Blog Post

Smart Grid Stimulus Spending Capped Too Low, Say Utilities

The more than $4 billion allocated in the stimulus package for the smart grid will deliver a massive boost for information technology companies and utilities that want to add intelligence to the power grid. But the funds need to be spent in an effective way in order to nourish the new market. And there’s already one problem (likely not the last) that utilities are pointing to: The cap on spending for any one smart grid project, they say, is too low.

According to Duke Energy, and New Jersey utility PSEG, quoted in the Washington Post, the grants of $500,000 to $20 million per smart grid project, which Vice President Joe Biden detailed earlier this month, won’t be enough to support the rollout of a significant-sized smart grid project. Duke Energy (s duk) is budgeting $1 billion over five years; PG&E (s pcg) plans to spend $1.7 billion for more than 9 million smart meters; FPL (s fpl) is planning to spend $700 million for smart meters for 4.5 million customers. Even a smaller utility like PSEG plans to spend $200 million. PSEG says it would scale back some of its plan, with the current cap. These rollouts clearly aren’t cheap.

But the $20 million cap could still be crucial for the many smaller utilities scattered throughout the U.S. I could see the larger utilities putting on the pressure to get this cap raised, while the smaller utilities will be perfectly happy with their grants. Already, though, the concern from utilities looks to be having an effect. The Washington Post says that the DOE is considering revising those guidelines and quotes the policymaker in charge, Matt Rogers, as saying that the DOE may split up the smart grid funds for big and small companies with a higher cap for the big guys. The final guidelines will be issued after the comment period ends on May 6.