Billions for Smart Grid in Stimulus... DOE Releases Grid Reports... Experts Predict Growth in Smart Grid Funding… Utilities Could See Revenue Shortfalls

Stimulus plan promises billions for Smart Grid. As currently circulating, the plan from the U.S. House of Representatives includes $32B to transform the nation’s energy system. Depending on how you interpret the language, somewhere between $11B and $21B of that will be aimed at grid upgrades. The Senate is developing its own version, which may be quite different. Once the legislators craft and pass a final version, the real fun will start – watching the elbows come out as utilities, states and vendors jostle for a place in the bread line. Barron’s called it a “Grid Rush,” warning that lobbyists would be “descending on Washington in droves to pan for a share.”

   Quick Take: Although nobody agrees just how much of the money will do directly to Smart Grid, they all agree that it will be a lot – billions more than even the optimists hoped two months ago. And here’s the best part – the resulting attention and credibility will do as much to boost fortunes as the money itself.

   Venture Beat's story on Smart Grid's role in the stimulus plan

   Barron's story on the feeding frenzy for grid upgrade dollars (full story requires subscription)

DOE issues three important grid reports. The Electricity Advisory Committee (EAC) of the U.S. Department of Energy has submitted three reports to the Secretary of Energy covering the challenges of generating and transmitting electricity, energy storage issues and technologies, and the deployment of a Smart Grid.  Representing advice from industry leaders and experts, the reports include recommendations for policy and program initiatives. The reports, which are available at the DOE Web site, also cover energy efficiency, demand response, and environmental responsibility.

   Quick Take: The DOE is about to have more money and influence than ever in its history. These documents may hint at how it will proceed – or, at least, what kind of pressure they will be getting from Congress and insiders.

   DOE press release on the reports (PDF)

   Keeping the Lights on in a New World, EAC report on electricity supply adequacy (PDF)

   Smart Grid: Enabler of the New Energy Economy, EAC report on Smart Grid (PDF)

   Bottling Electricity: Storage as a Strategic Tool for Managing Variability and Capacity Concerns in the Modern Grid, EAC report on energy storage technologies (PDF)

Smart Grid market will jump to $70B by 2013. Energy Insights’ Rick Nicholson has assembled his Top 10 predictions for the North American utility industry, including this notable forecast for Smart Grid spending. But the added money, some of which will come from the U.S. economic stimulus package, will force the industry to deal with challenges of workforce availability, manufacturing capacity, and the complexity of the project itself, he writes in Utilities Online.  Nicholson also predicts that the first choice for utilities will be energy efficiency and demand response, including “smart metering, home area networks, in-home displays, smart thermostats and consumer web portals.”

   Quick Take: Although the sector will grow as a whole, it will not grow uniformly. Nicholson offers insightful opinions on short-term winners and losers.

   Rick Nicholson’s Top 10 predictions for utilities in Utilities Online

Energy efficiency could reduce power consumption 22%, says EPRI. The Electric Power Research Institute has released a report analyzing how much electricity could be saved by energy efficiency and demand response (DR) programs over the next 20 years. According to the study, simply using existing technologies and programs such as efficient light bulbs and smart thermostats could reduce power use by 236 billion kW hours or 22% by 2030.  As previously released report claimed that Smart Grid deployment could reduce energy consumption by 4.3%.

   Quick Take: See the story below for one investor’s opinion of what energy savings could mean to utilities.

   EPRI’s energy efficiency study

   Full copy of EPRI energy efficiency report

   EPRI study on Smart Grid benefits

But a smarter grid may cause utility revenues to fall by 10%. Hedge fund investor Nick Gogerty warns in Seeking Alpha that the very efficiencies made possible by the Smart Grid will cause customers to buy less electricity – and that could reduce utility revenues by as much as 10% going forward. He even thinks that demand response providers such as EnerNOC “could see their market shrink dramatically.”

   Quick Take: As this reality starts to sink in, will utilities finally start to lobby hard for decoupling, so they are rewarded for efficiency instead of penalized?

   Seeking Alpha article on declining utility revenues

UK opposition party calls for a Smart Grid, too. In what may be an attempt to out-green the party of Prime Minister Gordon Brown, the UK Conservative Party has put forth a Smart Grid proposal covering electricity, gas, and electrical customers. According to Metering.com, the plan also includes “a system of feed-in tariffs for home renewable generation,” incentives for improvements in home energy efficiency, and a series of recharging stations for electric and hybrid vehicles.  Because distribution of electricity and gas are controlled by a single company in the UK (the National Grid), implementation is likely to happen far faster than in the United States.

   Quick Take: Vendors scouting for the next hot market should take note. Achieving a Smart Grid in the U.S. requires agreement between dozens of federal and state agencies and thousands of utilities large and small. In many other countries, a single decision by a single national utility can mandate a countrywide renewal.

   Earth2tech article

   Metering.com article

SGN founder previews new book. Greentechmedia is publishing excerpts from Jesse Berst’s forthcoming book, Electronomics: How the Smart Grid Will Power American Prosperity. Berst defines electronomics as the study of the creation of national prosperity and personal wealth that will flow from the transition from an oil-based economy to one based on electricity. In the book excerpts, he argues that the enormity of the electricity economy combined with the need to upgrade so much of current electrical infrastructure offer tremendous opportunities for renewable and green energy sources coupled with economic and competitive advantages.

   QuickTake: You heard it here Berst.

   Greentechmedia’s preview of Electronomics