1. The modern grid initiative
The grid is overburdened. Growth in peak demand
has exceeded growth in transmission by nearly 25%
every year since 1982.
Customers are paying the price. Interruptions and
power quality issues now cost the business sector in
excess of $100 billion annually.
Solutions are at hand. We can have greater security,
reliability, sustainability and profitability, as well as
a cleaner environment.
But will we commit our collective resources
to find a solution to this
national challenge?
the challenge pages 2–3
The grid is outdated, ­electricity
depen­dence is ­increasing,
but ­invest­ment is ­decreasing.
the opportunity pages 4–5
Current technologies and ­
emerging ­solutions will enable
­major improve­ments.
getting there pages 6–7
A truly modern grid will take a
combined ­effort from ­stakeholders,
con­sumers and ­suppliers.
→Executive brief
Powering
the 21st century
economy

2. executive brief |
the challenge in today’s grid
The U.S. power grid is the largest machine on earth, a
complex network that carries electricity from where it’s
made to where it’s used. It is a cornerstone of America’s
prosperity. But this essential national asset is threatened.
America’s global competitiveness and quality of life depend
on plentiful, reliable electric power. Every industry is becom-
ing more electric-dependent. A blackout costs Sun Micro­systems
up to $1 million per minute. A recent rolling blackout caused an
estimated $75 million in losses in Silicon Valley alone. When
the ­Chicago Board of Trade lost power for an hour ­during the
­summer of 2000, trades worth $20 trillion could not be ­executed.
The digital economy is especially vulnerable. In the 1980s,
­electrical load from sensitive electronic equipment, such as
computerized systems, appliances, and automated manufactur-
ing, was limited. Today, for every microprocessor in a computer,
there are 30 in standalone applications, more than 12B in the
U.S. alone. Now roughly 10% of electricity is delivered to digi-
tal devices. This could grow to 50% by 2020, causing enormous
increases in demand for high-­quality, digital-grade power.
[Electricity Technology Roadmap – 2003 Summary and Synthesis,
EPRI, 2003.]
Our nation is increasingly held back by an outdated power
delivery infrastructure. The U.S. grid faces shortcomings in
capacity, reliability, security and power quality. Designed before
the era of the microprocessor, in the 1960s or earlier, much of
this critical national asset is well beyond its design life.
RD spending is among the lowest of all industries. The lack
of spending mortgages the future, and imposes a heavy price on
the nation’s productivity, economy, and competitiveness.
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12% .2%
EngMgtSvcs
OfficeMech
HealthCare
DurableGoods
AircraftMissles
Retail
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Printing
Agriculture
ElectricUtilities
An outdated national asset:
Spending on research and develop­
ment — the essential first step to
innovation and renewal — is among
the lowest of all industries.
U.S. annual electricity sales are over
US$270 billion dollars, roughly $1,000
per capita. This is more than twice the
size of the phone industry and 30%
larger than automotive.
The modern grid is a whole system that must work
together – one machine tied together by integrated intel-
ligence and communications. Intelligent devices talk to
each other and to the control room to measure, monitor,
control and optimize the flow of electricity. This upgraded
and renewed ‘ecosystem’ is the foundation to keep globally
competitive in the 21st century.
+ Smart controls and
equipment throttle back
electricity use when the
grid is under stress
A noticeable increase in blackouts
and brownouts: Slow response times
of mechanical switches, lack of
automated analysis of problems, and
an inability to see the whole grid in
real time lead to more failures.

3. the modern grid initiative |
We have become more at risk as stresses increase. Operating
the grid at higher loadings means greater stress on equipment,
fewer options, and less time to react to unexpected problems.
Much larger electrical networks, new technologies, terrorist
threats, and new business rules all intensify the pressure on the
existing power infrastructure. The financial consequences of
interruptions grow into an enormous threat.
