CALIFORNIA DREAMING: The state encourages electric cars so that, someday, many of them can be powered by a grid that runs on renewable energy. Photo of Interstate 10, near Palm Springs. Image: kevindooley/Flickr
Deployment of smart grid technology from U.S. utility control centers and power networks to consumers' homes could cost between $338 billion and $476 billion over the next 20 years, but will deliver $1.3 trillion to $2 trillion in benefits over that period. The benefits will include greater grid reliability, integration of solar rooftop generation and plug-in vehicles, reductions in electricity demand, and stronger cybersecurity, according to a new study by the Electric Power Research Institute (EPRI).
The projected costs of deploying digital controls and applications on the grid, averaging $17 billion to $24 billion a year, will fall most heavily on utility distribution systems that deliver power to retail customers, EPRI concluded. About 70 percent of the total investment in the higher-cost estimate would be required to upgrade substations, lines, poles, meters, billing and communication systems on the retail side to enable smart grid technologies and replace aging equipment, the study says.
EPRI assumes that by 2030, 10 million plug-in vehicles will be on the road, and smart grid technologies will permit plug-in vehicles not only to take recharging power from the grid, but to feed power back in from their batteries to help meet sudden changes in electricity demand.
About 20 percent of investments in the high-cost scenario would go into upgrading the high-voltage transmission grid, including installation of sensors to alert operators to potential failures of transformers on the system, and purchases of equipment to protect the grid and make it more efficient, EPRI said.
The smart grid components going directly into the home would add about 10 percent to overall smart grid investment in the high-cost scenario. The average household could see its monthly electricity bill rise by $9 to $12 for smart grid products and services. EPRI concluded that consumer acceptance and adoption of smart grid applications would increase slowly.
About 10 percent of residential customers would have advanced energy management systems by 2030, the study assumed. (EPRI does not include the costs of a new generation of efficient, programmable refrigerators and other appliances as part of the household's smart grid costs.)
'Ultimately ... the consumer pays'
Clark Gellings, an EPRI senior fellow and lead author of the new study, said that the division of investments among the distribution, transmission and costumer segments should not obscure the fundamental reality: "Ultimately, at some point, the consumer pays for everything."
One of the many unknowns the authors encountered was where consumers would get their smart grid appliances and devices. The study reports "a growing belief" that these services will be delivered to customers as part of a package of services from new competitors in the telecommunications and information technology industries, rather than traditional electric utilities.
Utility executives and smart grid advocates agree that apart from the smart grid projects funded by $4 billion in federal stimulus grants, most current smart grid investment is going into improving the efficiency, reliability and profitability of power supply, rather than reaching consumers directly. Recent studies conclude that while some tech-savvy consumers will line up for smart grid applications for the home, most residential customers are not eager to manage their daily energy use, particularly with electricity prices at relatively low levels.
Given the right financial incentives, though, many households may accept smart grid strategies that let utilities reduce power consumption in homes at peak periods of demand, when wholesale electricity prices are highest, some analysts conclude.