Economy of smart grid

Smart grid generally charecterised by high installation cost and low operating costs. Thus, the basic economic analysis is the one comparing an initial known investment with estimed future operating costs. Most smart grid requires an auxiliary energy source so that the system include both renewable and conventional equipment, and the annual loads are met by a combination of the sources. In essence, renewable-based smart grid is bought today to reduce tomorrow's electricity bill. The cost of smart grid include all items of hardware and labout that are involved in installing the equipment plus the operating costs. Factors which may need to be taken into account include capital cost, replacement costs, operating and maintenance (O&M) costs, insurance, fuel and other operating expenses. The objective of the economic analysis can be viewed as the determination of the least cost method of meeting energy need, considering both renewable and non-renewable alternative. In this chapter, several ways of doing economic evaluation, with emphasis on the life cycle savings method are noted. This method takes into account the value of money and allows detailed consideration of the complete range of costs. In this chapter, the costs of smart, economic indicators of smart grid, design variables of smart grid and a case study in Central Queensland are presented.