Other parts of the world are upgrading their grids. China,
Europe and the Middle East have aggressive grid expansion and
modernization programs underway. Meanwhile, developing
nations are clamoring for an efficient grid and the lifestyle that
comes with it. Will they buy the technology and know-how from
France, Germany and China instead of the U.S.? Will we miss our
opportunity to lead a new, global industry?
Grid modernization offers enormous benefits. Power inter-
ruptions and disturbances cost the U.S. electricity consumer at
least $79B per year, according to the Lawrence Berkeley National
Laboratory. [Understanding the Cost of Power Interruptions to
U.S. Electricity Consumers, Sep. 2004.] Grid congestion – which
prevents lower-cost power from flowing to regions that need it
– costs billions more.
Grid modernization will also reduce the need to build new power
plants. The RAND Corp. calculates savings of roughly $80B over
the next 20 years while putting fewer emissions into the atmo-
sphere. And it will make us safer, creating a power system resis-
tant to attack, natural disaster and cascading blackouts.
We must start now. The technology is here. The challenges
are manageable. The benefits far outweigh the costs. Through
collabora­tion and cooperation, we can renew the nation’s power
infrastructure in a phased, affordable way and create the founda­
tion for our country’s economic growth and prosperity.
Some major power corridors are at
maximum capacity more than 80% of
the time…equivalent to having rush
hour from 5am to midnight.
national transmission grid study,
2002
+ Smart meters record and report power
use with great precision, allowing vasts
improvements in pricing, demand
response, outage response and consumer
choices
Strategic transmission investments
of about $8B (net present value) over
the next 26 years would have benefits
of about $60B, approximately 8 times
their cost, in savings to the economy
from potential reductions in transmis-
sion-related outages.
elliot roseman, icf consulting,
­energypulse special issue, spring 2004
+ Building automation systems ‘talk’ to the
grid, allowing commercial and industrial
customers to be more efficient about their
own energy usage
More transmission stresses:
Amounts and sources of generation
grow dramatically. Trans­mission
additions show no ­significant
increase over 20 years. But conges­
tion rose five-fold 1998 to 2002.
‘90
50
0
100
150
200 miles / megawatts
‘95 ‘00 ‘05
Growth of US transmission and generation
Transmission miles generation MW, in thousands
Cumulative all transmission added (miles)
Cumulative new generation added (megawatts)

4. executive brief |
the opportunity
Cutting-edge materials and powerful digital technologies
can make dramatic improvements to the power grid, as
already demonstrated in labs and field trials.
Five technology areas are driving these solutions. Many of
these technologies have been developed and proven in other
areas, such as manufacturing and telecommunications.
Integrated communications connect components to
an open architecture for real-time information and
control, to allow every part of the grid to both ‘talk’
and ‘listen.’
Sensing and measurement technologies support
faster and more accurate response, such as remote
monitoring, time-of-use pricing, and demand-side
management.
Advanced components apply the latest research in
superconductivity, fault tolerance, storage, power
electronics and diagnostics.
Advanced control methods will monitor essential com-
ponents, enabling rapid diagnosis and precise solutions
appropriate to any event.
Improved interfaces and decision support amplify
human decision-making, transforming grid operators
and managers into knowledge workers.
The solutions are affordable. Although cost estimates vary,
even the most expensive options put grid modernization at
about one medium pizza per month per household, spread over
The electricity infrastructure must
keep pace with the digital transfor-
mation of the economy. It is hard to
imagine a major industrial process,
manufacturing facility, or commercial
business in 2020 that will not use
digital control and interactive links
to its consumers.
Powering the Digital Age,
Kurt E. Yeager, ceo emeritus, epri,
summer 2003
Transmission investment must
increase: Investment declined
an average of $117M per year over
the last 25 years. Construction
and RD dived to Depression-era
levels and only now have started
to rebound.
+ Sensors monitor and
report line conditions in
real time, allowing more
power to flow over exist-
ing lines
+ Plug-and-play inter­connection lets renewables
and other new sources connect quickly and
seamlessly to the grid

5. the modern grid initiative |
the next 10–15 years. If done right, a transformed grid will be less
expensive in the long run, while providing benefits that dwarf
the costs.
