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The Impact of the Economy on Smart Grid...and not the other way around

As part of my blog I intended to profile the economic growth as a result of our efforts to advance our utility infrastructure. Sitting in the front lines on smart grid projects, I theorized that US-based smart grid projects took off on the allocation of ARRA funds in 2009. As smart grid efforts and expenses grew and economic distress persisted, the rationale for these projects lost effectiveness. We then saw the reigning in of future projects and roadmapsfrom 5-10 year plans to a seamingly endless highway stretching 10-15 years.

  

 

This is purely conjecture based on my perspective, which is the wonderful thing about blogging. I get to make wild assertions and leave out substantiation. I'd love to leave it at that, but the the engineer in me had to appraise that assessment.

As I sifted through various information sources (in other words "googled") on the economic impact produced by smart grid, I was left wanting for more information. By my accounts, since 2009, I am only able to find only one study that discusses the capital expenditures of utility companies based on smart grid projects and that was published in 2010. Newton-Evans published a report in early 2010 that analyzed the capital expenditures of the various utilities in 2010 and 2011. The important take away was that the majority of utilities increased capital expenditures based on smart grid initiatives. Downside was that the large minority that decreased capital expenditures did so in response to economic concerns.

Unfortunately that report only takes us up to 2010. Since that snapshot in time last year, we have seen multiple potential derailing incidents with smart grid that might skew these capital expenditures. We have seen mounting cost overruns, customer pushback and the effects of a 3 year recession that carried through 2011. I spoke previously about the adoption cycle for smart grid, but the aforementioned incidents in concert with the "chasm" effect of the adoption cycle could be detrimental to progress of smart grid.

There are some great economic reports coming out in April. In my next post I hope to add to this discussion with additional insights and substantiation. I also look forward to any comments in the meantime.

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