SAN JOSE, Calif. – Costs and benefits of building a smart electric grid have more than doubled as the vision of a digital, networked power utility has expanded, according to a new report from the Electric Power Research Institute. Sensor networks are on the rise as one of the big and under-served opportunities in the diverse terrain of the smart grid.
The EPRI report estimated the cost of upgrading the U.S. grid could range from $338 to $476 billion, up from $165 billion in a 2004 forecast. Benefit estimates have also skyrocketed to a range of $1.2 to $2 trillion, up from $660 billion estimated in 2004.
EPRI's previous estimates did not include enabling plug-in electric and hybrid vehicles, renewable energy sources, grid-scale energy storage, distributed generation and demand response applications that let consumers adjust energy use based on changing energy prices. Benefits of a smart grid include reduced carbon emissions, energy savings and reduced blackouts that cost $10 billion per event.
Most of the costs of building a smart grid—an estimated $231 to $339 billion—are in the back-end electric distribution system, the report said. Smart grid costs also include as much as $32.3 billion in back-end IT systems for electric utilities and another $3.7 billion in cyber security hardware and software.
Sensor networks represent another key smart grid opportunity that is getting increasing attention. The EPRI report estimates as much as $6 billion will be spent for as many as 70,000 networked sensors and management devices of various sorts.
"In the last 18 months, the one area most surprising us in the speed at which it is gaining attention is the sensors on the transmission and distribution system," said Clark Gellings, an EPRI Fellow and one of the authors of the report.
"A lot of the assets [in electric utilities] are aging and beyond their planned service life," Gellings said. "For example, the average age of existing substations is 42 years, but they were designed for a life of 40 years," he said.
"The way we make this work is with wide deployment of sensors, networks and the computation to back that up," he added.
The U.S. government is spending an estimated $43 billion on a variety of smart grid projects and initiatives as part of the 2009 stimulus bill. EPRI experts said the part of that work focused on hammering out smart grid standards could have lasting impact on getting the grid built.
The report says the costs of building the smart grid in the U.S. will be spread out to all energy users, a group estimated to rise from about 142 million in 2007 to 165 million in 2030.
Most of those users—about 143.9 million by 2030--are residential customers who could pay as much as $12 per month in smart grid costs, or a total $1,455 over an estimated ten year period. That's a drop in the bucket compared to an estimated 20.2 million commercial customers who will pay a total of $10,000 each or about $84 per month and more than 900,000 industrial users who could pay a total of $151,000 or $1,266 per month.
About ten EPRI managers worked on the report with input from about a dozen industry executives. EPRI is an independent, non-profit think tank supported by a combination of many U.S. utilities and academics.
Distribution systems make up the bulk of smart grid costs.