The Smart Grid: An Estimation of the Energy and CO2 Benefits

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of factors required to produce an ideal program, such as M&V capabilities enabled by the smart grid, consumer education, externalities, regulatory regimes, and utility business models. The 2009 Annual Energy Outlook (AEO) forecasts retail electricity prices at 10.4 ¢1 /kWh in 2030 (DOE/EIA 2009). When applied to the energy savings estimated by EPRI, the total cost savings associated with the advancement of smart-grid-enabled enhanced M&V capabilities total $1.0 B to $4.3 B in the 2030 base case. In addition to monitoring and verifying energy savings, M&V devices also yield operational benefits for utilities through real-time observation of system performance, early detection of system problems, and analysis of system behavior. The advanced metering infrastructure (AMI), for example, has numerous capabilities that hold potential operational benefits (FERC 2007): • remote disconnect/connect • remote firmware upgrades • ability to support demand response through the sending of messages to equipment at a customer’s home • notification of outage and restoration • remote meter reading • voltage flagging if the voltage level is not within the range that is configurable by the utility • ability to use memory to store a number of days’ readings on the meters • prepaid metering • capacity to include data warehousing systems • integration of data-management systems into operations-management systems (e.g., outage management, billing, accounting) • ability to extend smart grid and AMI to appliances located within the customer’s home connected together as part of a home area network. Full nationwide AMI deployment has been estimated at $27 B with 50% to 80% of the cost recovered through operational savings. Long-run generation, transmission, and distribution savings are estimated at $35 B while an additional $5 B to $10 B/year are estimated in the form of reduced electricity prices. Other benefits cited in the study include reduced environmental externalities, enhanced power quality and reliability, and expanded consumer choice. When all are considered, benefits exceed costs by at least a 4- to-1 ratio (NETL 2008). While the benefit potential appears significant, AMI currently comprises only approximately 4.7% of total U.S. electric meters (6.7 M meters), with states in the Mid-Atlantic, Florida, and Midwest regions (Electric Reliability Council of Texas, RFC, and Southwest Power Pool) having the highest penetration rates (approximately 5% to 10%) and the remaining regions with lower-than-average reported rates. The number of installed advanced meters has been projected to expand rapidly by another 52 million by 2012, 1 The AEO presents price data in real terms, meaning that prices do not reflect the effects of inflation. D.3

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