Electronomics: How the Smart Grid Will Power Wealth, Pt. III

See also Part I: Investing Wisely in the Age of Obama and Part II: Electric Infrastructure, Innovation and Economic Growth.

Part III: The Stimulus Will Build Our Green Future, Today and Tomorrow

The day after the Super Bowl usually involves an instant replay of the game (Great catch, Santonio Holmes! Great run, James Harrison!); a review of the half-time entertainment (Righteous rocking, Boss!); and a recounting of the best TV commercials (A dancing scarecrow from GE?).

Yes, the brainless scarecrow from "The Wizard of Oz" spent 30 seconds singing and dancing its way along the transmission lines of America's beaten up and broken down electricity infrastructure with the hope of convincing us that capital investment can transform this tangle of 19th century wires into a 21st century smart grid.

It's the same hope that the forward-thinking Obama Administration has, and it explains why the current economic stimulus plan put forward by The White House contains funding for the upgrade of thousands of miles of electricity network as well as smart-grid technology innovation designed to improve efficiencies, lower costs, eliminate outages and prevent construction of significant new power plants.

Job-Creating Potential

But the most immediate and pressing reason the President is trumpeting the smart grid is its job-creating potential – both short-term and long-term.

A recent analysis by the Grid Wise Alliance reveals that $16 billion in smart-grid disbursements over the next four years would serve as the catalyst for projects worth $64 billion. These projects would create nearly 300,000 direct and high-value jobs between 2009 and 2012; and 150,000 of these positions would be established before the end of 2009. In addition, the Grid Wise report indicates that 140,000 indirect jobs would be generated between 2013 and 2018 as a result of smart-grid investment.

These numbers are impressive but, to be honest, nobody really knows the true job-creating upside that smart-grid infrastructure improvements can deliver.

Some economists, for example, believe that investment in the electricity network can offer a super-Keynesian jolt that goes beyond traditional New Deal highway repair jobs. Once the road is paved, goes this argument, the pavers go home; but once the wires are fixed, entirely new technology companies and industries will swing into action and spawn wave after wave of surprising and unprecedented Internet-like innovation.

Transcending the Internet Revolution

That notion is well-worth pondering.

Think back to the mid-1990s, to the very early days of the Internet Revolution. Who could have predicted that Amazon or Google would surface and soar? Who really knew how much the Web would transform our personal and professional lives? And, looking into the mists of 1980s history, can you imagine where we'd be today if there hadn't been government funding for DARPA (the Defense Advanced Projects Agency), which developed the precursor to the Internet?

Fast forward to today and beyond: Has anyone fully sketched out how utilities across America will help power a new generation of plug-in hybrid electric vehicles? And do we fully grasp the next software explosion, which will help make global energy consumption an efficient exercise in intelligence?

Probably not.

And that's why it's important to realize that smart-grid stimulus expenditures will create a broad and sustainable foundation or platform upon which other valuable things can be built – just the way the Interstate Highway System of the 1950s led to hundreds of billions of private-sector investments in the transportation, energy, housing and leisure and entertainment sectors.

The proposed stimulus investments in smart grid will help heal and grow the economy in other ways, too.