Al Gore, in his recent New York Times op-ed titled "The Climate for Change," calls for a "$400 billion investment over ten years to construct a national smart grid to distribute renewable energy." Echelon supports these proposed investments. We also believe the answer is not just in constructing something new but in transforming the existing "overbuilt" grid in the U.S.
The Vision
To achieve this double goal, utilities must continue to look carefully at the technologies they select, especially to ensure that the smart grid really does deliver on the promise to save the U.S. energy and improve the global environment. Echelon also believes government will succeed more quickly if it begins to reward and incent cities, utilities, and building and home owners to find ways to continuously be more energy efficient — instead of maintaining the current of state of "disincentives."
For example, in many jurisdictions utilities are required to pass on immediately any operational savings to the consumer in the form of reduced rates. This means that, were a utility to invest in technologies that lowered the cost of reading and maintaining residential meters, it would pass on the savings rather than use the savings to offset the cost of the investment. In turn, such a utility would raise rates to recoup its investment — a perfect Catch-22 situation.
In addition, as companies in the grid ecosystem work together through this time of transformation, job creation and other economic stimulus events are inevitable. In the end, it will pay big to build intelligence into all the things that are connected on the U.S. smart grid. From improved services to energy savings and investment opportunities galore, a truly smart grid will improve our economic situation from start to finish, and for possibly centuries to come.
Taken at face value, Gore’s $400 billion estimate seems like an enormous amount of money. However, when you take into account that he also estimated annual losses to business to be $120 billion as a result of not having a modern electrical grid, then the payback for the investment would be less than three and a half years. It is absolutely imperative that our nation invest wisely in smart grid technologies today and ensure that they are future-proof for tomorrow.
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