Smart Grid as Investment Target

Posted on June 11th, 2009 by admin in Smart Grid

We have discussed the impact of Smart Grid technologies and systems in terms of importance, features and benefits. In this post, we’ll limn the value of the smart grid in terms of levels of investment. We rely on these research reports:

  • *Edison Foundation: “Transforming America’s Power Industry (The Investment Challenge 2010-2030)”; NOV 2008 by Brattle Group
  • *Economist Magazine Technology Quarterly 6-6-09

These reports also refer to research from other organizations, such as Electric Power Research Institute (EPRI), Pacific Northwest National Laboratory (PNNL), and Lawrence Berkeley National Laboratory (LBNL).

One of the more surreal aspects of our current electric power transmission system, which we affectionately call the Original Grid (OG), is that it really hasn’t changed much in terms of its fundamental architecture and technology in about 100 years. This accounts for the amazing fact that power outages must be detected and localized based on customer complaints by phone calls! Somehow, in the realm of modern communications, we expect better than that.

In this context, it isn’t so surprising that (according to LBNL), lack of investment in the OG has resulted in black outs costing the USA about $80B/year. Clearly, some investment in the OG seems like a good thing just to avoid black out induced losses. Of course, this investment will naturally include those subsystems that will make the OG Smart: sensors, actuators, electronics and wireless communications networks to implement adaptive, feedback control. Also, data base applications will be needed to mine and manage the massive quantities of data collected in real time from this Smart Grid. This kind of investment will make the OG self-aware and controllable…and thus smart.

For some financial perspective on this investment, consider the investment level PNNL estimates the OG will require to support projected increases in demand over the next 10 years: $450B. But wait! The levels of investment still do not bogle the mind in the age of multi-trillion dollar government deficits. So contemplate this: according to the Edison Foundation report, “By 2030, the electric utility industry will need to make a total infrastructure investment of $1.5 trillion to $2.0 trillion.”

Now that got our attention. Smart Grid is one area for substantial growth and thus investment returns-if you are smart.


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