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"The Smart Grid: Status and Outlook Richard J. Campbell Specialist in Energy Policy April 10, 2018 Congressional Research Service 7-5700 www.crs.gov R45156 The Smart Grid: Status and Outlook Congressional Research Service Summary The electrical grid in the United States comprises all of the power plants generating electricity, together with the transmission and distribution lines and systems that bring power to end-use customers. The “grid” also connects the many publicly and privately owned electric utility and power companies in different states and regions of the United States. However, with changes in federal law, regulatory changes, and the aging of the electric power infrastructure as drivers, the grid is changing from a largely patchwork system built to serve the needs of individual electric utility companies to essentially a national interconnected system, accommodating massive transfers of electrical energy among regions of the United States. The modernization of the grid to accommodate today’s more complex power flows, serve reliability needs, and meet future projected uses is leading to the incorporation of electronic intelligence capabilities for power control purposes and operations monitoring. The “Smart Grid” is the name given to this evolving intelligent electric power network. The U.S. Department of Energy DOE describes the Smart Grid as “an intelligent electricity grid—one that uses digital communications technology, information systems, and automation to detect and react to local changes in usage, improve system operating efficiency, and, in turn, reduce operating costs while maintaining high system reliability.” In 2007, Congress passed the Energy Independence and Security Act P.L. 110-140. Title XIII of the act described characteristics of the Smart Grid and directed DOE to establish a Smart Grid Investment Matching Grant SGIG program to help support the modernization of the nation’s electricity system. In 2014, DOE concluded that the adoption of Smart Grid technologies was accelerating but at varying rates “depending largely on decision-making at utility, state, and local levels.” DOE noted that the nation’s electricity system is in the midst of “potentially transformative change,” with challenges for Smart Grid deployment remaining with respect to grid-connected renewable and distributed energy sources and adaptability to current and future consumer-oriented applications. Costs of deploying the Smart Grid remains an issue, and study estimates vary. While some DOE programs have supported grid modernization, Congress has not explicitly appropriated funding for deployment of the Smart Grid since the American Recovery and Reinvestment Act of 2009 P.L. 111-5. In its 2014 study, DOE estimated historical and forecast investment in the Smart Grid as approximately $32.5 billion between 2008 and 2017, averaging $3.61 billion annually in the period. If this level of investment remains constant, it would put spending well below levels the Electric Power Research Institute in 2011 and the Brattle Group in 2008 estimated were needed to fully build the Smart Grid by approximately 2030. From 2010 to 2015, $3.4 billion in SGIG grants supported 99 projects resulting in $8 billion in grid modernization. Congress could provide funding to help bridge the funding gap if it chooses to accelerate adoption of the Smart Grid. A number of near-term trends—including electric vehicles, environmental concerns, and the ability of customers to take advantage of real-time pricing programs to reduce consumer cost and energy demand—would benefit from investments in Smart Grid enabled technologies. While concerns such as cybersecurity and privacy exist, most electric utilities appear to view Smart Grid systems positively. Costs could be reduced and system resiliency improved by further integration of automated switches and sensors, even considering the cost of a more cybersecure environment. But with the potentially high costs of a formal transition, some see the deployment The Smart Grid: Status and Outlook Congressional Research Service of the Smart Grid continuing much the same as it has, with a gradual modernization of the system as older components are replaced. The Smart Grid: Status and Outlook Congressional Research Service Contents Introduction ..................................................................................................................................... 1 Smart Grid Technologies ................................................................................................................. 2 Status of Smart Grid Deployment ................................................................................................... 4 Technology Compatibility as a Barrier to Adoption ................................................................. 4 Estimates of Smart Grid Cost .......................................................................................................... 5 Potential Smart Grid Benefits ................................................................................................... 5 Smart Grid Investment Matching Grants .................................................................................. 6 Estimating the Cost of Smart Grid Deployment to 2030 .......................................................... 7 Electricity Infrastructure .................................................................................................................. 7 Electricity Providers and Sources of Infrastructure Funding .................................................... 8 The Smart Grid as Enabler or a Result of Change? ....................................................................... 10 Potential Drivers of New Infrastructure Spending .................................................................. 10 Electric Vehicles and Climate Change ............................................................................... 11 Customer-Focused Programs ............................................................................................. 11 Major Smart Grid Concerns .......................................................................................................... 12 Cybersecurity .......................................................................................................................... 12 Privacy and Customer Data ..................................................................................................... 13 Recent Legislation ......................................................................................................................... 14 Figures Figure 1. Traditional “One-Way” Power Flows in the Grid ............................................................ 1 Figure 2. Emerging “Two-Way” Grid Infrastructure ....................................................................... 2 Tables Table 1. Examples of Smart Grid Technologies and Applications .................................................. 3 Contacts Author Contact Information .......................................................................................................... 14 The Smart Grid: Status and Outlook Congressional Research Service 1 Introduction The electrical grid in the United States comprises all of the power plants generating electricity, together with the transmission and distribution lines and systems that bring power to end-use customers. The “grid” also connects the many publicly and privately owned electric utility and power companies in different states and regions of the United States. However, with changes in federal law, regulatory changes, and the aging of the electric power infrastructure as drivers, the grid is changing from a largely patchwork system built to serve the needs of individual electric utility companies to essentially a national interconnected system, accommodating massive transfers of electrical energy among regions of the United States. The modernization of the grid to accommodate today’s power flows, serve reliability needs, and meet future projected uses is leading to the incorporation of electronic intelligence capabilities for power control purposes and operations monitoring. The “Smart Grid” is the name given to this evolving intelligent electric power network, with digital technologies increasingly replacing analog devices, thus enabling Smart Grid hardware and software functions. The U.S. Department of Energy DOE describes the Smart Grid as “an intelligent electricity grid—one that uses digital communications technology, information systems, and automation to detect and react to local changes in usage, improve system operating efficiency, and, in turn, reduce operating costs while maintaining high system reliability.” 1 The Smart Grid is viewed as a modernization of the nation’s power grid by the Edison Electric Institute EEI, the trade asso"
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