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Methodological Approach for Estimating the Benefits and Costs of Smart Grid Demonstration Projects
Matt Wakefield

This report presents a comprehensive framework for estimating the benefits and costs of Smart Grid projects and a step-by-step approach for making these estimates. The framework identifies the basic categories of benefits, the beneficiaries of these benefits, and the Smart Grid functionalities that lead to different benefits and proposes ways to estimate these benefits, including their monetization. The report covers cost-effectiveness evaluation, uncertainty, and issues in estimating baseline conditions against which a project would be compared. The report also suggests metrics suitable for describing principal characteristics of a modern Smart Grid to which a project can contribute.

This first section of the report presents background information on the motivation for the report and its purpose. Section 2 introduces the methodological framework, focusing on the definition of benefits and a sequential, logical process for estimating them. Beginning with the Smart Grid technologies and functions of a project, it maps these functions to the benefits they produce. Section 3 provides a hypothetical example to illustrate the approach. Section 4 describes each of the 10 steps in the approach. Section 5 covers issues related to estimating benefits of the Smart Grid. Section 6 summarizes the next steps.

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