White House, Business Community Support Investment in National Smart Grid

Sharp decreases in the price of domestic natural gas have challenged growth in the U.S. renewable energy industry. In response, the White House, with support from national business leaders, has re-focused public-private investment toward smart grid technology — efforts focused on developing the infrastructure for decentralized power networks that communicate and coordinate information between energy producers and consumers.

Since June 2011, the Obama administration has been working with energy industry partners to promote the adoption of smart grid technology. In an effort to reaffirm that relationship and make the case for prioritizing public investment in the project, the White House last week released A Policy Framework for the 21^st Century Grid: A Progress Report, a guide to the administration's efforts to make the national power grid stronger, smarter and cleaner. The report highlights the role of federal investment in helping local power providers modernize their grid infrastructure, providing energy data for entrepreneurs and companies to develop commercial innovations, and restructuring regulations to spur private sector investment in the smart technology industry.

Despite the optics of the White House policy shift, the pivot toward prioritizing smart grid technology is being led by Silicon Valley, according to a recent article in Bloomberg. Venture capital and private equity financing for renewable energy is at its lowest point since 2006, with profits from solar and wind companies plummeting in the face of increased competition from domestic conventional energy production. In response, Silicon Valley investors have shifted investment into emerging technologies that increase efficiency and flexibility from power supplies, the article finds. Venture funding for smart grid technologies, which focus mainly on software development, also provides a better ROI for investors than maturing renewable energy markets that require increased manufacturing infrastructure to expand production.

In accord with the White House, the Business Roundtable released a report outlining a policy framework for increasing U.S. energy independence and boosting economic growth. Their report also supports energy grid modernization as a key to national priority for public and private investment.

A recent national emergency illustrates the role that smart grid technology can play in addressing national challenges. When Hurricane Sandy hit the Mid-Atlantic coast, thousands of citizens were without power for days, and in some cases, weeks. Extreme weather events like Sandy demonstrate the inefficiency of traditional power grids that, when damaged, are difficult and expensive to fix and cause massive delays in restoring power for consumers. Smart grid technology can be used to build decentralized, self-healing grids that are harder to damage, much less expensive to repair, and more effective at delivering energy to consumers. In his recent State of the Union address, President Obama noted that smart grid technology was an essential national investment for strengthening the resilience of the country.

The Obama administration is helping the private sector capitalize on market forces that are rebuilding our national energy grid. And by re-focusing public-private investment toward smart grid technology, the White House is promoting an industry that has the potential to tackle many key administration goals: addressing climate change, promoting national security, achieving energy independence, boosting economic growth, and creating jobs.