$1.5 to $2 trillion investment needed in U.S. electric utility industry by 2030


Peter Fox-Penner,
The Brattle Group
Phoenix, AZ, U.S.A. — (METERING.COM) — November 18, 2008 – To maintain the current levels of reliability the U.S. utility industry will have to invest between $1.5 and $2 trillion between 2010 and 2030, much of it in smart grids, according to a new report from The Brattle Group.

Based on a range of scenarios, it was found that as much as 214 GW of new generation capacity could be required by 2030, at an investment cost of $697 billion.

Energy efficiency and demand response programs could significantly reduce, but not eliminate, the need for new generation capacity. However, reductions in generation capacity requirements do not mean an equal reduction in total investment, due in part to offsetting the cost of utility energy efficiency and demand response programs. In general the more aggressive the energy efficiency and demand response programs the less the saving.

The required investment in transmission and distribution (T&D) could be as large as, or larger than, the investment in generation. The combined investment in new T&D during this period will total about $880 billion, including $298 billion for transmission and $582 billion for distribution. These investments will enable the industry to integrate the approximately 39 GW of renewable energy already mandated under state renewable portfolio standards and continue the installation of a “smart grid.” The investments also will bring new efficiencies and service options to electricity customers and accommodate new end-use technologies, such as PHEVs.

The findings are detailed in "Transforming America’s Power Industry: The Investment Challenge 2010-2030," presented by Peter Fox-Penner, a principal of The Brattle Group, at the Edison Electric Institute’s 43rd Financial Conference. The report was sponsored by the Edison Foundation.

"The industry is facing enormous investment needs during a period of modest growth, high costs, and very substantial policy shifts," explained Fox-Penner. "The good news is that as a result of this very significant investment, our economy and utility customers will get more efficiency and control over their electricity use, lower carbon generation, and a higher technology, more resilient and reliable electric grid."

The Brattle Group provides consulting services and expert testimony in economics and finance to corporations, law firms, and public agencies worldwide.