The newly passed Stimulus Law contains provisions and incentives for Smart Grid investments and demonstration projects.  However, as a requirement for funds, the user must agree to provide information on the demonstration and other elements to a information clearinghouse administered by the Sec of Energy.  While the grid companies are principally owned by utilities and operated as monopolies, 3rd party technology providers may be less willing to provide information as part of a publicly funded project if it will be shared.  Confidentiality provisions are contemplated, but it is difficult to determine how much will need to be shared.

It is understandable that the government (and taxpayers) want to get the most for their money and avoid duplication of effort, but sophisticated and proprietary algorithms and methodologies are at the root of the smart grid technologies.  For these technology companies, the challenges in the past have been related to gaining acceptance by the utilities who are quite reluctant to change.  Giving up IP may limit the ability to reach a workable solution.

As utilities are paid as a return on their asset base, smart grid technologies and efficiency programs ultimately mean less energy usage.  This will result in lower per kwh earnings for the utility which may drive higher end customer rates.

There is huge need to get more out of the existing grid network versus building more transmission capacity (difficult to do) and/or adding more power plants.  In particular, the system is highly constrained particularly along the NorthEast corridor and in Texas.

To acheive a successful result will mean (still) years of testing and then final (and gradual) acceptance by the utilities and by the regulators.  In the mean time, we will be left with a grid system highly prone to failure as shown in graph below.

Customers (as they have been doing) will have to take some energy reliability actions themselves either through back up power and/or through power conditioning systems.

Smart Grid technology companies may consider approaching those that market and trade energy on the grid to test their algorithms amongst a group with high profit incentives.  The feedback from the “traders” on the ability to use these technology algorithms may provide the quickest and most robust “commercial testing” of the technology without having to share information via a clearinghouse.