Inexorable Increases In Electricity Demand

Published Date: 02 Nov 2017

The smart grid presents a wide range of potential benefits, including:

Optimizing the value of existing production and transmission capacity

Incorporating more renewable energy

Enabling step-function improvements in energy efficiency

Enabling broader penetration and use of energy storage options

Reducing carbon emissions by increasing system, load and delivery efficiencies

Improving power quality

Improving a utility’s power reliability, operational performance, asset management and overall productivity

Enabling informed participation by consumers by empowering them to manage their energy usage

Promoting energy independence.

2.6.1 Inexorable increases in electricity demand

Rising population, escalating demand for goods and services that require electricity and the growing digital world are all driving the demand for electrical power to unmatched levels in Delhi, the capital of India. The power demand in the city has been increasing at a rate of around 8 per cent in the last few years and with increase in purchasing power of general public, more gadgets operated on electricity are constantly bought [6].

While developing country like India is struggling to supply enough power to meet its peoples’ basic needs, electricity has also emerged as a quality energy source, enabling the propagation of electronic end-use devices, particularly for computing and communications. This led to demand for more (and more reliable) electricity.

2.6.2 Climate Change

There is broad agreement that global warming has already begun to cause serious and lasting damage to world ecology. Because electricity production is a major source of carbon emissions, "early adapters" around the world — both governments and corporations — have begun exploring ways to create sustainable, low-carbon, high-growth economies. The smart grid offers potential to conserve energy, both through reducing demand at peak times and by its ability to deploy renewable energy sources, thus lessening the industry’s contribution to climate change. A temperature-electricity curve is estimated in a study, figure 8 represents the U-curve for the demand for electricity versus temperature, the author mentioned that a large number of socio economic and physical factors such as the growth in incomes, extent of electrification, energy efficiency improvements, cultural habits and prevailing climate conditions influence the temperature-electricity curve. For instance, increased internal heat gains in commercial buildings from an increase in use of computers, or even a decrease in tolerance for heat with higher cooling demand.

Figure 8 Temperature-Electricity Curve

2.6.3 High unit cost of electricity

While the increasing trend in cost of electricity has been considered as inevitable, many factors will continue to put upward pressure on costs, including increased commodity prices, especially for coal, oil and gas and lower plant load factors for renewable energy sources, among others. At the same time, a construction cycle of historic proportions is recounting for utilities to replace and renew the aging transmission and distribution infrastructure, and being a developing economy, India is aggressively expanding its own power generation. India estimates $250 billion spending for power sector alone over the next eight years. Recently Delhi Electricity Regulatory Commission (DERC) hiked the electricity tariff by 22% in July 2012, and this has affected the sentiments of common people living in Delhi to use electricity and at the same time it is expected to increase the electricity tariff in near future.

2.6.4 Loss reduction

TPDD’s aggregate technical and commercial losses are estimated to be about 12%, of which technical losses are about 6%. While a smart grid is not the only means of reducing losses, it could make a substantial contribution to reduce the technical losses by means of optimum utilization of power equipments.

2.6.5 Reliability

Electric utility industry is facing a decline in quality and at the same time unit costs are rising as a whole. However electricity quality in the capital has substantially improved in the last decade due to better practices adopted by power distribution companies like TPDD, but use of smart grid will further improve the quality and reliability of electricity in the city. An important goal of the smart grid vision is a network that can improve outage management performance by responding faster to repair equipment before it fails unexpectedly.

2.6.6 Environment

Table 2 shows the mechanism of reducing Carbon dioxide emission by smart grid. Around 18% of emission can be reduced with smart grid. Evolving and more stringent greenhouse gases limitations, renewable portfolio standards and energy conservation requirements have become one of the key issues for utilities and are increasingly more ingrained in environmental corporate responsibility commitments of vendors and industries. Renewable energy use has been growing rapidly, driven in part by renewable portfolio standards. Much of recent drive has been on larger-scale renewable systems and owing to their changeability and intermittency, requires increased grid flexibility. Consumer-scale renewable initiatives such as rooftop photovoltaic are also expected to take off. On a distributed scale, these energy sources require "smarter" grids to meet safety, reliability, and control requirements. The enabling ingredient consists of sensors and an electronic control system that would provide the communications and control capability for the Smart micro-grid and that also would enable it to interact with the larger (host) grid. Two grid networks would work in concert to achieve maximum reliability and serve the unique needs of different customers at minimum cost. India has supported the implementation of renewable energy. Historically, much of its support was for wind power, but the newly announced National Solar Mission and its goal to add 20,000 MW of solar energy by 2020 should be an accelerant in this regard. Encouraged by environmental concerns and the desire to tap into all available sources of power, this move can also be considered as a smart grid driver.

