Many of the energy provisions contained within the $787B economic recovery package will have a major impact on the utility and alternative energy sectors. Key energy provisions and their potential impact for the Smart Grid include, in addition to the $11B allocated for updating the U.S. power grid, is $4.5B set aside for investments in Smart Grid technologies and solutions[1] (i.e., converting the low-voltage part of the system into a smart grid.) Digital efficiencies will be incorporated, waste will be reduced, and there may be no need for considering new power plants as a solution. According to the U.S. Department of Energy (DOE), the financial cost of power interruptions and outages in the U.S. is at least $150B annually.[2]
The stimulus package also includes a 30% ITC (Investment Tax Credit) for "advanced energy property" manufacturers that would include various smart grid technologies (as well as renewable energy equipment, carbon capture and storage equipment, and more efficient transmission technologies.) The DOE, under the Stimulus Bill, will be required to increase its financial support to smart grid demonstration projects for both investor-owned and municipal utilities through an existing "smart grid matching grant program." This is where DOE will be required to match 50% (vs. the previous 20%) of the cost of smart grid technology investments as part of demonstration projects. So this means that the bill provides federal funding to reimburse utilities for up to 50% of the cost of smart grid demonstration projects.[3]
There is $6.5B in additional borrowing authority for the Bonneville Power Authority (BPA) and the Western Area Power Authority (WAPA) that has been allocated. The bill also includes $6B in loan guarantees for "advanced technologies" that involve renewable energy and electric transmission. Importantly, these $6B in loan guarantees need only cover any estimated potential losses, "thus, using an assumed 10% default rate, covered loans could total $60B."[4]
The inclusion of transmission-related provisions shows the federal government’s increasingly pro-transmission agenda. Transmission fits under the rubric of not only clean energy but, importantly, under the infrastructure investment category in that next-generation transmission solutions will assist with job creation. The $6B loan guarantee falls under the "Innovative Technology and Loan Guarantee Program" established under the Energy Policy Act of 2005 and administered by the DOE. The existing program, which to date has authorized up to $42.5B in loan guarantees, supports innovative clean energy technologies (including renewables, transmission and nuclear) that either reduce, avoid, or sequester carbon dioxide and other air emissions.
