It is important to note that even though most modernization technologies are available now, further R&D is very important. All these technologies can be improved upon and would benefit from cost reduction. A few, such as large-scale storage, are simply impractical now. In addition, the nation is facing a critical shortage of power engineers, the very people who will be needed to implement modernization. University R&D funding is vital in persuading students to embark on careers in power engineering.

COSTS OF MODERNIZATION

Projecting the costs of modernizing the U.S. T&D systems is complex, given the expansive and interconnected nature of the system, the difficulty of estimating development costs (especially for software), and uncertainties over technology readiness. Complicating matters further, costs have been escalating sharply in recent years for large-scale T&D construction, as for other energy projects. Transmission investment is anticipated to continue to increase to meet load growth and replace aging equipment, but additional investment will be needed over the next few decades to modernize the T&D system.

A comprehensive discussion of the costs of modernization was published in 2004 by the Electric Power Research Institute (EPRI 2004).35 The AEF Committee reviewed the assumptions made by EPRI in this report and largely agrees with its estimates, with two exceptions for transmission. First, EPRI projected that superconducting cables would be added to the system over the next 20 years, but the committee concluded that high costs and slow technological development would preclude commercial deployment before 2030. The committee has thus modified EPRI’s cost estimates to reflect this judgment.36 Second, the cost of developing and deploying software on the transmission system is routinely underestimated; it is likely that more investment will be required for this purpose.

35

Estimates by the Electric Power Research Institute (EPRI), originally in 2002 dollars, were escalated to 2007 dollars for the committee’s analysis. In addition, recent real escalation in materials and construction costs were accounted for by using the national average transmission and distribution indexes (33 percent for transmission, 40 percent for distribution). These changes are described in Annex 9.A.

36

The investment in superconducting cables has been removed from the total investment needed for the transmission system. It has also been removed from the synergies calculation. These changes are described in detail in Annex 9.A.



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