The improvements will have widespread benefits:
Near-zero wide-area blackouts and greatly reduced local
interruptions.
High-quality power for sensitive electronics and
­complex computer applications.
Options for consumers to manage their electricity use
and costs.
The plug-and-play integration of renewables, distrib-
uted resources and control systems.
Improved resilience to attack, natural disasters and
operator errors.
Annual savings of tens of billions of dollars from
reduced interruptions, reduced congestion, and reduced
need to build expensive plants and lines.
Avoided cost savings are substantial. Grid upgrades will ease
congestion and increase capacity, sending 50% to 300% more
electricity through existing corridors. “Technology can solve
power quality, power reliability, and price volatility at a fraction
of the price of ‘big iron’ – either new transmission lines or new
generating capacity.” [Judith Warrick, Morgan Stanley Annual
Global Power and Utility Seminar, Dec. 2004.]
What’s missing is a coordinated effort. Today’s grid renewal
programs exist largely as islands of isolated activity, with little
coordination or connection. We need a coordinated, multi-
stakeholder effort so all the pieces fit together, no matter when
and where they are built. If we modernize without a plan, we
will spend billions more than necessary, while getting a patch-
work system.
The modern grid will have seven
key characteristics that benefit
consumers, business, utilities and
national security:
Self-heals — detects and responds
to routine problems and quickly
recovers if they occur, minimizes
downtime and financial loss.
motivates and includes the
consumer — commercial, industrial,
and residential energy consumers
will have visibility into prices and
the ability to choose a program and
a price that best suits their needs.
Resists attack — security built in
from the ground up.
Provides power quality for 21st
century needs — electricity free
of sags, spikes, disturbances and
interruptions, suitable to the data
centers, computers, electronics and
robotic manufacturing that will
power our future economy.
Accommodates all generation
and storage options — allows plug-
and-play interconnection to practi­
cally any source of power, includ­
ing renewable energy sources and
storage.
Enables markets — supports consis­
tent operation from coast to coast
while allowing innovation locally
and regionally.
optimizes assets and operates
efficiently — allows us to put more
power through existing systems,
build less new infrastructure, and
spend less to operate and maintain
the grid.
+ Intelligent electronic
devices inside the
substation talk to each
other and the control
room
+ Remote sensors
spot problems with
sub­stations, trans­
formers, and other
expensive equipment
+ Advanced cables carry
50–300% more power
Pantone 1805

6. executive brief |
getting there
We can have a platform for American prosperity and secu-
rity in the 21st century if we join together now in a cooper-
ative, cost-shared effort.
We are asking producers, designers, operators and users
alike to join forces to transform the grid and leave a
powerful legacy for future generations.
Government and industry each have indispensable roles.
Because no single organization owns the grid, individual players
have no incentive to risk the major changes that improve the
system for everyone. Thus, federal, state and local governments
have an essential role in catalyzing research, creating a support-
ive regulatory framework, and validating the plan. The private
sector must share the costs and invest to design and build next-
generation systems.
America has committed to nationwide infrastructure before,
with great rewards. The postal system, the transcontinental
railroad, the interstate highway system, the Internet backbone
– these and other infrastructure investments provided a founda-
tion for new markets, new companies and new growth.
The Modern Grid Initiative is the basis for a national plan
that can succeed. Funded by the Department of Energy’s Office
of Electricity Delivery Energy Reliability and managed by
the National Energy Technology Laboratory, the Modern Grid
Initiative does not duplicate or replace existing efforts. Rather,
it seeks to create a vision for the future grid with an open,
stakeholder-driven process for coordination, collaboration and
sharing. And then to establish real-world demonstrations and
deployments of the best ideas.
