The Strategic Value of Smart Grid Investments

I recently presented a global overview of the Smart Grid for the Smart ICT Sustainability Virtual Summit.  You can listen to the presentation “The Smart Grid value chain – myths and realities” by clicking here to register – it’s free.  Virtual summits are a great way to share information without the hassle and carbon footprints of travel.

The Smart Grid is definitely global – prompting upwellings of new technology, public and private investment activities, and strategic plans at national and regional levels.  The Smart Grid has different meanings for different audiences, so in a developing country, it may mean an opportunity to design distributed generation configurations for the delivery of electricity to underserved communities.  Developed nations with legacy infrastructure see upgrades such as synchrophasors deployed into transmission systems to deliver wide area situational awareness or new investments in energy storage at distribution substations to function as independent power islands to reduce power outage footprints. 

For the vast majority of consumers though, the Smart Grid is just not part of their daily dinner conversation.  Those of us in the industry are directing a great deal of information loaded with acronyms and industry jargon towards them, but they are not getting the messages about what the Smart Grid means to them or its strategic benefits.  This communications deficit has implications for continued support of government investments.

Zpryme, a research and consulting firm, recently completed a study of governmental investment in the Smart Grid that is available here.  China tops out all government investments with a total of $7.323 Billion spent in 2009.  The USA is second with a total 2009 investment of$7.092 Billion.  From a regional perspective, the Asia/Pacific region has a combined investment of almost $10B, while the EMEA region represents almost $2B.  These investments highlight the fact that policy makers understand there can be winners and losers in the Smart Grid technology race.  And these amounts are merely starting points.  Global investments required in the energy sector for 2003- 2030 are an estimated $16 trillion, according to the International Energy Agency. In Europe alone, some €500 billion worth of investment will be needed to upgrade the electricity transmission and distribution infrastructure.                                 

Policy makers recognize that Smart Grid investments improve energy security and stimulate local economies with new businesses and jobs, along with greenhouse gas emission reductions.   Investment in Smart Grid technologies is a long-term value play, and it will be vitally important that we educate consumers, also known as taxpayers and ratepayers, about the strategic benefits of these investments.  It will be more of a challenge in some countries than others, but the ones that do it well will be the winners in Smart Grid technologies and services exports, and build thriving domestic businesses along with increased energy security. 

The countries that dig deep to invest in game-changing technologies that maximize energy harvests of clean renewables like solar and wind create industries and build employment.  These investments also reduce our dependence on foreign oil, and localize energy purchases.  I’d much rather buy electric energy from my local neighborhood solar generation facility for an electric vehicle than burn gas purchased from some hostile foreign government that funds terrorists.  Intelligent public/private educational programs build needed job skills and intellectual capital that create local centers of excellence for vital Smart Grid technologies.  Even the low-technology, low-hanging fruit of the Smart Grid – energy efficiency programs that retrofit existing housing and building stock to reduce energy costs –  also create jobs that cannot be outsourced. 

Communicating the “security and jobs” benefits of the Smart Grid to consumers goes well beyond the usual “what’s in it for me” messaging about saving money on individual energy bills,  and improving our environment, but must be factored into the story lines to build and maintain taxpayer and ratepayer support for continued Smart Grid investments.                                                      

 

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