Obama awards $3.4 billion in 'smart grid' grants

A major proposal of the Obama administration's national energy makeover has been to build a next-generation "smart" power grid that enables integration of more renewable energy and maximizes efficiency. Most stimulus funding has so far gone to fix roads and other infrastructure, but on Tuesday the smart grid began catching up.

President Obama announced the winners of $3.4 billion in stimulus funding for projects in 49 states, except Alaska, which did not apply for funds.

Just 100 utilities of more than 400 applicants won federal grants, which officials say will leverage more than $4.7 billion in matching private sector investment. These grants comprise the lion's share of the $4.5 billion stimulus money set aside for smart grid development, and is expected to create tens of thousands of new jobs.

The measure, announced by Mr. Obama at Florida Power and Light’s (FPL) DeSoto Next Generation Solar Energy Center, may be the largest single investment in energy-grid modernization in US history. It funds a range of technologies intended to speed the nation’s transition to a more efficient and reliable electric system that promotes savings and integrates renewable energy sources such as wind and solar.

“There’s something big happening in America in terms of creating a clean-energy economy,” Obama said, adding that more needs to be done.

"We have a very antiquated (electric grid) system in our country," Carol Browner, assistant to the president for energy and climate change, told reporters. "The current system is outdated, it's dilapidated."

Implementing smart-grid technologies could reduce electricity use nationwide by more than 4 percent by 2030, according to an analysis by the Electric Power Research Institute. That would save $20.4 billion in energy costs for businesses and consumers around the country.

Smart meters

The funding will accelerate deployment of technologies such as "smart meters" that allow customers and utilities to measure energy use digitally with real-time measurement. The information, which can be displayed on a website or a display in the home, lets utilities work closely with customers to reduce energy use during peak load periods as well as overall reductions.

FPL plans to use its $200 million award to help install some 2.6 million smart meters that would help Floridians save up to $1.6 billion by the year 2030.

"Finally we have a technology that will benefit regular consumers - not just the guy driving his BMW home to fire up his hot tub," says Katherine Hamilton, president of the GridWise Alliance, a coalition of companies working to promote smart-grid technology. "This funding will deploy technology that allows everyone to understand how they use energy and give them tools to adjust their energy usage."

That's been happening already in pockets around the country. One $200 million award went to help
install smart meters for many more of the 1.2 million customers of Baltimore Gas & Electric (BGE). This summer 1,000 Baltimore residents who participated in a smart-grid demonstration project slashed peak energy usage by one-third, according to Ken DeFontes, president of BGE. A survey found nearly all of them asked to continue being able to see their energy use moment by moment.

"In the new world, you'll be able to see electricity use hour by hour in real time," Mr. DeFontes said in a teleconference. "All the customer is doing is paying attention to their energy use just a little bit more ... it gives them control over their energy usage."

Long-term savings

But even energy efficiency advocates who favor smart-grid technology acknowledge that it will be perhaps a decade before the nation begins to see major energy savings.

"There are still lots of questions in the short term about how to do it right, but smart grid will be important for the nation in the long term," says Steve Nadel, executive director of American Council for an Energy-Efficient Economy.

Appliance standards, revamped building codes, and energy efficiency programs will be more important in the short run, he says.

Challenges for the system include cyber security. Digital meters that can be read over the Internet can also be hacked. Utilities, under pressure from federal regulators, are pressing to implement strict safety standards.

"Cyber security is clearly an issue for the smart grid," Ms. Hamilton says. "But we expect that as they install this equipment, the digital components will have cyber security built into it."

Beside the $3.4 billion in matching grants, another $1.1 billion will fund other smart-grid components, including $615 million for demonstration projects and $100 million for work force development.

The latter is critical, Ms. Hamilton notes, since more than half of all utility engineers and other energy workers will retire over the next five years.

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