The Smart Grid: 100% Offset of Grid Modernization Costs (Part 5)

SG IIoT Logo Powerpoint 10.12.15Part 5: We Can Replace Aging Infrastructure “for Free” with a Least Cost Deployment of the SG

Dom Geraghty

Excerpts from Part 5 of “The SG National Necessity Series

  • The transition to the SG IIoT and grid modernization will cost about $2.1 trillion over the next three decades , of which $1.7 trillion will be spent on the replacement of aging infrastructure and $400 billion on SG IIoT applications
  • There is a dearth of quantitative information on the benefits of SG IIoT applications -- the availability of benefit to cost ratio (B/C) studies is meager (particularly on the benefits side), thus hampering prioritization of SG IIoT applications
  • Nevertheless, there are a number of  SG IIoT applications that are commonly viewed as offering high B/C ratios, e.g., conservation voltage management, power factor correction, intelligent faulted circuit indicators, and combined volt/VAR management
  • Some important benefits in the benefits “stack” of a SG IIoT project may be “soft” or qualitative -- they are usually societal benefits, e.g., environmental improvements, increases in safety, increasing the end-use customer’s choice
  • The best-available B/C analyses of SG investments are the analyses of Automated Metering Infrastructure (AMI) projects published in conjunction with regulatory rate hearings -- in two cases in CA, the AMI investment was justified by “stacking” a demand response (DR) benefit on top of the AMI benefits; in CT, a significant amount of “soft” benefits was included in the benefits “stack” to justify the investment
  • The cost of the transition to the SG IIoT can be minimized by using situational awareness data to locate SG IIoT applications selectively within the grid in an 80% value/20% cost approach – a least cost deployment (LCD) strategy
  • Our economic analyses of a LCD strategy suggests that we can reduce the total cost of the transition to the SG IIoT  from the $2.1 trillion above to $450 billion, a reduction of about $1.65 trillion
  • Bottom line: The savings from the LCD strategy can thus offset the majority of the total infrastructure investment of $1.7 trillion needed over the next 30 years, i.e., it results in a “Net Zero Capacity Cost” for replacing aging infrastructure
  • Prerequisites for the “Net Zero Capacity Cost” scenario: first and foremost, investing in situational awareness applications; second, using this data to implement a least cost deployment (LCD) strategy for the transition to the SG IIoT; third, accelerating the introduction of regulatory incentives and the elimination of existing regulatory disincentives

Money, money, money
Must be funny
In the rich man's world
Money, money, money
Always sunny
In the rich man's world
All the things I could do
If I had a little money
It's a rich man's world

-ABBA, 1970

As always, comments welcome and appreciated.

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