the biz | green stocks report
Smart Money talks Smart Grid
Renewable energy shouldn’t repeat the blunders of older industries.
By RONa FRIeD, ph.D.
Investors may be nervous about climate change, cap and trade and carbon taxes, but a lot of folks like the concept of the smart grid. Among the multinationals
jumping on the smart-grid bandwagon are IBM, General
Electric Co., AT&T, Intel and Google. They are all developing in-house technologies and investing in development-stage companies. The smart grid has been compared in
importance to the transcontinental railroad, the interstate
highway system and the internet and is expected to spawn
companies that rival Microsoft and Google.
Rona Fried, ph.D., is
president of Sustainable
Business.com, the online
community for green
business: daily sustainable business and investor news, Green Dream
Jobs, Business Connections and the sustainable
investing newsletter,
Progressive Investor.
Contact Fried at rona@
sustainablebusiness.com.
Consult your financial
advisor before making
any investment.
What the Smart Grid Will Do
A true smart grid works much the way the internet does,
enabling multiple applications to operate over a shared,
interoperable network. The challenge is to create an efficient, intelligent network linking the 14,000 transmission
substations, 4,500 large distribution substations and 3,000
public and private utility companies in the United States.
After two-way meters are installed, wireless sensor networks and software will show utilities where energy is being
consumed, at what rate and where there are problems in
the network. Homeowners and businesses will monitor
their energy use in real time and be able to adjust their
consumption habits accordingly. This will pave the way
for real-time pricing. Electricity will be priced at different
rates based on the time of day and the level of demand.
Utilities will be able to manage electricity loads more
efficiently, and customers will be able to reduce their
monthly energy bills.
Once transmission lines are built, the smart grid will
deliver renewable energy from centralized plants to where
it’s needed. Distributed sources like rooftop solar and wind
systems will sell power to the smart grid and be compensated at real-time rates.
Stimulus Funds Allocated for Smart Grid
The U.S. Department of Energy (DOE) offers $4.5 billion in cost-shared grants for smart-grid technology development under the American Recovery and Reinvestment Act.
The DOE plans to disburse grants of $100,000 to $5 million
to deploy grid-monitoring devices, $500,000 to $20 million for smart-grid technology and $615 million for regional
demonstration projects on smart-grid storage, monitoring
and technology viability. Although the stimulus funds will
jump start the modernization of our grid, it will cost $100
billion to $200 billion for full build out. The Obama administration’s goal is to install 40 million smart meters and 3,000
miles of high-capacity transmission lines.
Europe, China and Australia also have smart-grid initia-
tives. China’s State Grid Corp., which distributes power
in all but five of China’s provinces, has announced it will
invest RMB 250 billion ($36.5 billion) in 2009 for ultra-high-voltage transmission lines. The European Parliament
has announced plans to deploy smart meters in 80 percent
of homes by 2020. The plan is expected to become law by
the end of 2010.
Many Companies taking Early Action
Very few U.S. homes have a smart meter, but that’s
set to change. Energy monitors could quickly become
the latest addition to telecom packages that combine TV,
phone and internet service. Here are some recent developments:
• Pepco Holdings (POM, or pepcoholdings.com) plans
to install smart meters for 1.9 million customers in Delaware, Maryland, New Jersey and Washington, D.C.
• Florida Power & Light (FPL, or fpl.com) will spend $200
million on its Energy Smart Miami program, which will
install 1 million meters in just about every Miami-Dade
County home and business to create an automated grid
within the next two years. The utility also plans to integrate solar plants at several universities and government
sites. It will add 300 plug-in hybrids, served by 50 charging stations, to its Miami-Dade fleet. GE (GE, or ge.com)
will supply the smart meters, Cisco (CSCO, cisco.com)
will provide the networking software and upstart Silver
Spring Networks ( silverspringnetworks.com) will handle
the wireless communications.
• AT&T (ATT, or att.com) has connected smart meters at
commercial and industrial locations to about 100 utilities. Utilities can rent space on phone companies’ existing networks rather than build their own, while phone
companies get an additional, steady revenue stream for
the wireless networks they’ve paid billions of dollars to
build. But whether the phone company/utility relationship works depends on the rental price. Unmeshed Wi-Fi
firms like Tropos ( tropos.com) are already attempting to
undercut phone carrier prices.
• IBM (IBM, or ibm.com) has built its information technology architecture into 50 smart-grid projects around
the world.
• Google (GOOG) has launched a prototype PowerMeter.
When adopted by manufacturers of smart meters, the
device displays power-consumption data on the web,
where it can be viewed by customers, vendors, planners
and regulators. As Google’s blog says, “Open protocols
and standards should serve as the cornerstone of smart-grid projects.” ST