Table 2: Smart grid mechanisms for reducing CO2 emissions

Reductions in Electricity Sector Energy and CO2 Emissions (%)

Direct

Indirect

Conservation effect of consumer information and feedback systems

3

--

Joint marketing of energy efficiency and demand-response programs

--

0

Deployment of diagnostics in residential and small/medium commercial buildings

3

--

Measurement and verification for energy efficiency programs

1

0.5

Shifting load to more efficient generation

<0.1

--

Support for additional electric vehicles and plug-in hybrid electric vehicles

3

--

Conservation voltage reduction and advanced voltage control

2

--

Support the penetration of renewable wind and solar generation (25% renewable portfolio standard)

<0.1

5

Total reduction 12 6

2.6.7 Cost Savings

Meter reading is a non-trivial component of any distribution utility’s fixed monthly costs. A common practice is to read bi-monthly and estimate usage in the interim month in TPDD. If there is what is known as a PL ("premises locked") problem because the meter is located inside the premises and nobody is home (a frequent occurrence in recent times), the "estimation" could continue for up to a year.

With electricity prices set to continue rising sharply, the smart grid will also offer consumers choices that could reduce their bills. It can offer time-of-use and possibly even real-time pricing, as opposed to flat rate retail tariffs most consumers now pay. When consumers respond to such tariffs through a smart grid, peak load would be reduced leading to improvement in asset utilization and lower per-unit generating costs.

2.6.8 Technological Advancing

The advances in computing and telecommunications during the last half century have affected almost every facet of life. One reason the smart grid is taken seriously is because advanced computing and telecommunications have made it possible. As a network, the electricity industry has always required measurement, making it an ideal candidate for such advanced technology.

2.6.9 Improved Customer Satisfaction

If its costs cannot be driven down, the utility industry will need to improve the quality of service. The electric industry needs an increase in perceived value to improve its value offering. Because the smart grid promises to give customers more control over their use of electricity, it offers a way to increase perceived value. It could enable customers to minimize the total amount of their bills. So even though unit prices may not go down, the total size of a customer’s bill could be minimized if not absolutely reduced. And as per the surveys, the total amount of a bill, has a much bigger impact on customer satisfaction than unit price.

2.6.10 Electric vehicles in Delhi

The smart grid’s single biggest potential for delivering carbon savings is in providing cost-effective and increasingly clean energy for plug-in electric vehicles (PEVs) and their hybrids. PEVs can be plugged into a standard household electrical outlet to recharge their batteries. Capable of traveling up to 40 miles in electric-only mode, the majority of PEVs operating on battery power would meet the daily needs of most drivers.

2.6.11 Reducing the human errors in system operations

Labor savings are not a prime driver for the smart grid in Delhi, as contracts for outsourcing are inexpensive. However, automated meter reading would lower recording and other errors.

2.6.12 Peak load management

Delhi’s supply shortfalls are expected to persist for many years. A smart grid would allow more "intelligent" load control, either through direct control or economic pricing incentives that are communicated to customers in a dynamic manner. Such measures would help mitigate the supply-demand gap. During peak demand, TPDD has to purchase power from outside Delhi at higher costs.

2.6.13 Time-of-day tariffs

Time-of-day (TOD) tariffs involve a sharing of some risks between the utility and the customer. During those times of the day when energy is cheap for TPDDL (early morning hours and weekends), the resultant savings can be passed on to the customer. When energy is expensive for TPDD (peak times) the customer experiences the high cost. The objective is for customers to shift their utilization in response to a price signal. For over two decades electronic static meters have been available to handle TOD tariffs. In fact, they handle very complicated and very extensive tariffs (on peak, shoulder peak and off peak; fixed and variable holidays; seasonal data capture and many others). A difficulty that a smart grid can overcome is the effort needed to re-configure the meters on a regular basis, which will allow TOD tariffs to change as rapidly as desired by the utility and customer. The smart grid, with its telecommunication link between the customer information (billing) computer system and the meter in the field, overcomes this.

