Getting Smart About the Smart Grid

Imagine driving into a gas station, filling the tank and not knowing how much the gas cost -- until a bill arrives at the end of the month. That's how most of us buy electricity, it's a crazy way to do business and, if all goes well, it won't last.

Why? Because momentum is building behind the so-called smart grid, which, among other things, will make buying electricity more transparent. The $787-billion stimulus package signed into law Tuesday by President Obama includes $4.5 billion for a smart grid, along with tax incentives to promote solar and wind power.

Tuesday afternoon, an event called "Plug In to the Smart Grid" organized by General Electric and Google attracted a standing-room only crowd of more than 500 people to Google's New York Avenue offices in Washington. Among the speakers were such power players as Carol Browner, the president's climate czar (although she didn't say anything), John Podesta, the head of Obama's transition team and leader of the Center for American Progress think thank, and Chris Miller, a senior aide to Senate leader Harry Reid.

Washington's renewable energy crowd is downright giddy about the president's push for clean energy.

"Look where President Obama has chosen to be today," said Dan Reicher, a Google executive and former Clinton administration official who was co-host of the event, along with Bob Gilligan of GE. "He could be standing by a bridge or a highway. But he's at the Denver Museum of Science looking at a solar panel."

Gilligan ticked off the advantages of the smart grid: "It enables higher penetration of renewables. It allows the utilities to operate in a more efficient manner. Most importantly, it empowers and enables consumers by giving them more information."

Because a smart grid is essentially the application of information technology to the electricity business, Google (an IT company) and GE (an energy company) have joined together to push for better federal and state policy to enable the grid. This was their first outreach event in DC. Here are a few things I learned:

Information is power. Power over power, in this case. A smart grid will tell consumers how much their electricity costs at any given time of day, how much each appliance draws down from the grid, how their usage compares with their neighbor's, perhaps even whether they are using clean or "dirty" power. So, for example, if consumers know that it's cheaper to run the dishwasher or washing machine at night, many will do so. Can you think of a better way to promote energy efficiency in homes?

As Ed Lu, a Google executive (and former space shuttle astronaut for NASA), put it: "All of our work in this area is based on the premise that consumers ought to be able to see how much energy they are using." Google's working on a software, called the Google PowerMeter, to show consumers their consumption in real time.

Andy Karsner, the smart and outspoken former Bush administration energy official, said: "This is about full transparency and disclosure and empowerment of every consumer and small business in America. People ought to know how the biggest investment they make in their life performs, on the day they buy a new home."

How that information will be delivered is no simple matter. It raises issues of privacy, intellectual property and security, among others.

The grid needs to get bigger and stronger, as well as smarter. Right now, there's not enough transmission capacity to move wind power from the Great Plains to Chicago or solar power from the southwest to urban centers like Los Angeles.

"That's going to require literally thousands and thousands of miles of new transmission, and we've seen very little (recently) in this country," said Reicher.

To get major transmission lines built, the federal government will need more authority to site them, even over objections from state and local officials.

"Siting continues to be a problem," Podesta said. It's a lot easier to move oil and gas around this country than it is to move electricity, in part because the federal government exercises its power to get gas pipelines built.

Turning to Chris Miller, the Senate aide, Reicher asked: "Is the federal government going to end up with significantly more authority to site transmission lines?"

"Yes," Miller replied. He said enhanced federal clout could be part of an energy bill that the Senate will take up this spring.

Karsner added: "This is not a question of the opportunity to bring solar from the Southwest or wind from the Midwest. I would say it's a necessity … If the planet could talk, it would say, stop choking me."

Highlights from the Plug Into the Smart Grid event will be posted on Google's DotOrg channel on YouTube (a Google property), where there's also an interesting video about the Google PowerMeter gadget. We'll also be looking at the smart grid during FORTUNE's Brainstorm Green conference, with a panel that includes the CEOs of smart-grid firms GridPoint and Silver Spring Networks as well as venture capitalist and grid guru Chuck McDermott.

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