Estimating the costs and benefits of the smart grid


April 18, 2011 – A report from EPRI (Electric Power Research Institute), which is a partial update to an earlier report (EPRI 1011001), aims to initiate a stakeholder discussion regarding the investment needed to create a viable Smart Grid. To meet this goal, the report documents the methodology, key assumptions, and results of a preliminary quantitative estimate of the required investment.

At first glance, it may appear the most obvious change from the 2004 report is the significant increase in projected costs associated with building the smart grid. In actuality, the increased costs are a reflection of a newer, more advanced vision for the smart grid.

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.  

The report, which is linked to below, lists the following set of benefits from the smart grid, including:

  • Allows Direct Participation by Consumers. The smart grid consumer is informed, modifying the way they use and purchase electricity. They have choices, incentives, and disincentives.
  • Accommodates all Generation and Storage Options. The Smart Grid accommodates all generation and storage options.
  • Enables New Products, Services, and Markets. The Smart Grid enables a market system that provides cost-benefit tradeoffs to consumers by creating opportunities to bid for competing services.
  • Provides Power Quality for the Digital Economy. The Smart Grid provides reliable power that is relatively interruption-free.
  • Optimizes Asset Utilization and Operational Efficiently. The Smart Grid optimizes assets and operates efficiently.
  • Anticipates and Responds to System Disturbances (Self-heal). The Smart Grid independently identifies and reacts to system disturbances and performs mitigation efforts to correct them.
  • Operates Resiliently against Attack and Natural Disaster. The Smart Grid resists attacks on both the physical infrastructure (substations, poles, transformers, etc.) and the cyber-structure (markets, systems, software, communications).

Full report available here