The government has to create policy and framework to implement the time of use tariff in Delhi to make the smart grid application a success.

2.6.14 Demand response

Smart grid applications will allow TPDD and its customers to communicate with one another and make decisions about how and when to supply or produce and consume. This emerging technology will allow customers to shift from an event-based demand response where the utility requests the shedding of load, towards a more 24/7-based demand response where the customer sees incentives for controlling load at all times. Although this utility-customer discussion increases the opportunities for demand response, customers are still largely influenced by behavioral as well as economic motivations and many have demonstrated reluctance to relinquish total control of their assets to utility companies.

One advantage of a smart grid application is time-based pricing. Customers who traditionally pay a fixed rate for kilowatt hour and kilowatt/month can set their threshold and adjust their usage to take advantage of fluctuating prices. This may require the use of an energy management system to control appliances and equipment, and can involve economies of scale. Another advantage, mainly for large customers with generation, is being able to closely monitor, shift, and balance load in a way that allows the customer to save during times of peak load, not only kwh(unit).

Smart grid applications increase the opportunities for demand response by providing real-time data to producers and consumers, but economic and environmental incentives remain the driving force behind this practice. The foundation for this would again be having accurate customer profiles with load, consumption pattern and asset data so as to be able to evolve customer segmentation and develop business cases for supporting each of those categories with different plans and incentives.

2.7 Social Implications of Smart Grid and beneficiaries

The smart grid of the future will impact our business landscape, the energy marketplace and the ways in which we interact socially and culturally. The smart grid’s largest social impact will be seen in developing nations. In country like India, where more than 400 million people live without electricity so called permanent black out, smart grid may lead to reach of the saved electrical energy to that segment of population to improve their livelihood.

In addition, the smart grid will enhance control and convenience in the industrialized world while allowing for social progress in developing nations, reduced outages and quality power will improve the lifestyle of residents, reduced electricity bill and reduced harmful emission to environment will lead to multiple benefits for society of the world as a whole. The benefits and costs of Smart Grid systems can accrue to different parties. It is informative to these different groups, as well as to the broad range of stakeholders, to identify those who receive the different types of benefits and their magnitude, and those who incur the costs.

There are three basic groups of beneficiaries:

Utilities

Utilities are the suppliers of power and include electric utilities that generate power as well as the transmission and the load serving entities that deliver it (and integrated utilities that do all three). Many of the benefits (and of course the costs) to utilities are passed on to ratepayers, though the exact portion that is passed on varies from case to case.

Customers

Customers are the end-users or consumers of electricity. They are ratepayers who benefit from changes in rates and services offered by utilities, as well as from improvements in reliability and power quality. The benefits to customers are reduced electricity bills, reduced damages from power interruptions and improved power quality.

Society

Society in general is the recipient of externalities of the Smart Grid – effects on public or society at large – which can be either positive or negative in nature [4]. In general, the benefits in this category are reductions in negative externalities such as pollutant emissions. Positive externalities are generally more difficult to identify. Societal welfare benefits associated with efficiency improvements are not entirely reflected in price of electricity; there are indirect, macroeconomic benefits such as job creation as well. These are difficult to estimate and we do not address them in this paper. There are also benefits to and damages borne by society at large that are not externalities in strict sense of formal definition, but which are linked to other types of market failures (such as oil security benefits). The latter types of benefits are included under the category of benefits to society in general.

Literature Review

The methodological framework and the specific methods, equations and parameters suggested in this report are part of a broader evolution and development of methods to estimate the benefits and costs of Smart Grid projects. This development of methods will progress as more studies are done and as individual projects come to completion, all of which will add to the body of knowledge about the Smart Grid and its benefits.

In developing our methodological approach, we built upon many previous ideas. Although many studies have touted the benefits of the Smart Grid, far fewer have focused on developing a systematic way of defining and estimating them.

Summary of Previous Studies on Methods to Estimate Smart Grid Benefits

Few previous studies on smart grid benefits have been reviewed and their findings have been summarized, few of the studies have shown remarkable benefits of smart grid, whereas in some areas smart grid may not have much impact as on date scenario due to lack of infrastructure.

