| Waiting for 2009 Location: New York Author: Patti Harper-Slaboszewicz Date: Friday, December 19, 2008 As 2008 draws to a close, we are waiting for financial markets to absorb the string of troubles that hammer away at confidence in organized markets around the globe. We wait for President Elect Obama to be sworn into office, completing the transition to his administration that will be dealing with the economic crisis in addition to the other major challenges facing the new administration. We wait to see if the steps to address the financial problems will be able to stop the bleeding. In the energy industry, we wait to see how utilities and regulators evaluate plans for smart grid investments in competition with other capital intensive projects. They, along with us, wait to see how President Elect Obama's team might view smart grid investments. His energy team is listed below along with a selected quote from their acceptance speech on December 15, 2008: * Dr. Steven Chu—energy secretary, Nobel Prize winning physicists, currently leading the Lawrence Berkeley labs—“We believe that aggressive support of energy, science and technology, coupled with the incentives that accelerate the development and deployment of innovative solutions, can transform the entire landscape of energy, demand and supply.”1 * Carol Browner—a new White House position combining energy and climate, former head of EPA under the Clinton administration, currently chair of the Audubon Society— “We can create jobs, curb greenhouse gas emissions, reduce our dependence on foreign oil, and help restore America's leadership around the world by shaping an environmentally sustainable world economy.”2 * Lisa Jackson—EPA administrator, former head of New Jersey Department of Environmental Protection—"At the top of the list is the threat of climate change, which requires us to transform how we produce and use energy throughout the economy."3 * Nancy Sutley—chair of the Council on Environmental Quality in the White House, currently regional administrator for the EPA for California—"We must transform our economy and create new jobs and a new prosperity based on sustainability."4 Reviewing the words chosen by these nominees in accepting their nominations in President Elect Obama's administration, several themes are evident. Job creation is an important component going forward, not only to aide in recovering from the current economic recession but to also to start the transition from an oil-based economy to one based on green energy. Transformation is another key word, used by Dr. Chu, Lisa Jackson and Nancy Sutley. Demand and supply/production and use—two nominees refer to both the creation and use of energy in one phrase, suggesting that we need to consider demand and supply, not just one or the other. We can't reduce our dependence on foreign oil significantly and develop the capability of sustainability without considering both how we use energy and how we supply energy. Smart Grid investments will need to compete for attention from the Energy Team to be considered as part of the transformation envisioned going forward. Job creation—can the Smart Grid provide jobs quickly based on technology available today that will be flexible to adapt to the innovations of tomorrow? UtiliPoint is aware of at least 100 projects far enough along to produce jobs at all levels—entry level workers to manufacturing to professional. Some of these projects may be in limbo waiting for confirmation that the project fits the description of the transformation to green energy and sustainability that the Energy Team is looking for. Smart metering projects, for example, need meter installers, appointment schedulers, manufacturing, project managers, software, software integrators, customer service training, marketing, network design and installation, computer hardware, uniforms, and more. Projects typically take four to five years to rollout, resulting in positions that would carry employees past the economic recovery period. While some may argue that automated metering projects eliminate jobs for manual meter readers, the utility industry, for the most part, has been successful at eliminating positions through attrition, promotion and retraining. New meters will also be needed as will meter maintenance. The technology eliminates repetitive, mundane work and offers new opportunity for increased skills and increased efficiency. Smart metering and the associated back office systems and hardware support innovative energy pricing that marry energy efficiency with demand response, allowing customers to reduce peak energy use and conserve energy, resulting in a reduction of green house gases, lower costs, and postponing or avoiding the need to build peaking plants that are only used 100 to 200 hours per year during seasonal demand or during an unexpected outage due to equipment issues. Smart metering also supports distributed generation, allowing pricing for generation to reflect the true value of the energy based on when the generation resource is available as opposed to using long term average values. This would provide additional incentives for providing solar energy which tends to be available at the time of summer peaks. Looking further, smart metering supports home area networks, which allow for utilities and their customers to manage plug-in electric vehicles efficiently. Using electric vehicles charged from the grid when the power to the grid is supplied from energy sources other than coal could lead to a gradual reduction in green house gases created by driving gasoline powered engines, assuming the penetration of electric vehicles grows over time. In addition, using electricity to power cars would reduce the demand for gasoline, which we've seen over the past few months can have a dramatic effect on the price of oil worldwide, leading to significant savings. Smart metering, as defined in North America, Australia and some European countries, provides customers with many options for reducing energy use. Customers can see how much energy is used every hour, see their demand change as electrical devices are turned on and off, manage the use of large loads such as air conditioning and electric heaters, and track their bills on a daily basis. Smart Grid investments will create jobs, quickly and with lasting effects, help customers save energy and money, and support the transition to electric cars and other innovations that are on the horizon. Smart Grids can support initiatives to reduce global warming and support sustainability efforts and green gas reductions. Smart metering is complementary to investments in distributed generation such as solar. As we wait for the ending of 2008 and ring in a new year with a new administration, we do so with high expectations for the future. Recent events remind us of uncertainty for world events, the predictability of weather uncertainty, and the expectation for creating a cleaner, healthier environment by making better choices in how we use and how we obtain energy. We believe Smart Grid investments are part of the solution to that brighter tomorrow. 1Transcript: Obama News Conference Announcing Environment and Energy Team | December 15, Source: CQ Transcriptswire 2Ibid 3 Ibid 4 Ibid UtiliPoint's IssueAlert® articles are compiled based on the independent analysis of UtiliPoint consultants. The opinions expressed in UtiliPoint's® IssueAlert® articles are not intended to predict financial performance of companies discussed, or to be the basis for investment decisions of any kind. UtiliPoint's sole purpose in publishing its IssueAlert articles is to offer an independent perspective regarding the key events occurring in the energy industry, based on its long-standing reputation as an expert on energy issues. © 2008, UtiliPoint® International, Inc. All rights reserved. To subscribe or visit go to: www.utilipoint.com |