Economic Cost–Benefit Analysis on Smart Grid Implementation in China

The last Five-Year Plans (2016–2025) in China emphasise economic modernisation, focusing on boosting the services sector, urbanisation, and the expansion of the social safety net. China’s net-zero strategy targets achieving climate neutrality by 2060, necessitating a transition away from coal toward cleaner energy sources, which accounted for 60.6% of total energy consumption in 2023, to Variable Renewable Energy Sources (VRES). By 2021, VRES contributed 23.4% of power generation. To integrate VRES, Smart Grids are critical, as they autonomously manage energy production, distribution, and consumption. These grids support industrial and residential smart devices, electric vehicle charging, and battery storage. This paper applies a cost–benefit analysis using a customised version of the Electric Power Research Institute US methodology to assess Smart Grid investment in China from 2020 to 2050. The results show a benefit-to-cost ratio of 6.1:1, demonstrating substantial economic benefits. The focus on China serves as a valuable case study for Smart Grid implementation worldwide, with the methodology adaptable for use in other countries and across different scales. These findings can assist global decision-makers in evaluating the advancement in technology, policies, and potential economic impact of Smart Grids and also in comparisons with other players such as the US.