Faruqui, A., Hledik, R., Davis, C., "Sizing up the Smart Grid," presented at Elster EnergyAxis User Conference, February 24, 2009

PEV penetration has the potential for providing substantial societal benefits over the long haul

♦ In the near term, utilities may face challenges as PEVs overload neighborhood transformers

♦ Smart rates can facilitate smart charging behavior and obviate the problem

♦ However, while we know a fair bit about whole house response to TOU rates, we know almost nothing for PEV response

♦ The only way to resolve the uncertainty is to launch a new set of pricing experiments

Name of Study

Approach

Major Results

Faruqui, A., Hledik, R.,

Davis, C., "Sizing up the

Smart Grid," presented

at Elster EnergyAxis

User Conference,

February 24, 2009

Used iGrid model to quantify the customer-side benefits. For example, for benefits of dynamic pricing:

• Peak reductions from dynamic pricing derived from PRISM model in which reduction is a function of the ratio of peak rates to existing

rates, the sector, and the availability of automating technology

• These peak reductions lead to avoided costs of generating

capacity, energy and carbon mitigation costs Similar approach used for benefits of energy efficiency, distributed energy resources and plug-in hybrid electric

vehicles

Key assumptions used:

• Generating capacity cost: $75/kW-yr

• Wholesale electricity price: $100/MWh

• CO2 price: $25/ton

• Annual inflation rate: 2%

• Discount rate: 8%

• Reserve margin: 15%

• Line losses: 9.2%

• Peak demand growth: 1.5% per year

• Annual increase in energy consumption: 1.3% per year

Model estimates annual and present values of benefits due to present value of avoided costs of:

• Meter operation and maintenance

• Generating capacity

• Energy from electricity (including value of ancillary services for

distributed energy resources)

• Energy from gasoline

• Carbon

• Reliability

Present value of total net national benefit was estimated to be

• If PHEV’s included – $568 billion over the 2010-2050 time period

• If PHEV’s not included -- $226 billion over the same period

KEMA, Smart Grid Evaluation Metrics, prepared for the GridWise Alliance (February 23, 2009)

This paper was prepared by the GridWise Alliance in response to requests from the Department of Energy (DOE) for suggestions and recommendations for the process of selecting Smart Grid Project Proposals to receive matching grants under the provisions of the American Recovery and Reinvestment Act of 2009 (referred to as the "Recovery Act"). The purpose of this paper is:

• To define the key metrics the DOE should use to assess Smart Grid proposals and projects under the Recovery Act.

• To describe a process for achieving stakeholder buy-in to the metrics and the weights to be used for each metric in a balanced scorecard approach to proposal evaluation.

• To suggest approaches to allocating funding to different categories of Smart Grid projects that cannot easily be compared to each other.

• To create a process to monitor and report on effective use of funding.

This work takes into account a number of key sources of information and instruction including prior DOE and National Laboratory Smart Grid work as well as the Recovery Act, Energy Independence & Security Act of 2007 (EISA), and the OMB Initial Implementing Guidelines

Name of Study

Approach

Major Results

KEMA, Smart Grid

Evaluation Metrics,

prepared for the

GridWise Alliance

(February 23, 2009)

Developed a set of metrics by

considering (refer to Exhibit 2-1 in KEMA report):

• American Recovery and

Reinvestment Act’s objective

• Qualifying Smart Grid investments, as defined in the Energy Independence and Security Act of 2007

• Evaluation criteria from above two considerations, together with OMB evaluation guidance for Recovery Act, used to define Smart Grid project metrics

Suggested metrics fall under the following categories:

• Economic Stimulus

• Energy Independence and Security

• Integration and Interoperability

• Business Plan Robustness

Some of these metrics could be considered as project benefits, such as:

• Impact on costs to consumers (% and dollar decrease in rates)

• Facilitation of renewable energy (incremental MW and % peak MW; % of

DG and renewables than can be sensed and controlled)

• Number of PHEV charging connected to V2G services

• % improvement in losses

• % and dollar amount of improvement in costs of failed equipment

• Tons GHG and per MWh

• SAIDI improvement

• Reduced restoration time from major disruptions

• Reduction in major outages

• Improvement in loss of load probability

Metrics for Measuring Progress toward Implementation of the Smart Grid

This document presents the results of the breakout session discussions at the Smart Grid Implementation Workshop held by the U.S. Department of Energy’s Office of Electricity Delivery and Energy Reliability in June 2008. Experts identified metrics for each of the seven major Smart Grid characteristics agreed upon by leading groups.

