart grid are much higher than the $165 billion estimated in a 2004 report, but this is because “in actuality, the increased costs are a reflection of a newer, more advanced vision for the smart grid.”
The updated analysis assumes steady deployment of smart grid technologies beginning in 2010 and continuing through 2030. “The concept of the base requirements for the smart grid is significantly more expansive today than it was seven years ago, and those changes are reflected in this report,” EPRI adds.
EPRI says 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.