Absence of Smart Grid in Budget Talks Isn't Smart

In Monday's budget announcement, President Obama followed the path that he outlined in last week's State of the Union address, proposing a massive $100 billion for job creation. In the process, he renewed his administration's commitment to infrastructure improvement, adding a call for a $4 billion "infrastructure bank" that will be used for large-scale construction projects. But, even as the President stated that "we're going to put more Americans to work rebuilding our infrastructure, and building our infrastructure of the future," a key element was missing. The "smart grid," long a centerpiece of Obama's plans for infrastructure spending, was seemingly out of the conversation.Certainly, clean and efficient energy remains a key aspect of the President's plan for jobs creation. In fact, Obama invoked a sense of competition last week when he declared that "The nation that leads the clean energy economy will be the nation that leads the global economy. And America must be that nation."

A Shocking Absence

He even went on to state that China, Germany, and India are "rebuilding their infrastructure. They're making serious investments in clean energy because they want those jobs." But, rather than focusing on smart grid technologies, the President noted the need to improve the energy efficiency of homes and build clean-energy facilities.

The smart grid's apparent absence from public discourse is particularly shocking, given the fact that it has, thus far, been among the more successful infrastructure initiatives of the Obama Presidency. While the $8 billion earmarked for high-speed rail represents a fraction of the ultimate cost of these programs, much of the smart-grid funding has already gone out and is already bearing fruit.

In July 2009, the Department of Energy awarded $47 million in grants to eight smart grid projects. In October, $3.4 billion went out to 100 projects, generating $4.7 billion in matching funds from private investments.

A Collection of Changes

Part of the problem lies in the nature of the smart grid. While it sounds like a tangible, centralized project, it is actually a collection of hundreds of small-scale changes that will add up to a massive improvement in America's utility grid. For example, one project, smart meters, will help utilities to better monitor energy consumption and will enable customers to maximize their own efficiency.

While some programs, like the "renewable energy superhighway" sound impressive, much of the development will center around small, incremental changes. In the words of one smart grid researcher, the Electric Power Research Institute's Matt Wakefield, the smart grid is "evolutionary, not revolutionary."

When it comes to job creation, the smart grid's effect is especially hard to nail down. While it will probably boost manufacturing and construction employment, its direct job creation will be more diffuse. In a report on future energy jobs, the National Commission on Energy Policy predicted that "near-term deployment of smart grid technologies" will create approximately 90,000 jobs, and that it will ultimately result in 25,000 electricity power-industry workers who will be changing jobs.

Education-Intensive Sectors

But, unlike large-scale construction projects, these smart grid jobs will, most likely, develop piecemeal, as the technologies come online and are implemented in various states and municipalities. Moreover, much of the smart grid's job creation will be in education-intensive sectors like engineering and information technologies, which will further limit their immediate effect.

Over the past year, many of the infrastructure projects in development have been likened to the Eisenhower Interstate System, and the smart grid is no exception. Like the highways, it has the potential to completely change American life, making us greener, more efficient and more competitive. But, unlike other big infrastructure projects, it will not be a single, easily identified project, which means that it will not be an easy policy point for President Obama to make.
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