Obama announces stimulus funding for the smart grid

Earlier today, President Obama spoke at the opening of what’s now the largest photovoltaic power installation in the US, using the opportunity to announce the funding of a different energy project: the modernization of the US electric grid. The two might seem unrelated, but a report released earlier this year by the National Academies of Science indicated that grid modernization was essential of the country’s use of renewable electricity was to rise above 20 percent of its total. The new projects would involve a total of $3.4 billion dollars of stimulus spending; with matching spending by utilities, the total commitment would reach over $8 billion, and fund the installation of over 5 million smart meters.

The funding has been in the works for a while, as the DOE solicited grant applications shortly after the stimulus bill was passed. But this is the first time that the projects that would be funded have been revealed (a list, broken down by category, is available).

A significant portion of the funding, $1 billion dollars, will be going to consumer-level technology, primarily smart meters. The project list indicates that well over 5 million smart meters should be installed. These devices will allow homeowners to receive fine-grained information about their energy use, in some cases on a per-appliance basis, and exert greater control over its timing. These devices will be most useful, from both a financial and grid perspective, when they’re coupled with pricing that encourages use during off-peak hours, so some of the funding is going to help utilities transition to these pricing systems.

A larger chunk of the funding, $2 billion, will go toward putting the infrastructure in place to support these smart meters. The same sort of reporting and control provided by a smart meter can be provided at a variety of levels, allowing utilities to better handle issues like changes in demand, intermittent renewable power sources, and equipment malfunctions. In addition to getting the hardware in place, the utilities will be facing an enormous IT challenge, as the data has to be transmitted on secure networks, analyzed, archived, etc. The $2 billion will help cover these projects as well.

Another $400 million will be used to modernize transmission lines, both to limit the losses during transmission and to allow greater long-distance shuffling of power, “so that a wind farm in rural South Dakota can power homes in Chicago,” as Obama put it. Another $25 million is going to foster the development of a smart device manufacturing capability.

In making the announcement, Obama claimed that the smart meters and demand-response pricing should enable consumers to save over $20 billion during the next decade, far exceeding the cost of the new program. He also suggested that the projects would increase grid reliability, limiting the $150 billion a year in economic losses suffered due to power outages.

All of that is generally good news, but the longer-term significance of this program may simply be to push smart metering and equipment out of the realm of test projects and into the mainstream. So far, smart meter deployments have been the rare exception on the US grid; if the program works as planned, nearly five percent of US households will have experience with them in the near future, and the utilities will have a wealth of real-world experience with the technology.

In that sense, a recent move by California may be equally significant. As part of a flurry of bill signings, Governor Schwarzenegger approved a smart grid measure that calls upon the state’s Public Utilities Commission to come up with a plan for a state-wide smart grid deployment by July of next year (the bill’s passage was spotted by Green Beat). Utilities would then have a year to come up with their own deployment plans, after which, presumably, the hardware would start to be put into place. California accounts for another 10 percent of the households in the US, so this has the potential to create an even larger impact than the stimulus spending.