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Darrell Delamaide
The one
time when you can really appreciate a well-oiled bureaucratic machine is
when it's pumping out money.
The
administration's $787 billion economic stimulus package provides some $65
billion in grants and tax credits for an array of energy projects. These
funds turn the Department of Energy, other federal agencies and state
governments into an ATM machine for the industry -- if they know which
buttons to push.
So the
industry is swinging into action, forming a number of working groups
through the Edison Electric Institute, which represents investor-owned
utilities, to cash in on this government largesse.
The
stimulus package, designed to mitigate the recession with government
spending to replace the collapse in consumer demand, was passed in
February, and by mid-April, DOE had put out its first notice of intent to
distribute grants totaling some $4.5 billion for smart grid projects.
By the
early May deadline, an Edison Electric Institute working group had prepared
a comment letter on the department's proposals. The main concern the
industry group had was that DOE planned to cap the individual grants at $20
million. This amount was too small, the industry argued, given that some of
the bigger smart grid projects involved total investments of $600 million
and more. Individual grants should be more on the order of at least $50
million, they said.
But the
industry is not complaining about the overall amount of $4.5 billion.
"It's certainly enough to make a difference," says EEI's Ed Legge, who worked on
the smart grid comment letter. "It can help accelerate the deployment
of the technology."
The smart
grid grants are a prime example of the administration's stated purpose with
the package of killing two birds with one stone -- stimulating the economy
with added government spending while incentivizing long-term structural
changes that will make the country more competitive.
Renewable
energy itself stands to benefit from $6 billion in temporary loan
guarantees for rapid deployment of wind, solar, hydro and other renewable
projects. Additional alternative energy funding includes $2 billion in
grants for advanced battery manufacturing and $400 million for
energy-related projects at the Defense Advanced Research Projects Agency.
A total
$3.4 billion for fossil energy research projects includes $800 million for
the Clean Coal Initiative Round III and another $1.5 billion for
carbon-capture-and-storage demonstration and energy-efficiency projects.
Well-Oiled
Machine
Further
funds are being channeled through the states -- including $6.1 billion for
energy-efficiency and conservation grants and $3.1 billion for state energy
programs that focus on utility efficiency and renewable programs. Other
energy-efficiency programs include $5 billion for weatherization of
low-income homes.
For its
part, the EEI has produced a 26-page summary of the various titles of the
economic stimulus package pertaining to energy. In addition to the working
group on smart grids, the industry group has formed several other working
groups to coordinate input in other major grant areas.
"These
measures will create jobs, promote economic growth and reduce the country's
oil imports," writes EEI President Thomas Kuhn in a recent article.
"At the same time, they will expedite the transition under way within
the electric power industry to a more energy-efficient, lower-carbon
future."
But Kuhn
adds that further work would be needed to strengthen the nation's
transmission system, particularly to deliver the electricity generated by
renewable sources. Renewables, especially wind
energy, are often located far from population centers. The organization
says that the thorniest issue in this regard is siting,
especially if the transmission lines have regional implications.
The first
funding out of the gate, the smart grid grants, is a microcosm of how
stimulus funds will work for other energy projects, and indeed for much of
the stimulus package. With its deadlines for planning and funding within
the next two years, the smart grid grants encourage companies to finalize
or expedite their own plans.
Smart grid
technology, for instance, is a key component of the conservation program
announced last year by Dominion Virginia Power. The utility plans to spend
$600 million on the project and to replace all its existing meters with
smart, two-way meters. Consumer savings are expected to top $1 billion over
a 15-year period. Florida Power & Light, meanwhile, said the stimulus
package encouraged it to begin a $200 million smart grid system that will
create up to 1,000 jobs.
A third big
project announced in recent months is in the Houston area where CenterPoint
Energy will install more than 145,000 smart meters by year-end. Following
this pilot project, the company then plans to deploy smart meters to nearly
2.5 million consumers within a 5,000-square-mile service area over the next
five years at a cost of $640 million.
And this is
just a fraction of the overall stimulus money for energy projects, as other
agencies ready their notices of intent for procedures to disburse funds.
"I don't know how they keep it all straight," says EEI's Legge.
That, of
course, is why you have a well-oiled bureaucratic machine.
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