Smart grid: Carbon and economic implications for Colorado

Smart grid, a mechanism to provide bidirectional communication and control between electricity providers and consumers, is the subject of great public interest as a means to enable a more efficient and renewably powered electricity grid infrastructure. Considerable public and private investment in smart grid is driven, in part, by the belief that it will provide significant environmental benefits, including CO2 emissions reductions.;Previous studies of the environmental benefits of smart grid have focused on hypothesized changes in CO2 at the national level and have not addressed economic considerations. Because there are regional differences in electricity system characteristics and because significant electricity regulatory decisions are made by the states, there is a need to understand the CO2 and economic implications of smart grid at the state level.;This dissertation developed a methodology by which to evaluate the interrelationships between the CO2 and economic implications of smart grid at the state level. The foundation of the methodology is a static, mixed integer linear program which estimates the direction and magnitude of potential changes in CO2 and economics due to coupling of smart gird with demand response, energy efficiency, renewable energy, and plug-in hybrid electric vehicles.;The research hypotheses of this dissertation are: (1) smart grid CO 2 reductions and economic benefits are not aligned given current electricity regulatory policies, and (2) given insufficient CO2 incentives or the wrong set of economic incentives, smart grid could fail to achieve attainable CO2 reductions.;The methodology was applied to a case study of Colorado which suggests that in 2006 smart grid could have contributed to incremental reductions in electricity sector CO2 emissions of up to 23% or incremental reductions in cost of up to 8%, but not via the same smart grid deployment strategy. As such, the research confirmed the hypothesis that CO2 reductions and economic benefits are not aligned given current electricity regulatory policies and, absent supporting policy, will likely fail to achieve attainable CO2 reductions.;From a policy perspective, the research provides an evaluation of various potential smart grid policies and underscores the importance of having appropriate policies in place to guide utilities as they invest in smart grid.