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Analytical Framework

In order to develop a standard framework that can be applied by anyone interested in assessing the benefits of smart grid projects, U.S. Department of Energy (DOE) convened an expert panel, co-funded with the Electric Power Research Institute (EPRI), and facilitated by DOE's Oak Ridge National Laboratory. This joint effort resulted in methodologies for systematically estimating the different benefits of smart grid projects. The methodologies focuses on the definition of benefits and the establishment of a sequential, logical process for estimating them. It is described in the peer-reviewed EPRI report,Methodological Approach for Estimating the Benefits and Costs of Smart Grid Demonstration Projects, dated January 2010. Drawing from this report, the logic flow of the methodologies is shown in the figure below, which outlines the process for estimating benefits and their monetary value.


Assets Functions Impacts Benefits

As shown in this flow chart, the benefits are derived from the types of assets deployed in a smart grid project and the types of functions they enable. To connect smart grid assets and other energy resource assets to the functions those assets may provide, DOE has developed a matrix showing the relationships between assets, functions, and benefits.

The major elements of the analytical framework are described below.


Smart grid assets consist of the technologies, devices, and equipment that are purchased, installed, and made operational to modernize and automate electric transmission, distribution, and customer systems. Assets include, for example, in-home displays, programmable communicating thermostats, advanced metering infrastructure, communications systems, distribution automation equipment, and phasor measurement units.

In addition, other energy resource assets, such as distributed generators and energy storage devices (including batteries, flywheels, and plug-in electric vehicles) can provide functions that are enabled or improved when paired with smart grid assets. View and download a list of Smart Grid Asset Descriptions. Additional assets are listed in the glossary.


Smart grid functions involve the enhanced capabilities provided by smart grid assets for delivering electricity across the grid from power plants to consumers. Functions include, for example, customer electricity use optimization, automated feeder switching, power flow control, and wide-area monitoring and visibility. View and download the of the Smart Grid Definitions of Functions.


Smart grid impacts occur when smart grid assets are installed and their functions become operational on electric transmission, distribution, and customer systems. Impacts include, for example, reductions in peak loads, reductions in line losses, faster identification of outage locations, and faster response times to restore services. A more detailed list of potential impacts is provided in the Guidebook for ARRA Program Metrics and Benefits (December 7, 2009).


Smart grid benefits describe the value of the impacts created when smart grid assets and functions are used. The general categories of benefits include improved economics (such as reductions in operation and maintenance costs), enhanced reliability, reduced emissions, and greater energy security. View and download information on smart grid benefits: