I saw a really cute cartoon in the newspaper the other day. It showed two kids in the back seat of a car with their parents in the front, obviously taking the boys on a trip of some sort. One little boy was asking the quintessential question: “Are we there yet?” But before the parents could answer – assuming they even intended to answer – the second little boy answered for them. His answer was classic: “It depends on where we’re going,” he said.

Gee, I wish I’d thought of that answer when my own kids were little… but of course, I didn’t. So naturally, that got me thinking about the Smart Grid (a logical leap, right?) and where we’re going with that particular problem child. As many of you probably heard, the Electric Power Research Institute (EPRI) just released a report putting a financial point on that question. I freely admit to not reading all 162 pages of this report, but it’s available on the EPRI website if anyone is so inclined.

The report is titled, “Estimating the Costs and Benefits of the Smart Grid: A Preliminary Estimate of the Investment Requirements and the Resultant Benefits of a Fully Functioning Smart Grid” (EPRI, Palo Alto, CA: 2011.1022519)¹. Wow, that’s quite a mouthful, isn’t it? Just think about that for a minute. My hat’s off to EPRI for even undertaking such a formidable task, and speaking as a market research professional myself, I must say the outcome is pretty impressive. Putting not only a cost, but also an estimated ROI on something as squishy and ambiguous as the Smart Grid is no small task, and even though the preparers would probably admit to taking a few “swags” here and there (it’s not like there’s a wealth of information from ever having done this before, you know!), as an industry we’ve got to start somewhere with trying to get our collective arms around it.

So what are those numbers? Well, the executive summary of the EPRI report says this:

“Factoring a wide range of new technologies, applications and consumer benefits the investment needed to implement a fully functional smart grid ranges from $338 billion to $476 billion and can result in benefits between $1.3 trillion and $2 trillion.”

That’s certainly one glaring data point to think about, especially in the context of having already committed something like $8-10 billion to the task if we consider both the $3.4 billion in ARRA (“Stimulus”) funds and the matching funds required of utilities taking advantage of those federal dollars. Yep, that’s a whole lot of money! But compared to the EPRI estimate, it’s really a relatively modest beginning.

The report also balances the projected costs with anticipated benefits, which include (and I quote):

•  More reliable power delivery and quality, with fewer and briefer outages;
   
• Enhanced cyber security and safety with a grid that monitors itself and detects and responds to security and safety situations;
   
• A more efficient grid, with reduced energy losses and a greater capacity to manage peak demand, lessening the need for new generation;
   
• Environmental and conservation benefits, better support for renewable energy and electric-drive vehicles; and,
   
• Potentially lower costs for customers through greater pricing choices and access to energy information.

These are all noble – and ostensibly achievable – objectives, but one big problem that I see is the rather broad perception among consumers that all of the money committed and/or currently being spent isn’t doing anything useful – or at least not anything deemed positive – for most ratepayers. And whether you agree or disagree, just look at all of the backlash around things like the alleged negative health effects of RF-connected meters, data privacy issues, perceived overbilling, inaccurate meter readings, wrong-minded investment priorities and so on.

Some of these issues have legitimate foundations; most do not, and instead merely offer emotional responses to what amounts to a chronic lack of understanding and consumer education. They are also the result of the ongoing misconception that the Smart Grid is all about Smart Meters… and for the four millionth time – that is NOT the case. I believe that if most people understood what the Smart Grid is really all about, a whole lot of the controversy could be put aside rather quickly.

Let me also offer another example of why I think most consumers are thoroughly in the dark about Smart Grid initiatives. This has to do with the ‘grid communications’ piece, which is a very substantial part of what is needed for the Smart Grid to become a reality. Case in point: One of the forums I belong to is questioning whether the new (so called) “4G” cellular service is up to meeting the requirements of a 21st century Smart Grid. Specifically, the question posed was: “How big a role do you think 4G access technologies will play in new smart grids and smart metering?”

There were a lot of contributions to this post, but most failed to respond to a fundamental truth; that is, no one can say (definitively) what “4G” actually is – or will be – with any real conviction. That’s because so far, 4G is being defined by advertisements and sales literature, rather than any type of technical specification or standard. (Hint: That’s why all of the major carriers can get away with claiming “the nation’s fastest 4G network!”)

But, while hype might work for consumer cellular markets where promises of “blindingly fast” speed are considered a guarantee, and slick ads using jargon like “LTE (Long-term Evolution)” are used to define the future capabilities, until/unless there is a written and broadly adopted specification, no one can possibly say with any certainty whether “4G” networks can live up to Smart Grid expectations or not.

So, the moral of this story is simple: If we want to know if we’re “there” yet, we first need to do a better job of saying where it is we’re trying to go and then – much more specifically – how we plan to get there. – Ed.

¹ This analysis updates EPRI’s 2004 EPRI assessment, which estimated the cost of implementing a smart grid at $165 billion. The updated analysis assumes steady deployment of smart grid technologies beginning in 2010 and continuing through 2030.