The U.S. government's plan to improve the nation's smart grid

A $3.4-billion portion of the ARRA will help modernize the U.S. smart grid, while integrating renewable energy resources into the nation's power infrastructure.



While at a solar energy facility in Arcadia, Fla., President Barack Obama announced this week that his administration plans to spend $3.4 billion on producing a more efficient electrical grid. The government's funds-part of the $878 billion stimulus package-represent the largest modernization in the nation's electrical infrastructure. The $3.4 billion will be matched by contributions from private companies, resulting in a total grid-improvement package estimated around $8 billion.

Watch President Obama's complete speech here .

Of the federal money, about $1 billion will be directed at helping consumers use less energy or use energy more wisely. This could mean subsidies for buying more efficient appliances or incentives for using electricity at different times of the day. About $2 billion will be targeted at making the outlying components of the grid more reliable. This requires the deployment of more sensors and automatic turn-off mechanisms that operate during emergencies. About $400 million will be invested in streamlining the bulk movement of power across high-voltage power lines. A better effort will be made to integrate renewable sources of energy into the grid, sources such as wind or solar power.

The smart grid modernization scheme aims to spur the creation of thousands of new jobs and benefit companies or communities in 49 states. New smart technology can improve the operating efficiency and reliability of the grid itself. Many experts believe that the grid needs to respond more quickly to emergencies, either to reroute energy along new paths when obstructions occur, or, as a last resort, to switch off certain sectors of the grid as a way of containing blackouts that would otherwise envelope large areas. Some of the allocations will go toward making the grid more robust by making transformers and substations more sensitive to possible emergencies as they unfold-avoiding another blackout like the one in 2003, which cut power to more than 50 million people in the U.S. and Canada.

Other improvements include meters that customers use at the receiving end, either in homes or factories. The cost of electrical power can be much greater at 5 p.m. than 5 a.m.

In his recent Senate testimony, Energy Secretary Steven Chu reflected on the issue of smart energy, especially as it relates to renewable energy. He pointed the fact that almost all of the batteries used in hybrid cars driven in the U.S. are made in Japan and that the percentage of solar cells made in the U.S. had fallen from 40% in the 1990s to the current level of 7%.

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