The approximately $4 billion in Smart Grid Investment Grants that were issued as part of the American Recovery and Reinvestment Act of 2009 was parlayed into nearly $8 billion in grid modernization projects that are still ongoing.

The government investment was a boon to the utility industry during the economic downturn, but it will take far more than a few billion dollars to truly bring the grid into the 21st century.

A new presentation from the U.S. Department of Energy shows the breakdown of the stimulus grants, with nearly half the money going to advanced metering infrastructure, another $2 billion invested in the distribution grid, and the rest being used for customer systems and transmission projects.

Millions of pieces of equipment were installed as a result of the funding, including 18,500 automated capacitors, over 800 phasor measurement units and more than 15 million smart meters.

However, that’s just a fraction of what's needed to truly modernize the grid. The stimulus grants were in part designed to put people back to work immediately, but the larger goal of updating the U.S. power grid remains a daunting challenge.

Now that stimulus funds have dried up, the industry has not been able to maintain a similar pace of investment. “To date, spending outside of ARRA has remained relatively tame,” said Ben Kellison, senior grid analyst with GTM Research. “Key applications such as conservation voltage reduction and FLISR have gained traction, but have not achieved the wide acceptance that was expected to drive the market.”

In EPRI’s assessment, distribution automation alone would need about $124 billion of investment between 2010 and 2030. That would be about $6 billion per year over the twenty-year period, far greater than the estimated $3 billion per year for distribution automation that GTM Research had predicted. According to EPRI, the benefits of investment into grid technologies vastly outweigh the costs -- by at least about threefold.

Increased rates of distributed generation in some regions and a focus on resiliency are driving investment, but even that may not be enough. The Northeast’s focus on resiliency after Hurricane Sandy is still in flux, as much of the money is going to grid hardening or upgrades such as new utility poles, rather than automated grid technologies.

“Except for states with regulatory incentives such as Maryland, Illinois, or California, or those with market incentives such as the TVA's region, spending has fallen below expectations,” added Kellison.

The findings from the SGIG projects could help other utilities build the business case for grid modernization, but it will likely still take state-by-state public utility commission mandates to drive a second wave of investment.

The need for increased investment is also coming at a time when more large customers are investigating self-generation options and savvy residential customers with high electricity rates are looking to rooftop solar.

In an ideal world, the mandates would be forward-looking in how they assess the value of resiliency and reliability compared to a century-old model of simple cost-of-service regulation. Even with innovate regulation, however, it’s unclear whether any region of the U.S. will come close to mustering the amount of investment needed to build out a fully modern grid in the coming decades.