Although the smart grid has just recently become a topic of the American public’s interest, lawmakers were well aware of its importance several years ago. The development of this much-needed grid upgrade is dependent upon the Energy Independence and Security Act of 2007 (EISA), which declares it the policy of the United States government to support the modernization of the transmission and distribution system in order to maintain a reliable and secure electricity infrastructure.
EISA set up the Smart Grid Task Force (SGTF), a group of at least eight individuals appointed by the Secretary of Energy. Task Force members are charged with representing both the private and public sector stakeholders in smart grid implementation and are meant to coordinate all smart grid activities that occur within the federal government.
The legislation highlights the importance of research, development, and demonstration of various smart grid technologies. Central to this is the creation of the Smart Grid Regional Demonstration Initiative. Intended to show the benefits of investing in grid technologies, the program will launch five demonstration projects across the country. It will be very exciting to see where the first demonstration project will be located and how the public will react to the first tangible federal step in the grid upgrade.
One major downfall of the EISA is that it lacks teeth when biting into state policies. Such legislation, which will be critical in determining the speed at which smart grid technologies are implemented, is only advised and not mandated. EISA says states should consider (1) requiring utilities to justify investments in non-advanced grid technologies; and (2) authorizing utilities to recover from ratepayers costs of the electric utility relating to the deployment of a smart grid system. Not wanting to fuel the flame that flickers around federal-state jurisdiction, the federal government took on a passive role in the legislation.
So what states are heeding such advice? For starters, California. In July 2006, even before the passage of the legislation, California was the first state to authorize a utility (PG&E) to spend nearly $2 billion to install an Advanced Metering Infrastructure (AMI). A cost-effective and widespread AMI is a prerequisite for the successful growth of a smart electrical grid. In addition, California state government is debating specific smart grid legislation in Senate Bill (SB) 17. Key provisions of the law would require all government stakeholders to “determine the requirements for a smart grid deployment plan” by 2010 and for each electrical corporation operating within the state to “develop and submit a smart grid deployment plan…for approval.” If this legislation passes, California will be first to enact a statewide smart grid framework. Colorado and Florida are also stepping up to the challenge. Boulder, Colorado has the goal of becoming America’s first “smart grid city,” thanks to an initiative undertaken by utility XCel Energy. And Florida is set to install 1 million smart meters in Miami in collaboration with GE, FPL Group, Cisco, and Silver Spring Technologies.
How are such projects to be funded? To start, we can look at the allocation of $4.5 billion towards smart grid investments passed as part of the stimulus package of February 2009. This is the federal government’s first financial commitment towards upgrading the grid. Privately owned utilities, concerned with the large upfront investments needed to bring advanced metering to consumers, were the first to point out that more funding is needed. In response, the maximum award available under the Smart Grid Investment Grant Program was increased from $20 million to $200 million, thus showing that the government is indeed listening to stakeholders.
Keep checking in with us at GetSolar as we track smart grid funding and legislation. Such policies are the gatekeepers to scaling solar power at both the residential and utility levels.
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