TRANSMISSION & DISTRIBUTION
Smart Grid: On the Money
How much will a smart grid cost? It’s a question that has gained importance in
light of massive cost overruns for one highly touted U.S. project.
By Gail Reitenbach, PhD
The U.S. grid, like almost all national grids, requires expansion and upgrad- ing to serve growing electricity demand, accommodate increased renewable
generation sources, improve prevention of
and response to outages and security threats,
and maximize the efficient transmission of
electricity. The cost of improving the grid to
meet these goals is high—somewhere in the
neighborhood of $65 billion to $165 billion
over the next decade or two. The cost of doing nothing is higher.
1. Cloudy outlook for smart grid acceptance in SmartGridCity. Boulder,
Colorado—which typically enjoys more than 300 sunny days per year—has lately been taking
a dimmer view of smart grid project activity and costs than it did when the idea was originally
rolled out by Xcel Energy. Though all project implementation costs were expected to be funded
by the utility’s vendor partners, costs have begun to be passed on to customers via increased
rates. Courtesy: Gail Reitenbach
Not-So-Smart Budgeting for
SmartGridCity
As a concept without definitive definition
(unlike the molecular description of an
element like carbon), the smart grid can
mean what its users stipulate that it means
in a given context. That’s not necessarily a
bad thing nor the sign of a conspiracy. It’s
just that the smart grid is even more complex in its entirety than the Internet. But it
does mean that policy makers and the public need to be aware that one utility may
use “smart grid project” as a way to make
business-as-usual transmission and distribution upgrades sound more cutting-edge
while another utility may use the phrase to
describe an experimental research and development (R&D) project that may or may
not deliver the desired results. Xcel Energy’s SmartGridCity is a case in which the
implications of large-scale deployment of
what is being described as an R&D project
are just now coming to light.
Xcel’s SmartGridCity project costs have
ballooned from an initial estimate of $15.3
million to $42.1 million. Although the Col-
orado Public Utilities Commission (PUC)
approved a Jan. 1 rate increase affecting all
Colorado Xcel customers to cover capital,
operation, and maintenance costs of the
Boulder, Colo., project (plus a new coal-
fired generating plant), it’s still unclear
where all $42.1 million are going to come
from.
