Stimulus Bill Has Billions for Smart Grids

Obama's administration plans to transform how we use energy with smart grids.

by / February 19, 2009

President Barack Obama signed the $787 billion stimulus bill in Denver on Feb. 17, in part, to highlight the package's impact on alternative energy initiatives. Obama signed the bill after touring the Denver Museum of Nature and Science, which uses solar power. But in his remarks he also focused on another strategy to reduce reliance on fossil fuel energy production: smart grids.

"The investment we are making today will create a newer, smarter electric grid that will allow for the broader use of alternative energy," Obama said. "We will build on the work that's being done in places like Boulder, Colo. -- a community that is on pace to be the world's first smart-grid city."

The stimulus package has numerous provisions for clean energy, but the largest single investment appears to be in smart grids: $11 billion.

Smart Grids Increase Energy Conservation

Why such a big investment? Despite the huge strides in technology that have changed everything from phones to automobiles, the electric grid has remained dumb. Utilities don't make a profit by encouraging customers to consume less electricity. As a result, they haven't invested in smart technology and continue to build huge energy plants, most of which run on carbon-based fuels.

Smart grids combine a variety of technologies to help consumers reduce energy consumption. According to Earth2Tech, a smart grid enables multiple applications to operate over a shared, interoperable network, similar in concept to the way the Internet works today. These applications can include:

  • special meters;
  • wireless technology;
  • network technology; and
  • software.

When combined, smart grids allow utilities to see where their electricity is being consumed and if problems, such as a potential blackout, are looming. Consumers will be able to tell how much energy they are consuming and which appliance is consuming the most. By making adjustments to how much energy is consumed and when, homeowners will be able to save hundreds of dollars every year in energy costs, according to Obama, and utilities will reduce the need to build expensive, polluting energy plants.

Boulder Becomes First Smart Grid City

In Boulder, Xcel, the state's largest electric utility, installed 14,000 smart meters that provide energy consumption information to the utility and consumers. Eventually the utility hopes to convert all 45,000 of the city's meters into two-way communication devices. Future plans call for linking plug-in hybrid cars to the grid so that the vehicles' batteries will let energy flow back into the grid when the cars are not in use.

While homeowners have been the focus of smart grids, the public sector will play a role. In his remarks, Obama declared that taxpayers will save $1 billion when federal buildings use smart-grid technology to slash energy consumption by 25 percent. State and local governments should be able to reduce consumption by similar rates.

High Vendors and Utilities

Some of the biggest players in both IT and heavy industry plan to have a role in smart grids. General Electric and IBM have launched major public relations and advertising campaigns that play up their expertise in the smart-grid sector. According to Earth2Tech, companies as familiar as GE and as unfamiliar as Landis+Gyr, plan to install millions of smart meters over the next few years.

According to Earth2Tech, some of the utilities that have moved fast to jump on the smart grid bandwagon include:

  • Southern California Edison;
  • Pacific Gas and Electric;
  • Xcel Energy;
  • Austin Energy;
  • Sempra Energy;
  • Oncor; and
  • San Diego Gas and Electric.

Government's Role

The public sector is both a consumer and -- in the case of some municipalities -- a provider of electricity. While Obama has set a target for how much energy the federal government will conserve through the use of smart-grid technology, the states and local governments have yet to come out with any collective goal as far as smart-grid use to conserve energy. Nor is it clear yet whether municipal utilities are on the forefront when it comes to investing in and using smart-grid technology.

One key aspect to the success of smart grids will be the role of state utility regulators. According to Forbes magazine, "Regulated utilities traditionally increase profits by proposing new generating projects to state utility commissions, modeling future return on investment and locking in that return by requesting rate increases from regulators." So far, little has been said as to how state regulators will amend the rules to take into consideration the shift from electrical consumption to conservation.

Government red tape could also affect the speed at which the country adopts smart grids in its many forms, from installation of two-way meters, to approval of high-capacity lines to transmit electrical power generated by wind farms in the Midwest to the East and West coast urban areas.

Tod Newcombe, Editor Editor, Public CIO