Taxpayer Dollars to Support Utility Smart Grid Expenses

Michael Giberson

Rebecca Smith reporting in the Wall Street Journal, “Obama to Name ‘Smart Grid’ Projects“:

The Obama administration is expected Tuesday to name 100 utility projects that will share $3.4 billion in federal stimulus funding to speed deployment of advanced technology designed to cut energy use and make the electric-power grid more robust.

When combined with funds from utility customers, the program is expected to inject more than $8 billion into grid modernization efforts nationally, administration officials said. … The Department of Energy said grants of $400,000 to $200 million will lead to the installation of at least 18 million advanced digital meters, which should bring the nation’s total to about 40 million, or enough to cover one-quarter to one-third of U.S. homes….

Energy Department officials stressed, in a press briefing Monday evening, that consumers will benefit from the investments. New meters and energy monitoring systems will give consumers better information to manage their energy use, and make it easier for power companies to use more renewable energy. Electricity from wind turbines or solar power systems tends to come in uneven bursts — when the wind is strong or the sun bright. A digital grid would be better able to handle those ups and downs, proponents of the investments say.

Energy Department officials said that they received more than 400 applications and requests for more than $17 billion in funding assistance.

One question that’s still unanswered is whether consumers in states like California and Texas, where utilities are already installing millions of smart meters, could wind up being penalized, in effect, because those states moved forward before stimulus funds were offered.

If the meters allow consumer access to the data, work interactively with the consumer’s appliances and home energy management devices, and support more advanced rate structures, then eventually consumers will benefit.

The speed at which consumer’s see benefits will depend on technology and policy choices of utilities and state retail electricity policies. I suspect that the competitive retail marketplace of Texas will shine, with or without federal support.

UPDATE: The list of 100 awardees included several projects in California and in Texas (both in ERCOT and in the non-ERCOT parts of the state).  The U.S. Department of Energy also provides a map.

One thought on “Taxpayer Dollars to Support Utility Smart Grid Expenses

  1. About the California projects, only $28 million is going to one of the IOUs, the rest of the $183 million or so is going to municipal utilities who are not necessarily actively installing advanced meters, so it is arguable that California’s IOUs were indeed penalized for already doing AMI. Of course, it’s also arguable that part of the point of doing this is to encourage utilities to do AMI; why provide money to a utility that has already done it.

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