SAN JOSE, Calif. — Eighteen million homes—13 percent of all U.S. households--will get smart electric meters within three years as part of $3.4 billion in U.S. government grants to upgrade the country's aging electric grid. President Barack Obama will formally announce the awards Tuesday (Oct. 27) in remarks at one of the country's largest solar farms in Arcadia, Florida.

The grants represent a small sliver of the U.S. economic stimulus package announced earlier this year. But they are perhaps one of the biggest pieces in a set of federal government moves to accelerate work on the transition to a so-called smart grid.

The government accepted 100 of nearly 400 proposals for the grants to be awarded in the next 60 days by the U.S. Department of Energy (DoE). A quarter of the proposals accepted were for the maximum award amount of $200 million.

All proposals were required to raise matching funds. In fact, the accepted proposals raised 1.4 times the amount of the grants or $4.7 billion, bringing the total investment in the U.S. electric grid to $8.1 billion.

"We have good skin in the game here," said Jared Bernstein, chief economist and economic policy adviser to the vice president in a press conference call announcing the awards.

As large as they are, experts say the billions are just a down payment on tens of billions more that need to be spent over the next decade to turn today's analog and mechanical power grid into a digital, networked infrastructure.

"A lot of people want to compare this to building the U.S. interstate highway system," said Carol Browner, assistant to President Obama for energy and climate change, also on the call with press. "We have a very antiquated system in this country that needs to be updated," she said.

The projects cover 49 of the 50 U.S. states, Browner added. They fall roughly into three areas: smart metering projects that give customers access to information about their electric use, infrastructure upgrades to better connect renewable energy sites like the Florida solar farm with the rest of the grid and other infrastructure improvements to the grid's backbone.

In addition to the smart meters, the approved projects include plans to deploy as many as 200,000 advanced transformers, 170,000 smart thermostats, 7,600 automated substations and upgrades for 850 transmission centers. The additions will mean five percent of all U.S. electric substations and much of its transmission network will migrate to digital technology, administration officials said.

Baltimore Gas and Electric will receive $200 million in federal grants, an example of one of the 25 largest winners. The utility will use the funds--along with another $251 million it is raising--to deploy 1.1 million smart meters and 400,000 in-home devices including networked thermostats and home load managers.

The systems could help the Baltimore utility reduce its peak demand levels as much as 22 percent, administration officials said. Overall, a smart grid could reduce U.S. electric consumption by four percent, saving $20.4 billion, according to some estimates.

For its part, San Diego Gas and Electric will get $28.1 million in federal funds to deploy infrastructure gear supporting existing smart meters in its GridCom project. The utility is raising 31.9 million to augment the grants.

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