How Utilities will pay for Smart Grid Investments

To modernize the grid, utilities would spend $1-2 Trillion in the next 10-20 years on network infrastructure, systems, and on integration of existing energy generation with new distributed renewable sources of energy. How will utilities pay for smart grid investments.

Sources of Smart Grid Funds

Federal Stimulus Grants - As much as $3.4 billion in Smart Grid Investment Grant has been allocated by US federal Govt. (Source - TBA)

Pass the cost to customers Charge customers for new products and services or bundle services with other products?

Reduced Costs

Increased productivity Smart meters will reduce the need for meter readers who read electricity meter data manually (??) and crews that manage outages etc with next generation Outage management, SCADA and other systems

Increased operational efficiency of energy transmission and consumption With demand response systems, utilities would not have to deploy high energy plants, there will be increased transmission efficiency and consumer behaviour will change once they have more information. Intial smart grid pilot tests suggest energy consumption reduction between 6-15% (Actual results may be different?)

Increased Reliability Utitlies face significant fines (ranging from several thousand and millions) if they don't meet regulated reliabilty metrics. During service interrruptions, utilities also lose revenues.

Prevention of electricity theft This may not be a big problem in United States but developing countries like India, China as much as 40% of the power is stolen during transmission. Smart meters will prevent electricity theft.

Date posted: 2010/03/14

URL - How Utilities will pay for Smart Grid Investments

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