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IEE: Smart grids depend on consumers for success

White paper finds cost benefit increases for utilities the more consumers agree to participate in managing electricity use.

Institute for Electric Efficiency

Utilities stand to save money in operational costs after an initial large investment in smart-grid infrastructure, but the rest of the savings will depend on consumers.

That's according to a 38-page white paper (PDF) released this month by the Institute for Electric Efficiency.

The IEE group did a cost-benefit analysis using real-world numbers for things like equipment costs, energy prices, and usage statistics to estimate the costs and benefits to four different types of prototypical utilities managing a service territory of one million residential electricity consumers.

Implementing smart grids, advanced metering infrastructure (AMI), and associated energy management technologies would cost such a utility an outlay of between $198 million and $272 million, depending on its energy sources, regulation, and climate.

Once implemented, the utility would save between $77 million and $208 million in operational costs between 2011 and 2030. Much of that would come from a reduction in metering costs, automated outage detection, and remote connections, according to the IEE paper.

The real savings that put smart-grid investment into a net profit happens when consumers use the tools, the report found.

The more consumers use programmable communicating thermostats, home energy management systems, and interactive displays to regulate operations of things such as non-essential home appliances during off-peak hours, the greater the savings, according to the IEE.

Depending on the level of consumer participation, the utility could save an additional $100 million to $150 million over the 2011-2030 period.

While the report said that consumers themselves would also save, it did not include data on exactly how much money smart grids would save each individual consumer over the same period.

"Although specific results will vary by utility, our study found that even with conservative assumptions regarding consumer engagement in technology, programs, and rate plans, utilities and their customers can expect positive net benefits from their AMI investment over the next 20 years," IEE Executive Director Lisa Wood said in a statement.