Smart grid can generate $110 million in annual benefits for typical utility


A typical electric utility can expect smart grid technology to generate at least $110 million per year through a wide range of benefits, from increased rate of return to lowered carbon emission to new jobs creation, according to a new analysis by the Utilities Telecom Council (UTC).

The study, “Smart Grid Economics: Making the Business Case for Smart Network Technology”, prepared for the UTC by consulting firm The Shpigler Group, calculated the economic impacts of a comprehensive smart grid deployment for a typical utility that installs one million electric meters.

The analysis showed that for a comprehensive smart grid deployment involving a full set of programmes in three key areas – advanced metering and outage management, distribution automation, and distributed energy resources, the typical utility may expect to require capital investment of $828 million over three years.

The Internal Rate of Return for the programme is calculated at 13.8% without accounting for the value customers may place on the increased reliability of the electric grid; when factoring in these customer benefits, IRR exceeds 35%. The system benefits calculated by the end of a ten-year forecast period are likely to exceed $110 million per year.

In addition the system reliability is increased from 99.48% to 99.75%, reducing outage minutes by 16.8 million customer-minutes. Nearly 300,000 tons of carbon emissions are eliminated on an annual basis, and over 9,000 direct and indirect jobyears are created.