THE POTENTIAL OF A SMART GRID
Creating the kind of smart electrical grid that is both efficient and secure will mean huge investments by both the private and the public sector. The current and outdated model we see today has existed for over 100 years. Because there is massive room for growth in smart grid infrastructure, there is also a potential for massive financial gain from investing in companies that will be involved in this energy revolution. It’s not a question of “if” this major conversion will happen, but a question of “when” it will happen, and how long it will take to build.
The process to rebuild an outdated model has already taken steps forward. For example, as more electrical cars such as the Chevy Volt come on the market, fleets of vehicles can charged at night when the need for energy consumption by the community is low. Cars that are parked during the day could then feed power back into the grid when electricity demand is higher. This new technology only begins to scratch the surface of how the smart electrical grid could have a synergistic impact in reducing energy use and promote alternative fuel sources.
The Roen Financial Report is a monthly newsletter that continues to track developments in smart grid technology, along with the financial data you need to make the best decisions about smart grid company stocks.
BIG INVESTMENTS IN THE SMART GRID
Smart Grid Technology will combine old theories of electric distribution with modern technology.
This potential has been recognized by heavy hitters such as: Guido Bartels, Managing Director at IBM, who sits on the Board of the Gridwise Alliance; Bill Capp, the CEO of Beacon Power, which is a power company; and T. Boone Pickens, a major American financier who in 2008 proposed the Pickens Plan, a major energy policy proposal. These business leaders and large scale investors understand that smart grid technology means new products, services, hardware, utilities, and most of all, new consumers all with more intelligent energy management systems.
IMPLEMENTING THE SMART GRID
An important issue concerning smart grid development in coming years is how to implement and establish standards. This subject has become a major talking point for theorists and analysts who want to see firm standards established by a governing body that would decide what a smart grid is, how much it should be able to do, and who should control it. Issues to be resolved include security, how growth of smart grids will be handled, at what pace, and with what kind of consistency.
Currently, updating the electrical infrastructure is heavily tied into the nation’s broadband network, which is providing a platform for the technological update. The potential for growth in this area creates investment opportunities in information systems companies, as well as electricity providers.
POLITICAL REALITIES OF BUILDING A SMART GRID
Legislation is underway that would provide Presidential oversight of the electrical grid. If this aptly named “GRID Act” were signed into law, it would give the President far-reaching new emergency powers over the U.S electrical grid, and the bill would mandate widespread developments in the electrical distribution system throughout the nation. Historians have compared President Obama’s effort to establish alternative energy initiatives to that of President Eisenhower’s struggle to create highways. Concerns range from the ability to acquire land for towers and lines, and overcoming state disincentives to improve their grids.
SECURITY IN THE SMART GRID
Apart from getting enough funding to modernize the smart grid, another issue facing this energy revolution is security. Like the Internet, electronic communications can be hacked if not secure, with potentially devastating effects. This is a noted concern of the Obama White House and Congress, which must weigh the safety of a nation’s power grid against the need for modernization. The urgency for a safe communication stream means creating new security software and hardware to protect against attacks on a high-tech grid. The security of the smart grid could be one of the largest areas of growth for the coming years.
SMART GRID IN THE PARADIGM PORTFOLIO
10 of the 37 companies listed in the Roen Financial Report are involved in smart grid technology and services. General Electric (GE) is one of the companies that the Roen Financial Report tracks; each month, detailed information on GE stock is provided to subscribers.
GENERAL ELECTRIC (GE) – SEEKING TO DEFINE THE SMART GRID
GE, one of the largest companies in the world, has a robust stake in smart grid technology. GE’s energy division alone has products that include power delivery, smart metering, charging systems and power sensing. A leader in carbon composite windmills, the company has over 11,600 installed worldwide. GE’s leadership in power distribution, and high level of diversification in the alternative energy arena, makes it a solid stock for long term investing.
In addition to smart grid efforts within the company, GE just committed $200 million for entrepreneurs, students and other innovators as a “call to action.” Funds will go to sources outside the company to fund ideas on smart grid, renewable energy and efficiency. It is GE’s way to accelerate smart grid implementation, encourage and fund outside-the-box thinking, and play a role in shaping an extremely important part of the energy future.
GE also has a fantastic Web site that’s worth visiting, which allows viewers to visualize and understand what a smart grid can do, at http://ge.ecomagination.com/smartgrid/#/landing_page.
The smart grid is a technology that must be implemented in order to increase the efficiency of energy usage and promote a diversity of energy supplies. It is also a gargantuan undertaking that will likely take decades to implement. Companies with a robust stake in the smart grid technology build out are well positioned to take advantage of this ongoing transformation of how electricity is used and delivered. Such companies are key players in our financial newsletter.
Individuals involved with the Roen Financial Report and Swiftwood Press LLC owned or controlled shares of Eaton Corp. and MasTec Inc.
It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities mentioned in this article. Any advice and/or recommendations made in this article are of a general nature and are not to be considered specific investment advice. Individuals should seek advice from their investment professional before making any important financial decisions.