Electric Light & Power, Executive Digest

Let the Spending Begin
by Teresa Hansen, editor in chief

The electric utility industry, specifically the power-delivery side of the industry, soon will be responsible for creating tens of thousands of jobs and improving customer service and reliability in 49 states. At least that’s the intent of $3.4 billion that the U.S. Department of Energy (DOE) recently awarded to 100 companies to build the smart grid.

These awards are important enough to the administration that President Obama made the announcement. The winning projects are split into four categories: advanced metering infrastructure, electric distribution systems, electric transmission systems and equipment manufacturing. Most press releases I’ve seen report that this money will support installation of about 18 million smart meters, 700 automated substations and 200 advanced transformers.

Energy Secretary Steven Chu told GridWeek attendees in September that the $4.5 billion his department plans to distribute as part of the American Recovery and Reinvestment Act will be the down payment on the clean energy economy. The recent awards represent the first round of those funds.

The 100 awardees must match the stimulus money they’re receiving with an equal amount of private funding. This will bring the total amount to be invested in the smart grid as a result of this announcement to about $7 billion. In addition, this money should begin to enter the market right away and must be spent in its entirety within the next 36 months. This is good news for the industry, especially for those companies receiving the funding and their vendor partners.

Investments of $7 billion in the next three years should help stimulate the economy, but how far will it go to transform the current grid, which was built to deliver electricity generated from fossil fuel, into the grid that will transport and distribute the green, sustainable energy Chu envisions? I’ve heard several experts say that it will cost $50 billion or more to prepare the grid for renewables integration, electricity storage devices, distributed generation (such as rooftop solar), plug-in vehicles and energy efficiency technologies. That means close to $45 billion of private money needs to be invested in the grid in the next few years.

Given that the entire American Recovery and Reinvestment Act will divvy up more than $700 billion, $45 billion doesn’t sound like that much. It’s easy for us to become desensitized when we hear "billions" and "trillions" being spouted off in news reports every night. Nevertheless, $45 billion is a lot of money, and for that matter, $3.4 billion is a lot of money.

Many people still are concerned whether this money will result in successful implementations, especially when questions exist about standards and the DOE’s funding stipulations. I understand these concerns, but I try to remember that the main purpose of this money is to stimulate the economy, create jobs and develop a clean energy economy. I hope the taxpayer money and private investments lead to well-planned and executed projects that perform according to plan, a tall order for recipients.


I congratulate the investor-owned utilities, municipalities, cooperatives and public utilities, as well as the handful of equipment manufacturers that received this first round of stimulus funding. Now go forth, raise capital, create jobs and build the grid that will allow our industry, its customers and our nation to flourish.