President Obama’s recent announcement of $3.4 billion in grants to help modernize the nation’s energy grid was steeped in references to 21st-century technology.
But the program’s inspiration is actually rooted in the beginning of the last century. As electricity proliferated across the nation to power Edison’s new incandescent light bulbs, and as the oil industry made a frequent and convenient target for President Theodore Roosevelt, the onset of phenomenal growth in the auto industry eased the strain of declines in demand for kerosene and gas.
Today, as competing pressures seek to again drive major shifts in Americans’ energy use, uncertainty over economic implications casts a threatening shadow over that momentum.
The Obama Administration unveiled this latest multi-billion-dollar initiative with descriptions of jobs created, lower energy bills, and increased efficiency. It joins an existing framework of federal (and a growing number of state) tax incentives, grant and loan programs for energy efficiency and renewable energy use.
Retail electricity expenditures in the United States comprise 2.4 percent of gross domestic product. With annual electricity consumption projected to increase by 26 percent by 2030 — summer peak demand is expected to increase 39 percent — this growing demand will require an increased capacity to deliver reliable energy with the resilience to avoid service interruptions.
Today, about half the electricity used annually in the United States is produced by burning coal. Natural gas and nuclear power each account for another 20 percent. Hydroelectric power and other renewable energy sources provide only about 8 percent of all electricity Americans consume annually.
Reducing Americans’ reliance on non-renewable energy sources will require that renewables be able to compete with fossil fuels without being subsidized by tax dollars. Getting there will require significant investments, utilizing new technology on a broad scale, and important policy changes.
Perhaps the most significant of these is the implementation of a smart power grid that will provide consumers with useful feedback on electricity consumption and allow producers (including families with rooftop solar panels) to sell renewable energy for consumption in major population centers. A Smart Grid must also provide increased reliability and protection against blackouts.
American families can manage and reduce their electricity use if they are given easy access to helpful, timely information to help them monitor daily consumption. A 2006 Oxford University study concluded that household consumers equipped with such meters can be expected to reduce their energy usage from 5 to 15 percent. Smart meters with brand names like The Energy Detective are currently for sale around the nation. When used with consumer-friendly software packages, like Google’s PowerMeter, they empower families to work together to lower their energy use and carbon footprint better than ever before. But until a Smart Grid is in widespread use, their impact on overall energy use patterns will likely remain limited.
Moving the nation to Smart Grid will require addressing other new challenges as well. For instance, the same wireless devices that play a critical role in helping families control their energy use also pose a potential cyber-security challenge — both to personal data on household networks and increasing potential vulnerability of data centers or other vital infrastructure. Better solutions from both policymakers and industry will be essential to the success of Smart Grid.
It will also require that the nation’s electric utilities institute “smart” rate schedules that give consumers financial incentives to modify their energy use and renewable producers the chance to sell power to the grid at relevant rates.
Technology can help in other ways too. The federal Department of Energy is preparing to judge its $10-million “L Prize” competition to anoint a new, energy-sipping successor to the 60-watt incandescent bulbs that still provide half of the nation’s lighting — a development it hopes will lead to substantial reductions in electricity use.
As the nation moves toward policies that address its energy needs for the coming decades, Smart Grid represents a crucial part of the solution. But its implementation, along with the policies that support it, must also be smart and focused on solving these challenges in ways that empower and encourage Americans to make a meaningful difference.
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