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Editor's note: The author, a senior smart grid analyst with GlobalData, highlights findings from a new report titled 'US Smart Grid Stimulus – Unrealized Benefit to the Economy.'

 

By Sankar Gupta

 

Federal stimulus funding provided by the U.S. government to develop the smart grid and boost the economy may not be achieving either goal as intended.

 

First, with a number of smart grid contracts having been awarded to non-U.S. companies, the impact on the economy is not what it could have been, and the jobs created through these measures are not expected to be long-lasting enough to impact the economy positively in that way either.

 

Secondly, the 2009 American Recovery and Reinvestment Act’s (ARRA) provision to U.S. utilities of $4.5 billion funding for smart grid modernization and development maybe insufficient to make lasting impact. Future investments would require large-scale funding which can be achieved either by government support or by private sector investment from energy utilities and technology vendors. Solid pilots and business cases are needed to invite private sector investment.

 

Contracts awarded to non-U.S. Companies reduce the benefits

Smart grid contracts awarded to non-U.S. companies threaten to reduce the potential benefits to the U.S. economy in terms of development. The U.S. smart grid stimulus was intended to be used for the revival of the native power technology industry and create new jobs by awarding technology implementation contracts to domestic vendors or to vendors willing to set up manufacturing facilities in the U.S. to serve the contracts. This was going to help circulate the stimulus funds in the U.S. economy to create a positive overall impact.

 

Approximately 79% of contracts were awarded in 2011 to U.S.-based vendors who either have their manufacturing facilities in the U.S. or are headquartered in the country. However, non-U.S. vendors also have a major share of the contracts awarded in technology segments such as metering, power system equipment and services. Notable non-U.S. vendors who have won major contracts are Elster Group SE and Siemens AG. These are contracts related to systems such as high-voltage direct current systems, which need to be delivered to the location after being manufactured at other countries outside the U.S. Contracts such as these have a low possibility of creating jobs in the U.S., and tend to lead to the creation of non-U.S. jobs.

 

Next page: Not all jobs will be permanent >>

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