The Brattle Group has determined that growing demand for electric services will require investment on the order of $1.5 trillion between now and 2030. Peter Fox-Penner, co-chairman of The Brattle Group, presented the preliminary findings at today's Edison Foundation conference "Keeping the Lights On -- Our National Challenge."

"With fuel costs at record levels, plant construction costs soaring, and increased pressure to combat global climate change, electric utilities are facing the greatest investment challenge in their history," said Fox-Penner. The Brattle study projects generation, energy efficiency, transmission, and distribution investment needed in the United States between 2010 and 2030, factoring in a range of capacity deferrals that are possible through the implementation of energy efficiency programs.

Speaking at today's conference, Fox-Penner noted that new and replacement generating plants will cost about $560 billon through 2030, absent a significant expansion of energy efficiency programs or new climate initiatives. Transmission and distribution together will require nearly $900 billion by 2030, under current trends and policies.

Additionally, The Brattle Group has estimated that incremental generation capacity needs could be decreased from 224 to 151 gigawatts (a 33 percent reduction) based on an analysis by the Electric Power Research Institute, which indicates that overall electricity consumption between now and 2030 could be reduced by an additional 7 to 11 percent below the 2007 Energy Information Administration baseline in response to aggressive energy efficiency programs.

Global climate policies are also projected to increase the cost of new electricity supplies. For instance, equipping all new coal plants with carbon dioxide capture and storage systems -- technologies not yet commercially available - would add roughly $200 billion to generation investment needs, according to the preliminary study. In all scenarios, the study found that higher electricity prices will reduce demand, an effect that The Brattle Group is examining further in its ongoing study.

"Our study shows that the electricity industry faces enormous investment needs under every conceivable scenario," Fox-Penner said. "Transmission and distribution investments needed to create a customer-friendly 'smart grid' and integrate renewable energy will be more costly than generation and energy efficiency investments. While providing great benefits, plug-in hybrids will also add to the industry's supply challenge. Regardless of the mix of efficiency and fuels, the industry needs a strong balance sheet to accommodate this massive investment program."

Marc Chupka and Robert Earle, principals of The Brattle Group, are directing the study. The full report, on which these preliminary findings are based, is sponsored by The Edison Foundation and will be available in June 2008.