Smart grid technologies could deliver between $1.3 trillion and $2 trillion in benefits over the next 20 years, according to a study by the Electric Power Research Institute (EPRI), reported in the New York Times.
The study projects the cost of installing digital controls and applications on the grid at $17 billion to $24 billion a year, or between $338 billion and $476 billion over 20 years. That is more than twice as much as the $165 billion of smart grid investments that EPRI projected in a 2004 report.
EPRI senior fellow and lead author Clark Gellings said that the increase reflects new technologies that offer expanded capabilities.
EPRI predicted that by enabling demand response and efficiency improvements, smart grid technologies will reduce the annual growth in electricity consumption to less than 0.7 percent over the 2008-2035 period, below the one percent projected by the Department of Energy’s 2010 energy outlook.
Another EPRI study suggests that by enabling greater integration of renewable technologies, as well as reducing consumption, the smart grid could cut 2030 carbon emissions by 58 percent, against a 2005 baseline.
Most of the costs will fall on utility distribution systems that deliver electricity to retail customers, the latest study said. Although some upfront costs may be paid by distribution and transmission companies, Gellings said, “ultimately, at some point, the consumer pays for everything.”
Utility executives and advocates for the smart grid agree that most of today’s smart grid investment goes into improving the efficiency, reliability and profitability of electricity supply, rather than direct services to consumers, the Times said.
To develop the smart grid, state utility commissioners must agree to pass on system costs, and the industry must agree technical standards for relevant technologies, the study said. Utilities must also adjust to the idea of buying equipment that lasts as little as a decade, compared to much of their current equipment, which has lasted 40 years or more.
EPRI also warned that solar storms could also pose a serious threat to smart grid systems.