In reference to these seven major characteristics, a Smart Grid will 1) enable active participation by consumers; 2) accommodate all generation and storage options; 3) enable new products, services, and markets; 4) provide power quality for the range of needs in a digital economy; 5) optimize asset utilization and operating efficiency; 6) anticipate and respond to system disturbances in a self-healing manner; and 7) operate resiliently against physical and cyber-attacks and natural disasters.

For each of the seven major Smart Grid characteristics, workshop participants determined key metrics for measuring progress toward implementation of Smart Grid technologies, practices, and services. Some of these metrics include the percentage of customers capable of receiving information from grid operators and the percentage of customers opting to make or delegate decisions about electricity consumption based on that information; the percentage of distributed generation and storage devices that can be controlled in coordination with the needs of the power system; the number of Smart Grid products for sale that have been certified for "end-to-end" interoperability; the number of measurement points per customer for collecting data on power quality, including events and disturbances; the amount of distributed generation capacity (MW) that are connected to the electric distribution system and are available to system operators as a dispatchable resource; the percentage of grid assets that are monitored, controlled, or automated; and the percentage of entities that exhibit progressively mature characteristics of resilient behavior.

Workshop participants also discussed measurement issues that complicate progress toward Smart Grid technologies, practices, and services. In addition, the report argued that to solve these issues, government and industry need to work together to refine the metrics discussed above, as well as develop methodologies for establishing baselines and collecting data that measure progress. This report emphasized that various baselines, targets, and measurement approaches will need to be tailored to each utility’s transmission and distribution system. The report also argued that education and training are essential in the development of these Smart Grid technologies, tools, and techniques to sustain the present and prepare for the future

Name of Study

Approach

Major Results

Office of Electricity

Delivery and Energy

Reliability, Metrics for

Measuring Progress

Toward Implementation

of the Smart Grid, results

of the breakout session

discussions at the Smart

Grid Implementation

Workshop, June 18-19

2008, Washington, DC.

Prepared by Energetics,

Inc., July 31, 2008.

Breakout sessions prioritized metrics that can be used to gauge progress toward implementation of the Smart

Grid

Several metrics defined for each of the seven Principal Characteristics of the

Smart Grid

KEMA, The U.S. Smart Grid Revolution: KEMA’s Perspectives for Job Creation (2008)

This report focuses on the labor impacts of Smart Grid implementation. The report finds that "implementing a Smart Grid represents an enterprise-wide initiative and impacts virtually the entire utility organization. Therefore, these projects will require a wide range of new skills, education, and talent." KEMA projects that 278,600 total jobs will be created between 2009 and 2012, in addition to 139,700 total jobs between 2013 and 2018. This report also outlines the current status of Smart Grid programs in the United States. It finds that the current activity mostly focuses on AMI. "It is a generally accepted concept that AMI is often a precursor or foundational element to Smart Grid, or that the activity of Smart Grid efforts would incorporate levels of AMI. Presently, approximately 70 utilities have filed some form of AMI plan that also include pilots of this technology. Many have also filed business cases for implementation approval with their respective regulatory body." These AMI activities represent progress in nearly 30 states.

This report explains that the economic case for AMI and Smart Grid deployment can usually be made. It states that "typical AMI and Smart Grid regulatory filings present a business case with favorable benefit-to-cost ratios that may also include social benefits such as improved reliability and lower wholesale energy prices at peak. When these societal benefits are also factored in, the overall consumer benefit will further improve the financial attractiveness of AMI and Smart Grid as an investment."

Name of Study

Approach

Major Results

KEMA, The U.S. Smart

Grid Revolution: KEMA’s

Perspectives for Job

Creation, Prepared for

the GridWise Alliance

(January 13, 2008)

Used estimates from Duke Energy business case in filing to regulator for installing Smart Grid in part of its service territory – filing provided estimate of projected labor costs for smart meter implementation.

KEMA extrapolated this business case to the U.S. as a whole – assumed 150 million smart meters.

Forecasted annual number of jobs in different sectors (direct utility Smart Grid, direct utility suppliers, transitional utility, indirect utility supply chain,

contractors, and new utility or energy service company).

