The McDonnell Group

ATLANTA – November 17, 2009 - The stimulus is indeed stimulating -- but even more for the long haul than for the short term. That’s the picture emerging from an informal survey and recent conversations with utility industry executives and analysts. The Smart Grid Executive Forum asked members “Have the stimulus grants accelerated overall investment in smart grid technology across the utility industry in 2009?”  Nearly three quarters (72%) of the 141 participants in the blind survey strongly agreed or agreed with this sentiment.

While the first half of 2009 saw some concern among market participants that the stimulus might have unintentionally slowed system procurement cycles, participants in the informal Smart Grid Executive Forum survey shared a sense of cautious optimism.  The Forum consists of roughly 1,100 global utility executives, engineers, consultants, and system vendors engaged in active system deployments.

Furthermore, in recent weeks, many analysts and utility executives have told us they believe the stimulus process has spurred new, and in some cases fundamental, reviews of technology strategy and business process innovation by utility companies.  As they’ve considered grant applications and rightly reminded people that the grid isn’t necessarily ‘dumb’ today, utility executives have also wrestled with the potential future impact of smart grid systems on their business models and operations.

Beyond the direct positive impact of the roughly $4 Billion in grants and the additional matching funds, these utility market ripple effects will ultimately determine the long term results of the smart grid stimulus and its ROI for the American taxpayers footing the bill.

But first, the US Department of Energy (DOE) must work with the 100 successful applicants to get the money from the award process into contracts and then out into the field.  This week, the DOE will host a group workshop for ARRA stimulus fund recipients. The DOE allocated three tickets to the workshop to each successful applicant utility, presumably to deliver a consistent, transparent approach to the contracting process and to accelerate the speed at which the process unfolds.

This streamlined approach should help move funds into contract to drive project-driven job creation in 2010 as soon as possible.  However, many successful applicant utilities now face the pressure to secure and button down the required stimulus matching funds through city councils, utility commissions, and cooperative boards.   Regardless, in the years to come, I predict that people across the political spectrum will acknowledge -- in some cases grudgingly -- the important role that the 2009 smart grid stimulus played in spurring forward a wave of technology-driven utility industry innovation along with its associated improvements in efficiency, reliability, and environmental outcomes.