The Business of Smart Grid

May 24, 2010

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Shannon Fraser serves in the Office of Energy and Environmental Industries, where she advances opportunities for U.S. energy companies through policy dialogues and export programs.  Shannon has specialized in a number of energy sectors, including smart grid and transmission/distribution.

What is a Smart Grid?  How does it impact U.S. Industry?

Signs of U.S. innovation, job creation, and economic revitalization are now underway with the numerous smart grid programs that are being implemented throughout the United States.  As of May 4, 2010, eighty-three of the smart grid projects funded through the stimulus bill are being integrated in local communities throughout the United States.  In total, the U.S. government has put forward $4.5 billion of smart grid stimulus funds as well as $7 billion of broadband deployment funds which will ensure that the required communications network for smart grid reaches all local and rural communities.

With all of the recent smart grid talk, what exactly is smart grid technology?  How will consumers and industry be impacted by this new grid system?  What market opportunities are available to the new, emerging smart grid companies, and how will a smart grid system foster job growth and a new, innovative clean energy economy in the United States?

Smart grid, quite simply, is a system which integrates the traditional transmission and distribution (T&D) network with an over-lay of information communications technologies (ICT).  The smart grid allows your power lines to communicate with your air conditioner, electric vehicle, wash machine, and cell phone, thereby allowing for you to proactively manage your energy use and electricity bill.  From a business perspective, electricity-intensive industries will be better able to track and manage their overall energy usage, thereby encouraging energy efficient practices and solutions throughout the facility.

The United States has taken an all-encompassing approach to the smart grid, highlighting a two-way flow of electricity and information to/from power plants, customers, equipment, appliances, and vehicles.  The definition of smart grid in other countries depends on the current T&D infrastructure in the country, as well as government and industry priorities and policies.   It is worth noting that a country will need basic T&D infrastructure before embarking on smart grid integration – if a country does not have power poles and transmission lines, then they are far away from developing a smart grid network.

The Department of Energy estimates that the benefits of a modernized grid system in the United States will span from $46 to $117 billion by 2023.  With a more secure and reliable grid network, U.S. businesses are estimated to save $100 billion per year, funds which can be redirected to the installation of new equipment in a facility and the hiring of new workers in a factory.  With recent federal smart grid funding programs, we have already witnessed U.S. companies that are taking on new workers.  Itron, smart grid company based in Waseca, Minnesota recently added 40 new workers to its facility, in addition to 120 new employees at its operations in South Carolina.

Countries worldwide are also implementing smart grid stimulus programs at local communities.  Australia, Brazil, China, the European Union, India, Japan, and South Korea are among the growing number of countries which are advancing the development and deployment of smart grid systems through public-private programs.  In many instances, U.S. companies are partnering with in-country utility companies and partnering companies to integrate U.S. smart grid components into the grid network.  Moreover, the emergence of electric vehicles, smart appliances, and smart products will foster greater international trade opportunities in the smart grid sector.

The International Trade Administration will highlight the business benefits of smart grid at the June 9, 2010 conference on “The Business of Smart Grid: Benefits for Minnesota’s Companies and Workforce.”  Coordinated in partnership with the Minnesota Trade Office and the University of Minnesota, this one-day program will highlight the emerging business and job creation opportunities generated by recent smart grid initiatives that impact numerous sectors of U.S. business and industry.

About the International Trade Administration-Manufacturing and Services

The International Trade Administration (ITA) strengthens the competitiveness of U.S. industry, promotes trade and investment, and ensures fair trade through the rigorous enforcement of our trade laws and agreements.  ITA works to improve the global business environment and helps U.S. organization compete at home and abroad.  ITA supports President Obama’s recovery agenda and the National Export Initiative to sustain economic growth and support American jobs.

The Manufacturing and Services (MAS) unit of the International Trade Administration (ITA) is dedicated to enhancing the global competitiveness of U.S. industry, expanding its market access, and increasing its exports. MAS industry experts and economists perform strategic research and analysis in order to shape and implement trade policy, create conditions that encourage innovation, lower the cost of doing business, and promote U.S. economic growth.