Building a Smart Grid, Smartly

President Barack Obama announced today $3.4 billion in government grants to help build a "smart" electric grid [1]. Like many Obama initiatives, it’s a smart first step. But much more is needed and one piece is rarely mentioned at all.

Start with the problem. America’s electric grid is aging and not keeping up with demand. Electricity demand has increased by 25% since 1990 while construction of transmission facilities decreased by about 30 percent. The results are higher costs and more blackouts. Carol Browner, the president's top adviser on energy and climate change, called the grid “outdated” [1] and “dilapidated." [1]

Our discussion of energy is dominated by wind farms and solar panels. They’re important, of course. But they leave open the question of moving the energy from the where it’s made (offshore wind farms or sunny deserts) to where it’s used (cities and factories). That’s the grid. It’s called smart because it can re-route electricity in accordance with demand or around trouble spots.

In the end, we want it all. Wind farms, solar panels and a smart grid to bring the energy from point A to point B. That’s our clean energy future.

But we want something else with consequences we don’t always recognize. We want to be self-sufficient. We don’t want to replace our dependence on foreign oil with a dependence on foreign manufacturing. And we want those clean energy jobs to be located at home. Especially if we’re funding them with our own tax dollars. As Campaign for America's Future co-director Robert Borosage puts it:

“Not simply a timid buy America policy [2] satisfied with the final assembly of parts and technologies made elsewhere, but moving entire supply chains so that our workers and engineers and entrepreneurs are familiar with cutting edge technologies that our inventors can soon surpass.”

Right now, half of our wind turbines are imported from overseas. Ninety percent of our solar cells are manufactured in China — which requires that its own solar installations [3] use domestic (Chinese) content.

This isn’t about protectionism or neanderthal rejection of global trade. It’s about thriving in a competitive global economy. America needs to think strategically. Move away from asset bubbles and debt-driven consumer spending. Rebuild our real economy of production and manufacture.

Public investment in infrastructure is a crucial step in that direction. It creates jobs now and increases our competitiveness in the future. A new smart grid is part of it — and it’s even smarter if the transformers aren’t imported from China.

If you’re near DC, please come to our conference Thursday October 29, building the new economy [4]. It’s free, and Senator Sherrod Brown (D-Ohio) will share his ideas over lunch. It’s time to pop the bubble economy.

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UPDATE: After this post was published, the White House released additional detail. [5] Most important: The smart grid program includes $25 million to expand the necessary manufacturing base. It's a small amount and nowhere near the top of the release -- but the White House calls it "a significant and growing export opportunity for our country and new jobs for American workers." It's nice to see details trending in that direction.