Fifty years ago, Dwight Eisenhower
had the boldness and vision to create
an interstate highway system in a
nation of two-lane roads, and it trans-
formed our economy. Modernizing our
electric power system can open up the
same range of new opportunities for
technology and innovation.
reid detchon, energy future
­coalition, power energy magazine,
oct. 2004
The grid must evolve into a beyond-
state-of-the-art system that the
United States requires for its next 20
years of economic growth, and must
be prepared for a time when it will be
required to transmit and distribute
50% more power than it does today.
roger anderson and albert
boulanger, columbia university,
power energy magazine, march 2004
+ Intelligence and communications allow
the grid to accommodate all forms of
generation, whether large or small,
centralized or distributed
+ Modernized control rooms and
software give operators full
information and split-second
control

7. the modern grid initiative |
How we will modernize our grid
Use an ‘ecosystem’ perspective. Engineers call it a ­‘systems
view’ – thinking of the grid as an integrated, interactive
­system, rather than a series of isolated components.
Create a shared vision. We will bring together key partici­
pants to create a framework. Then we will gain the consensus
of all stakeholders – science, industry, commerce, consumers,
environmentalists – through an open, accountable process.
Collaborate, coordinate, and share costs. We will create
a coordinated plan that gets the most from every research
­dollar. The DOE “Grid 2030” vision gives us a direction, the
Energy Policy Act of 2005 gives us a foundation. Building on
these will anchor our collective efforts.
Incorporate modern technologies. We will leverage develop­
ments in computing, networking and telecommunications,
while building on concepts proven in the electric power indus­
try. We will identify the most important gaps in technology
and apply research efforts where most needed. We will take the
‘long view’ and the ‘systems view’ to determine which technol­
ogies will have enduring impact.
Take a phased, incremental approach. The modern grid is
a revolution that will come about by evolution, through a plan
that accommodates legacy systems while allowing for step-
by-step upgrades.
Test and validate. Seeing is believing. Regional projects
help stakeholders confirm the full benefits of new tech­
nologies. We will develop and coordinate these projects and
serve as a clearinghouse for the results.
The Modern Grid Initiative is underway throughout
the country. It is a national initiative with regional programs.
Participation ranges from free email updates that keep you
posted on progress to working groups that give you a voice in
the grid transformation that will power our next century of
progress and prosperity. We invite your support and
your ­guidance.
Join the Modern
Grid movement.
Turn the page to learn where to get
more information. Register online
to get email updates, free white­
papers and technical information,
announcements of events, notifica­
tion of potential demonstrations in
your region, and opportunities to
join working groups composed of
your peers around the country.
Develop
modern grid
vision
Developmental
field tests
Regional summits
Regional
demonstration
program
Adoption of modern
grid strategies
Basis for national
deployment of the
modern grid
Technology
gap
analysis
National
summit
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8. Visit our Web site
www.TheModernGrid.org
Email
info@TheModernGrid.org
Phone
(304) 599-4273 x101
October 2006
Some of the organizations
leading efforts to
modernize the grid
www.TheModernGrid.org
The goal of the Modern Grid Initiative (MGI) is
to unite and coordinate other efforts. Funded by
the Department of Energy’s Office of Electricity
Delivery Energy Reliability and managed by the
National Energy Technology Laboratory, MGI does
not duplicate or replace existing grid research,
development and deployment (RDD). Rather,
it seeks to establish a consensus vision for the
future grid. And then, to create an open process for
coordination, collaboration and sharing. This leads
to large-scale demonstrations of key advanced
systems and concepts.
Whether you want to stay informed, request a
speaker, attend events, download presentations and
documents, or play a role on a working group, your
participation is simple and no-strings-attached.
Bonneville Power Administration
Non-Wires Initiative
Consortium for Electric Reliability
Technology Solutions
Energy Future Coalition
Galvin Electricity Initiative
GridWise Alliance
GridWise Architecture Council
Intelligrid
Mid-Atlantic Demand Response Initiative
Northwest Center for Electric Power Technology
Office of Electricity
Delivery and Energy
Reliability