The Electric Power Research Institute (EPRI) has released a broad assessment of the costs and benefits to modernize the U.S. electricity system and deploy what has become known as “the smart grid.” Factoring a wide range of new technologies, applications and consumer benefits the investment needed to implement a fully functional smart grid ranges from $338 billion to $476 billion and can result in benefits between $1.3 trillion and $2 trillion.

The estimate reflects new technologies related to the grid, 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.

The report balances costs with benefits, which include:

• More reliable power delivery and quality, with fewer and briefer outages.
• Enhanced cyber security and safety with a grid that monitors itself and detects and responds to security and safety situations.
• A more efficient grid, with reduced energy losses and a greater capacity to manage peak demand, lessening the need for new generation.
• Environmental and conservation benefits, better support for renewable energy and electric-drive vehicles.
• Potentially lower costs for customers through greater pricing choices and access to energy information.

The analysis updates EPRI’s 2004 EPRI assessment, which estimated the cost of implementing a smart grid at $165 billion. The updated analysis assumes steady deployment of smart grid technologies beginning in 2010 and continuing through 2030.

Mark McGranaghan, EPRI vice president of Power Delivery and Utilization, says the increased costs of the current analysis reflect a more advanced and expansive vision for the smart grid.

“This cost assessment factors in new technologies and customer benefits that create a more resilient, self-healing and interactive grid that were not available when the 2004 analysis was completed,” said McGranaghan. “It can serve as a valuable resource for the industry, policymakers and key stakeholders, first to help us appreciate just how far the state of the art has advanced, and second, to help the industry make prudent investment decisions going forward.”

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.