Obama's Role in the Smart Grid

The energy sector could spark the rejuvenation of America. It's all about the production of alternative energy and green jobs and it is being spearheaded by the president of the United States.

The federal government is now in the midst of pouring nearly one trillion dollars into the American economy in the form of spending and tax cuts to serve as the central catalyst in the nation's economic recovery. The New Energy economy will lead the charge and attempt to double the production of alternative energy over the next three years as well as build a smart grid so as to help guarantee economic stability and the facilitation of more green fuel sources.

"At this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe," President Obama said in a speech. "To finally spark the creation of a clean energy economy, we will double the production of alternative energy in the next three years. We will modernize more than 75 percent of federal buildings and improve the energy efficiency of two million American homes, saving consumers and taxpayers billions on our energy bills."

It will be a vigorous battle against a recession that began in December 2007 and one that has been labeled the nastiest since the Great Depression. Funds allocated through the stimulus plan are to be used to modernize the transmission grid and to develop smart meters. The two steps will then work to ensure reliability and energy efficiency.

According to the Electric Power Research Institute in Palo Alto, Calif., deployment of a highly automated system could take a huge cut out of carbon dioxide releases while at the same time limit electricity consumption by reducing sales by 1.2 to 4.3 percent by 2030. A smart grid can furthermore make possible greater integration of renewable generation resources and more deployment of plug-in hybrid electric vehicles.

"Estimates of energy efficiency potential affect forecasts of electricity demand, and electric utilities must make prudent investments in generation, transmission, and distribution infrastructure to reliably and cost-effectively address this demand," says Arshad Mansoor, vice president of Power Delivery and Utilization for EPRI.

Entrenched Nation

To be sure, the transformation to a green society is easier said than done. Consumers are unaccustomed to real-time pricing that would charge them accordingly for when they use electricity, and they are largely unaware of the benefits that a modern grid is said to provide. To boot: the investments in these various technologies are costly and the concepts are nebulous ones to follow.

It all comes atop a series of latent attempts to resurrect the American economy. All told, this year's deficit could hit $1 trillion. But President Obama insists that the need for more stimuli to, in part, rebuild the nation's energy infrastructure is urgent. Unemployment now stands at 8.5 percent and some estimate that it could rise to 10 percent. It's a daunting task, says the president, but the nation needs to take "dramatic action."

According to the GridWise Alliance, a coalition of organizations that advocates a smart grid, a $16 billion investment in incentives over the next four years would drive $64 billion toward such projects. That, in turn, would create about 280,000 new direct positions across the energy sector. More than 150,000 of these jobs would be created by the end of 2009 and nearly 140,000 positions would become permanent.

The report, authored by information technology consulting firm KEMA, goes to say that the smart grid will embody a network of devices that are as interconnected, automated and interactive as the Internet. The payback for utilities and consumers will occur in the form of improved reliability, reduced operational and maintenance costs and the avoidance of some new generation capacity.

Such high technology will permit consumers to join forces with their utilities to control electricity usage through advanced communication systems while also allowing the power companies the ability to isolate power outages and remotely read meters. But those instruments not only need money, they also require progressive policies to promote energy efficiency and to introduce price structures to consumers -- things that the Federal Energy Regulatory Commission says could limit the smart grid's potential.

The good news is that the technology is gaining traction. FERC says that advanced meters make up 4.7 percent of the meter population. That's up from less than 1 percent in 2006. On the demand response side, it says that 8 percent of consumers in the United States are in some kind of demand response program to control energy usage. Altogether, it adds that nearly 41,000 megawatts, or 5.8 percent, of U.S. peak demand is bid into the system in such a manner. That represents an increase of about 3,400 MW from 2006.

"Demand response is clearly the 'killer application' for the smart grid," says FERC Commissioner John Wellinghoff. Demand response allows utilities to work cooperatively with customers to shed load during peak electricity usage.

In their book Perfect Power, Robert Galvin and Kurt Yeager agree, maintaining that major blackouts could be averted. In fact, a substantial investment in new transmission technologies would more than pay for itself. The authors say that it is possible to build a "perfect electric power system" that could save the economy nearly $150 billion lost each year because of electrical outages.

President Obama embraces the same sentiments and as such, the transition to the New Energy economy is officially underway. It's all part of the plan to rebuild America and one that will require an enduring commitment. If it works, the early 21st Century will be defined by green energy and next-generation jobs, all hinged to the smart grid.

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