During the 4-year deployment period: 278,600 jobs.

During the 6-year steady-state period: 139,700 jobs.

Miller, J. "Smart Grid Metric: Monitoring our progress: Presented at Smart Grid implementation workshop, Jun 2008

Name of Study

Approach

Major Results

Miller, J., "Smart Grid

Metrics: Monitoring Our

Progress," presented at

the Smart Grid

Implementation

Workshop, June 19,

2008

Developed conceptual framework – a Smart Grid metric map – that links key technology areas to the Principal Characteristics of the Smart Grid, and those in turn to values (i.e., benefits)

Suggested the following value metrics, under the following categories:

System Efficiency

• System electrical losses

• Peak-to-average load ratio

• Duration congested transmission lines loaded >90%

Economic

• Peak and average prices, by region

• Transmission congestion costs

• Cost of interruptions and power quality disturbances

• Total cost of delivered energy

Reliability

• Outage duration and frequency

• Frequency of momentary outages

• Power quality metrics Security

• Ratio of distributed generation to total generation

• Number of consumers participating in energy markets

Environmental

• Ratio of renewable generation to total generation

• Emissions per kWh delivered

Safety

• Injuries and deaths to workers and to the public

EPRI: Characterizing and Quantifying the Societal Benefits Attributable to Smart Metering Investments

Electric Power Research Institute (EPRI) made a well-respected and very elaborate cost-benefit. This study shows that the estimated net investment requirements needed to realize a smart grid in the U.S. are ‘only’ $338 to 476 billion compared to a total benefit between $1294 and 2028 billion. This results in a positive balance and a benefit-to-cost ratio of 2.8 to 6.0 in favor of smart grid deployment. The estimated costs encompass almost the whole spectrum of smart grid related expenses based on e.g. the number of distribution substations, kilometers of transmission lines and the incidence of vandalism. However, some expenditures were excluded, such as the cost of new transmission lines, energy efficient devices and consumer appliances and devices. The total costs for consumers will thus most likely be higher than estimated in this study

Name of Study

Approach

Major Results

EPRI (Hemphill, R.,

Neenan, B.) (2008)

Characterizing and

Quantifying the Societal

Benefits Attributable to

Smart Metering

Investments, Palo Alto,

CA: Electric Power

Research Institute.

1017006.

Reviewed pilots and state

Jurisdictional filings to identify how utilities have estimated societal benefits of smart metering. Also reviewed economics literature to identify analytical practices for estimating societal benefits.

Framework for identifying and monetizing societal benefits. Types of benefits identified:

a) Reduced electricity costs to consumers from modified electricity consumption in response to demand response programs

b) Reduced electricity costs to consumers from information provided to consumers

c) More efficient use of electricity due to new products or services

d) Reduced duration of outages from service improvements

e) Macroeconomic benefits from changes in utilities’ and consumers’ spending patterns

f) Reduced negative externalities Examples of methods used by utilities, summarized in this report:

a) Consumer awareness rate assumed (e.g., 50% in SDG&E study); elasticities from CA SPP. Avoided capacity costs based on Forward Capacity Auction, inflation of Cost of New Entry, or on a reliability pricing model (e.g., $4.50/kW-month)

b) Value of feedback to consumers increases energy conservation (kW and kWh reductions)

c) Assumed or forecasted adoption rates for smart meters and their effects on bills

d) Value of electricity service to customers in meta-study (e.g., $3.45 damage with a 1 hour outage on a summer afternoon)

e) Input-output model characterizes the magnitude of transactions between

supplying and consuming sectors of the economy, and that is used to estimate direct and indirect macroeconomic impacts of expenditures, and

f) Energy security benefit (e.g., from 0.57 to 1.14 cents per kWh, based on estimates of the premium on oil prices due to the oil cartel)

National Energy Technology Laboratory, Modern Grid Benefits, prepared for the U.S. Department of Energy, Office of Electricity Delivery and Energy Reliability (August 2007)

This report describes all the benefits that a modern U.S. electric grid will offer once the current aging infrastructure is reformed with advanced technologies. According to this document, a modern grid needs to be self-healing, motivate and include the consumer, resist attack, provide power quality for 21st century needs, accommodate all generation and storage options, enable markets, and optimize assets and operate efficiently. Once this modern grid is developed, the areas of reliability, security and safety, economics, efficiency, and the environment will all reap the benefits. With respect to reliability, a modern grid will greatly reduce the duration and frequency of outages, decrease the number of power-quality disturbances, and almost completely eliminate the chance of regional blackouts. As for security and safety, a modern grid will reduce vulnerability to terrorist attacks and natural disasters and improve conditions for grid workers.

