1. EXECUTIVE SUMMARY

This San Diego Smart Grid Study is one of the first in the nation to apply the Smart Grid
concepts developed the U. S. Department of Energy's Modern Grid Initiative to a specific region.
It provides preliminary analysis to determine the technical feasibility and cost effectiveness of
implementing Smart Grid technologies and strategies in the San Diego Region. The objectives
of the study are to (1) determine whether the future economic and regulatory climate in the San
Diego region could accommodate or necessitate a Smart Grid, (2) determine the collection of
technologies that could implement a Smart Grid, and (3) conduct a cost-benefit analysis to
determine whether implementing a Smart Grid would be cost effective for the region.

1.1. Smart Grid Overview
This study is based on the definition of a Smart Grid developed and being pursued by the U.S.
Department of Energy's Modern Grid Initiative (MGI).1 The existing transmission and distribution
system in the United States uses technologies and strategies that are many decades old and
include limited use of digital communication and control technologies. To address this aging
infrastructure and to create a power system that meets the growing and changing needs of
customers, the MGI seeks to create a modern - or "smart" - grid that uses advanced sensing,
communication, and control technologies to generate and distribute electricity more effectively,
economically and securely. The Smart Grid integrates new innovative tools and technologies
from generation, transmission and distribution all the way to consumer appliances and
equipment. A modernized grid would create a digital energy system that will:
• Detect and address emerging problems on the system before they affect service,
• Respond to local and system-wide inputs and have much more information about broader
system problems,
• Incorporate extensive measurements, rapid communications, centralized advanced
diagnostics, and feedback control that quickly return the system to a stable state after
interruptions or disturbances,
1 More details about the Modern Grid Initiative (MGI) and this process can be found at
www.moderngrid.org.
Key Findings
1. Future economic, technological, and regulatory trends in the San Diego region
likely will create a desirable climate for implementation of a Smart Grid.
2. While the existing transmission and distribution grid includes some advanced
technologies and SDG&E is planning to implement others, the project team
identified 26 technologies that can be implemented to advance the current
electric grid toward a smarter, more modern system.
3. The results of a preliminary cost-benefit analysis suggest that implementing
Smart Grid technologies and strategies could yield benefits that adequately
exceed the initial installed costs and cover the ongoing operation and
maintenance costs.
• Automatically adapt protective systems to accommodate changing system conditions,
• Re-route power flows, change load patterns, improve voltage profiles, and take other
corrective steps within seconds of detecting a problem,
• Enable loads and distributed resources to participate in operations,
• Be inherently designed and operated with reliability and security as key factors, and
• Provide system operators with advanced visualization tools to enhance their ability to
oversee the system.

1.2. Study Results
To accomplish the objectives of the San Diego Smart Grid Study, the project team developed a
process that included the following six steps: (1) develop a scenario that describes the likely
future state of the region's economic, regulatory, and technology climate, (2) assess the current
state of the energy infrastructure and climate in the region (as-is state), (3) compare the current
state to a future Smart Grid scenario to identify technological, regulatory, and consumer system
gaps, (4) identify a core group of Smart Grid technologies that when implemented together
would provide the framework for the Smart Grid concept, (5) conduct a cost-benefit analysis to
determine if there is a business case for implementing the technologies identified, and (6)
recommend an implementation strategy for the identified technologies, including near-term
demonstration projects. We present below a summary of the results of this work.

1.2.1. Future San Diego Scenarios
To determine whether a future state of the San Diego region could accommodate and
necessitate Smart Grid technologies and strategies, the project team developed a series of
future probable scenarios based on spectrums of extreme states of economic, environmental
and technology development. The team analyzed the impacts that such factors could have on
the operation of the regional electric grid. This analysis demonstrated that under certain
scenarios, a favorable climate exists for the implementation of a Smart Grid in the San Diego
Region.

Based on our analysis, the most likely scenario to describe the future of the San Diego region
includes continued economic growth, more environmentally restrictive regulation, and
breakthrough technology in regional businesses, including the electric and gas utility. Given the
current trends of regulation, the region likely will see an increasing emphasis on renewable
energy, use of alternate fuels, as well as energy efficiency and demand response in all market
segments. The region's economy will continue to have a large number of high-tech businesses
and a high-tech lifestyle, which could drive a shift in the reliability and power quality
requirements of the grid. This probable future environment of the San Diego suggests a
desirable climate for the implementation of a Smart Grid.