Smart Grid Grants May be Stupid

By Kennedy Maize

President Obama in late October announced that the Department of Energy would award $3.4 billion in grants to allegedly “smart grid” technologies. As I parse the awards, my reaction is that they are fundamentally stupid.

Most of the money – to be matched by the private sector (those matches presumably are tax deductible and, for utilities, recoverable in customer rates) – goes to installation of smart meters. Why is federal stimulus needed for smart metering? Many utilities over the past couple of decades have seen it in their economic interest to install various versions of smart meters, including the obvious advantage of remote meter reading.

The smart grid sounds cool, trendy, and hip. It is, as I have expressed before, a distraction from the more important goal of a strong, fully-interconnected grid. The smart grid federal funds strike me as grandstanding, not something that Uncle Sam needs to fund to advance the national interest.

The real grid problem is the gridlock (that’s the correct term) between the states and the federal government over high-voltage interstate commerce. Congress tried – with typical half-measures – and failed to address that problem in the 2005 Energy Policy Act. Fiddling around with the undefined “smart grid” in response to that failure – a tactic promoted by the Electric Power Research Institute, which is trolling for a new mission and research dollars – strikes me as misguided.

Pardon me if I think the awards are political. The single largest grant – or loan, if you believe that loans without collateral or interest are really loans – is in, surprise, Delaware, where DOE will put up $528 million to reopen a General Motors plant in Wilmington, employing 2,000 union workers at a Fisker Automotive plant to make high-end electric cars. The plant had produced sporty two-seaters for Pontiac and Saturn, both brands that GM has now jettisoned.

Based in California, Fisker has yet to roll out its cars for the auto market. The company plans to produce a mid-sized, luxury four-door, plug-in hybrid in 2012, at some $89,000 a copy. That’s for a car that will run 50 miles on electricity before switching to gasoline. But it qualifies for major smart grid money from Washington to make someday-to-be commercial cars in Delaware. What this has to do with smart grid technology frankly escapes me.

But I get the politics. Vice President Joe Biden, a former Democratic senator from Delaware, surely had something to do with this award. That’s particularly true because his son Beau Biden, Delaware’s attorney general, likely is running to fill his father’s former senate seat next year, against Rep. Mike Castle (R-Del.), the only Republican who has been able to win statewide in recent years (Delaware has only one House seat). Castle, a moderate Republican (is that an oxymoron?) was also governor (1984-1992).

The White House denies that the Delaware award has anything to do with politics. And Claude Rains as Inspector Renault in Casablanca (1942) was “shocked, shocked” to discover gambling at Rick’s Place. At which point, a croupier handed Renault a fist-full of cash.