Grid investment gap: New numbers a wake-up call

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Quick take: For too long, smart grid advocates have relied on vague statements and ballpark estimates from the last decade. Now, thanks to this rigorous and up-to-date analysis, we can accurately quantify the benefits we will receive from grid modernization... and the penalties that will accrue if we delay.  – Jesse Berst

Without new investments in our electricity infrastructure, service interruptions and capacity bottlenecks will become more frequent and unpredictable, imposing direct costs to businesses and households. That's one conclusion from the American Society of Civil Engineers (ASCE), which did the math on current grid investment trends versus investment needs for its new report Failure to Act: The Economic Impact of Current Investment Trends in Energy Infrastructure.

According to ASCE's analysis of the nation’s transmission, generation and distribution systems, extending current investment trends for these assets through 2020 shows an anticipated investment of $566 billion, but also reveals a $107 billion shortfall compared to needs.

The report suggests that closing the gap would:

·         Lead to fewer brownouts and blackouts and save American businesses $126 billion

·         Prevent the loss of 529,000 jobs and $656 billion in personal income losses

·         Benefit America’s economic competitiveness by protecting $496 billion in Gross Domestic Product (GDP) and $10 billion in revenue from U.S. exports

"Just like the roads we use every day, when there are bottlenecks or congestion in our electricity infrastructure, it affects everyone. And fewer disruptions mean real money to American businesses and households," said Andrew W. Herrmann, P.E., president of ASCE.

The report indicates there is reason to believe the gaps can be overcome, including an upturn in investment in electricity infrastructure in the last decade.

"The outlook for our grid and the system overall is good because the rate of investment has increased substantially in the past few years. In fact, the total needs projected for each year between 2012 and 2020 fall within the range of spending seen between 2001 and 2010. We saw an increase from $44 billion to a high of $101 billion in that timeframe, and so if spending keeps pace we will be able to close the gap," said Steven Landau of the Economic Research Group of Boston, the lead author of the report.

So what's your take? Do these numbers make you feel more positive or less so about the prospects for grid modernization? Use the Talk Back comment form to tell us what you think.

Global Smart Grid Federation Publishes Report on Leading Smart Grid Projects Around the World

LONDON, April 26, 2012 /PRNewswire-USNewswire/ -- The Global Smart Grid Federation (GSGF), a collaboration among national and regional smart grid associations from around the world, announced the release of its inaugural report on the global state of smart grid.. The report investigates the key challenges facing deployment of smart grid as well as highlights leading projects from around the world. The report is based on extensive research from current GSGF member markets; Australia, Canada, Continental Europe, Great Britain, Ireland, Korea, Japan and the United States.

"The report provides industry leaders with real-world best practices that can be applied to their own projects," said Guido Bartels, GSGF Chairman. "…it also provides policy makers with insights into successful national smart grid activities, while providing regulators with models of innovative regulatory constructs that enable cost effective investments. This report is a clear indication of the consumer and system benefits gained through global collaboration as we work to transform the world's electricity systems."

Albert Cheung, Head of Energy Smart Technologies at Bloomberg New Energy Finance, said, "The report gave very insightful perspectives on the individual national context for smart grids in each of the countries profiled. I compliment GSGF for its practical approach to global collaboration and sharing of best practices".

The report interviewed leading smart grid project managers around the world and reached a few key conclusions:

  • The funding of national security objectives, environmental policy goals and job growth is being passed from the tax payer to the electricity rate payer.
  • Engaging consumers from the beginning of the smart grid deployment process is a key to success. Utilities should be less technocratic in their approach and employ best practices from other consumer-centric industries.
  • As smart grids increasingly become the mechanism to meet environmental, security and economic goals, there is a role for governments to work closely with utilities in stating the value of consumer participation.

The report can be downloaded from the GSGF website at www.globalsmartgridfederation.org

Established in 2010, GSGF is committed to creating smarter, cleaner electricity systems around the world. By linking the major public-private stakeholders and initiatives of participating countries, the federation shares best practices, identifies barriers and solutions, fosters innovation, and addresses key technical and policy issues.

In addition, GSGF works with the International Smart Grid Action Network (ISGAN), an intergovernmental organization to address the broad challenges of deploying smarter grids. This nexus of public and private sector provides a forum for communication and collaboration, which will facilitate consensus-building within the international community to address electricity system and climate change concerns.

Member organizations of GSGF include Smart Grid Australia, GridWise Alliance (U.S.), EDSO for Smart Grids (EU), SmartGrid Ireland, Japan Smart Community Alliance, Korea Smart Grid Association, Israel Smart Energy Association, Smart Grid Canada, SmartGrid GB (Great Britain), and India Smart Grid Forum.