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Electricity prices to soar without smart grid deployment

SUBNET Solutions Inc | Thursday, March 08, 2012

Unless adequate investments are made in smart grid technologies, electricity prices in Western countries could climb as much as 400 percent by 2050, according to Guido Bartels, general manager of IBM's Global Energy and Utilities Industry and chairman of the Global Smart Grid Federation.

Smart Grid News reports Bartels announced the news at the Israel Smart Grid Consortium in February. At the consortium, Bartels stated the total cost of global smart grid development and deployment will be roughly $400 billion. When asked if it was realistic to believe higher electricity rates could fund that development, Bartels stated the bigger question was how ratepayers would pay for electricity if governments didn't invest in smart grids.

"We estimate that if the current grid is not upgraded, electricity tariffs will be 400 percent higher by 2050," he said. "Introducing a smart grid makes it possible to reduce this rise to just 50 percent."

Bartels added that the huge price hike would be due to an eventual decline in grid reliability as the current electrical infrastructure continues to age. Integrating renewable energy sources into existing power networks would require "massive investment, because the grid isn't sufficiently flexible," he said.

According to Globes, governments around the world have so far pledged $15 billion in incentives for smart grid projects.

"The task of a federation like ours is to create a vision 20-30 years ahead for these governments," Bartels said. "In the U.S., we managed to persuade the administration to allocate $4.5 billion to this issue out of the incentives package for 2009."

Bartels cited a study conducted by the U.S. Electric Power Research Institute, which found that introducing smart grid technologies, such as intelligent substations and similar devices, could lead to cumulative global savings of $1.3 to $2 trillion in the next twenty years. To reach these savings, Bartels says, it will be up to developed nations to lead the way by doubling investment in power grids to a combined $338 to $476 billion.

However, this is still a small sum compared to the savings that will be seen by smart grid deployments.

SUBNET is working to make integration into the smart grid efficient and secure by offering expertise in substation automation, and helping utilities comply with NERC CIP standards through innovative approaches. 

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