Tuesday, October 27, 2009

High Five Times

Today, President Obama announced the award winners of $3.4 billion in stimulus grants for the modernization of our nation's grid. The grants will support 100 projects taken up predominantly by utility companies in 42 states and the District of Columbia. The awards are not guaranteed done deals. Each grant winner must do a bit more work to substantiate the merits of their initial proposal requests. And, while there are definitely some losers in the allocation of grant money, collectively, all stakeholder bodies should be looking at this announcement as a positive step forward and throwing up a high five.

The Department of Energy has assembled some useful documents that detail exactly where the money is going and what it should cover:

Grant awards by category, click here.
Grant awards by by state, click here.

More interesting is the 'Smart Grid Leading Players' diagram produced by Greentech Media Research. It is not difficult to notice that every major technology company is looking to participate in this movement. The Smart Grid represents a financially material opportunity for nearly every supplier, provided that they can prove their worth.

Over the next several years, the grants combined with matching private investment will go towards outfitting more than 40 million homes and businesses with smart meters, over 1 million in-home displays, 170,000 smart thermostats, and 175,000 other energy management devices that will allow Smart Grid Citizens to reduce their energy usage. The funding will also help expand the market for "smart appliances", home energy conservation retrofits, and allow us to get more of our energy from renewable sources.

With all this good news, it's easy to overlook the fundamental question: Does the potential environmental and consumer benefit from smart grid investments exceed the costs?

Time to get back to work...

Wednesday, October 21, 2009

Who Will Get the Cheese?

While utilities of all sizes anxiously await the Department of Energy's announcements of who will receive stimulus funds for smart grid related investments, a lot of uncertainty is bubbling...

Utilities that do get their grants approved are sure to put many halted smart grid initiatives back on the fast track, but what about the utilities that don't make the cut? Will they continue to limit investments until the government and/or investment community finds more reasons to contribute to the modernization of the grid, or is there a Plan B?

One important condition in the distribution of stimulus funds under the 2009 American Recovery and Reinvestment Act is that utilities must match the funding dollar for dollar. In other words, if a utility receives $35 million of stimulus cash, the utility must match the investment with its own $35 million for a total $70 million investment.

Whatever happens, we can expect to see many exciting developments in key areas around the country, and more refined standards, best practices, and case studies from a fairly well-aligned group of stakeholders.

Stay tuned...

Tuesday, October 20, 2009

New Whirlpool Appliances Not Required

This recent post from a WSJ Blog elicited at least one particularly relevant response as it relates to the educational challenge utility companies and their technology partners face in the evolution of the smart grid:
http://blogs.wsj.com/environmentalcapital/2009/10/20/smart-phone-will-clean-energy-be-apples-killer-app/

One commenter wrote: The infrastructure needed for these applications to actually be useful doesn’t exist yet and won’t exist for decades, if ever. In my home, I’ve got a lot of appliances that use electricity. None of them are capable of communicating with anything, including an iPhone. They all work fine and I’m in no hurry to replace any of them so that I can save $0.33 a year on my electric bill.

A true smart grid may take 20 - 30 years to fully realize, and most people will certainly not be rushing out to replace their appliances just so that they can communicate their respective energy usage to the meter. However, we can expect significant and numerous steps to occur over the next several years in an effort to simply make our grid “smarter”. One of the key success criteria for these initial advancements will be to demonstrate cost benefits to the consumer (without requiring investments in new smart appliances).

Additionally, many would be surprised at the infrastructure investments that utilities have already made in the modernization of our electrical grid. NStar and United Illumniating utility companies in New England, for example, have been investing in real-time grid monitoring technologies for years to ensure that they're properly positioned for the future (which is now).

With $4.5 billion in stimulus funds (2009 Recovery Act) being doled out in Q409 into 2010, I think we can expect to see some worthwhile energy conservation opportunities for residents in smart grid pilots unfolding across the country in the near future.