On the economics side, a modern grid will increase market efficiencies and reduce energy prices. In addition, a modern grid will provide new options regarding load management, distributed generation, energy storage, and demand response for participants in the electricity markets. Real-time data and advanced monitoring technologies will result in greater operational efficiency and improved asset management at lower costs. The environment will also benefit from a modern grid that deploys environmentally friendly resources and requires less generation, ultimately reducing harmful emissions.

The authors of this report gathered various statistics to help prove their case that a modern grid will "greatly improve the quality of life." Using EPRI as a source, the authors state that the cost of a modern grid over the next 20 years will be $165 billion, but the societal benefits will reach somewhere between $638 billion and $802 billion, a benefit ratio of 4 to 1. This report also documents that more than $40 billion could be saved each year with the modernization of the grid and a total cost of $46 billion to $117 billion for generation, transmission, and distribution could also be avoided.

Name of Study

Approach

Major Results

National Energy

Technology Laboratory,

Modern Grid Benefits,

prepared for the U.S.

Department of Energy,

Office of Electricity

Delivery and Energy

Reliability (August 2007)

Considers the following categories of benefits:

• Reliability

• Security and safety

• Economics

• Efficiency

• Environment

Discusses benefits under each of the broad categories.

Reliability

• Reduction in outage duration and frequency

• Fewer power quality disturbances

• Virtual elimination of regional blackouts Security and safety

• Reduced vulnerability to terrorist attack and natural disasters

• Improved public and worker safety Economics

• Reduction or mitigation of prices

• New options for market participants Efficiency

• More efficient operation and improved asset management at lower costs

Environment

• More deployment of environmentally friendly resources

• Electrical losses reduced

Pullins, S., "Smart Grid: Enabling the 21st Century Economy, presented at the Governor’s Energy Summit, West Virginia (December 2008)

The below literature review is from presentation given at the Governor's Energy Summit West Virginia. In addition to providing an overview of West Virginia's Smart Grid implementation project, it addresses broader issues such as changing grid complexity in a world characterized by changing demands for electricity. It also addresses the potential for renewable energy sources and the impact and benefits of a Smart Grid. It is intended for a knowledgeable, but non-technical audience. The presentation shows that there are direct benefits from smart grid implementation for utility, operational benefits like outage management, improved processes, workforce efficiency, reduced losses, etc. and asset Management (system planning, better capital asset utilization, etc.) and for consumer, it has mentioned that there would be reduced business loss due to improved reliability, power quality, alternatives to outages, etc. and Better energy efficiency (less energy consumption, sell DG power to grid, reduced transportation costs –PHEV, etc.). The author has also mentioned the societal benefits with an example of 200 million electric vehicles that connect anywhere in the grid, provide transportation and act as storage and generator for the grid, and these vehicles are powered by renewable and distributed generations. It has estimated total cost of $165 billion over 20 years which includes $127 billion for distribution and $38billion for transmission, which will result into benefits of $638billion to $802 billion over 20 years in west Virginia after grid modernization.

Name of Study

Approach

Major Results

Pullins, S., "Smart Grid:

Enabling the 21st

Century Economy,

presented at the

Governor’s Energy

Summit, West Virginia

(December 2008)

Benefit-cost study of benefit of Smart Grid in West Virginia, considered the following benefits:

Utility –

• Operational – outage

Management, improved processes, workforce efficiency, reduced losses, etc.)

• Asset management – system

planning, better capital asset utilization, etc.

Consumer –

• Reduced losses (improved

reliability, power quality,

alternatives to outages)

• Better energy efficiency (less energy consumption, sale of DG power to the grid, reduced transportation costs – PHEV, etc.)

Society

• Reduced emissions (by reducing losses, enabling electric vehicles)

• Mentions consumer benefits as well

Cites estimates of benefits to be $638 billion to $802 billion over 20 years, compared to costs of $165 billion (based on EPRI 2004 study)