Obama's Smart-Grid Game Plan

The $3.4 billion injected Oct. 27 is a small down payment on the cost of equipping the U.S. electrical system with smart meters, batteries, and sensors

By John Carey

Think back to the age of telecom before the breakup of AT&T, before the Internet, before Facebook or Twitter. That's about how antiquated America's system for delivering electricity—the electrical grid—is today. In many parts of the country, the grid is so "dumb" that workers still have to walk from house to house to read the electricity meter, and utilities have no clue when the lights go out until customers call to complain.

That's why there's a growing push to build a smarter grid, in which the meters can report in, appliances can control how much energy they use, and electricity stored in batteries can supply quick jolts of energy where needed, replacing the expensive power plants now used to meet peak power needs. One of the biggest believers in that vision is the White House. On Oct. 27, the Obama Administration announced 100 grants, totaling $3.4 billion, for smart-grid efforts, using money from the stimulus bill.

The winners include Houston's CenterPoint Energy (CNP), which gets $200 million for a $639 million project to install 2.2 million smart meters and hundreds of sensors to make the system more responsive and reliable, and the city of Wadsworth, Ohio, which gets $5.4 million to add 12,500 smart meters and beef up its grid-charged electric cars. "This is a great first step toward transforming our whole energy system," says Mark Brownstein, an energy director at the Environmental Defense Fund, which like many environmental groups sees the smart grid as essential to both making the U.S. more energy efficient and boosting the use of renewable power.

At the heart of virtually every project is an upgrade to more sophisticated meters, which communicate directly with the local utility. What good are they? Listen to President Barack Obama as he announced the awards at a solar energy facility in Arcadia, Fla.: "Smart meters will allow you to actually monitor how much energy your family is using by the month, by the week, by the day, or even by the hour," he explained. "So coupled with other technologies, this is going to help you manage your electricity use and your budget at the same time, allowing you to conserve electricity during times when prices are highest."

In pilot projects of this new approach, customers gave the local utility permission to temporarily trim, say, the amount of electricity going to their air conditioners or clothes dryers, thus helping the utility meet peak loads. In return, the customers were able to cut their electricity bills by 15% or more.

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The smart meters are just a beginning, many experts say. But the path ahead is less than crystal clear. Just as it was impossible to predict in 1900 that electricity itself would lead to TVs, MRIs, computers—or even electric irons, for that matter—"now it is hard for us to envision what we will enable in 30 years," says James E. Rogers, CEO of Duke Energy (DUK).

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