Building the Smart Grid: The Burden of Following Through on Campaign Promises

The expiration of the newspaper is not an entirely salutary event. Any time three centuries of tradition reach their terminus, thoughtful observers have to take notice. Even so, it's apparent that the violent displacement of the newspaper for the online journal has it's virtues: for one thing, the printed word was an all to static medium. It used to be that members of the cognoscenti would whisper about particular events caught on film, without ever necessarily having witnessed them. Have you seen Eisenhower's farewell address, his "military-industrial complex" speech? How about Lyndon Johnson's notorious Daisy ad? Today, thankfully, such audio-visual artifacts are as accessible as any speech transcript these venerable figures have left us.

Though not quite of the same historical caliber, then Senator Obama's interview with Rachel Maddow, just days before his election, is a case in point. After being prodded with a particularly provocative question: whether the U.S. should institute an FDR style public works program, Obama surprisingly answered in the affirmative:

One of the most frustrating things over the last eight years has been the ability of George Bush to pile up debt and huge deficits and not have anything to show for it, right? So, if you're going to run deficit spending, then it better be in rebuilding our roads, our bridges, our sewer lines, our water system, laying broadband lines.

One of, I think, the most important infrastructure projects that we need is a whole new electricity grid. Because if we're going to be serious about renewable energy, I want to be able to get wind power from North Dakota to population centers, like Chicago. And we're going to have to have a smart grid if we want to use plug-in hybrids then we want to be able to have ordinary consumers sell back the electricity that's generated from those car batteries, back into the grid. That can create 5 million new jobs, just in new energy.

This was the soon-to-be President at his most ambitious, seemingly standing astride history, all but declaring the era of small government over, and announcing the arrival of a new New Deal. But, as we've seen in the case of expanding the broadband network, grandiloquent rhetoric is no substitute for the dry business of budgeting enough federal dollars to make an appreciable impact. Well, then, how about the case Obama seems to highlight here, the need to develop a new smart electricity grid? Is the administration providing the fiscal capacity to tackle this particular element of our national infrastructure? For that matter, what is a smart grid?

Essentially, a smart grid is the result of information technology being integrated into the power system, that is to say, the creation of something like an energy internet. A combination of digital meters and sensors would allow for the more efficient allocation of energy. For example, instead of paying fixed rates for electricity, "dynamic pricing" would allow consumers to pay less during periods of low demand, such as at night. Real-time information about power consumption would allow individuals to modify their usage, also depending upon overall demand. The reverse is true as well: utilities would gain the ability to signal households to reduce consumption during periods of high energy usage. With this type of two-way communication, blackouts like the massive 2003 outage that shutdown the Northeast would be much less likely to occur in the future.

This same ability to modify electricity demand makes a smart grid amenable to renewable sources of energy. One of the characteristics that have made solar and wind energy problematic is the fact that they're inherently unpredictable. A series of cloudy or windless days would necessarily put a damper on any power system dependent upon these sources. Again, however, a smart grid would be capable of adjusting demand in response to these sorts of vagaries of God and nature, and thus would make it more economical to expand the use of renewable energy. Moreover, a new system of long-distance high voltage lines would be able to transport electricity from states with extensive wind farms, to larger population centers. This isn't the only aspect of modernizing the energy grid that's environmentally friendly. In the future, individuals would be able to sell energy back onto the market, for example from residential solar panels or from energy stored in hybrid electric cars. In other words, by the most optimistic forecasts, the smart grid offers up a green vision of a society rationally allocating electricity where it's needed, shedding it where it's not, and developing an ever-greater reliance upon renewable sources of energy.

That's the promise, anyway. What can we say about our government's dedication to shaping it into reality? Almost exactly a year after the Maddow interview (and since the election), the President provided an answer: $3.4 billion in federal stimulus grants to 100 different projects across the country. The funds award a veritable grab-bag of recipients including cities, utilities, private firms, and manufacturers and will cover the installation of 18 million smart meters, 700 automated substations, and 200,000 new transformers. It all sounds impressive, emblematic of a shift to a can-do spirit in America, of public-private partnerships, of synergy between corporations and government to rebuild the country and make it competitive into the 21st century. There's just one small problem: Uncle Sam isn't providing enough money to make it happen.

To put matters in perspective, it's useful to look abroad. The first major smart grid initiative, the Telegestore project, was installed by the Italian utility Enel over a five year period ending in 2006. Today the system covers 30 million Italians at a cost of 2.1 billion euros (or about $2.5 billion at the time). Now, this is a not insignificant investment in a country like Italy, with a little less than 60 million people. It becomes rather less impressive in a superpower of over 300 million. And of course, the Telegestore system is not even a fully comprehensive national grid to begin with. How much would such a unified national smart grid cost in America? Former Vice President Al Gore's group Repower America put the price tag for such a network at $400 billion. Meanwhile, the industry consultancy the Brattle Group estimated that rebuilding the grid would require an investment of $900 billion over twenty years. In other words, what the administration is undertaking amounts to a very significant symbolic gesture, or a modest, though encouraging beginning, but not much more.

And those 5 million jobs that Obama promised from building a smart grid a year ago? In his speech detailing the federal grants, that figure shrunk to "tens of thousands" of jobs created or saved.

So, with regards to the smart grid, as with investments in broadband, or in high-speed rail, or for that matter when dealing with health care reform, the problem facing America isn't so much that of misplaced priorities in Washington anymore, as of insufficient commitment. A green New Deal could, in theory, rebuild our infrastructure, employ millions, and emerge as the basis for a new wave of industrialization in this country. But, this will only happen if the dollars appropriated for these ends begin to match the soaring scope of the rhetoric that we've become so addicted to.

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