Between the Poles

Gridweek: US smart grid market poised for take off ?

One of the speakers at Gridweek quoted the CEO of Tendril saying, and I am paraphrasing, that up until now smart grid deployment has been pilots, but in the next six months you will see mass deployments.  Gartner's hype cycle for smart grid sees a couple of smart grid technologies on the verge of mass adoption.

A recent GTM Research report “U.S. Smart Grid Market Forecast: 2010–2015” is projecting a rapifd increase in spending over the next few years from $5.6 billion in 2010 to $9.3 billion by 2012, an increase of more than 65 %.  GTM Research sees renewable energy and electric vehicles being important drivers for the increasing investment in smart grid.  Interestingly GTM Research sees investment in smart grid in the EU also increasing, to a comparable €6.8 billion per year by 2016.

A recent GTM Research survey of North American municipal utilities, of which there are about 2000 and which are as a whole are more conservative in adopting new technology, suggests that smart meter deployments are in the cards for most of them in the next five years.

A number of speakers mentioned the benefits to smart grid arising from the smart grid funding provided over the last few years by the ARRA. Many of the speakers mentioned funding that their utilities had received from the Department of Energy had enabled them to to smart grid deployments.   A number of speakers expressed the hope that the American Jobs Act (AJA), proposed by the Obama Administration in the last few weeks will continue to enable the Department of Energy to continue these programs.

Challenges for smart grid deployment

The GTM Research report mentions the three major deployment hurdles identified in its most recent smart grid survey to be systems integration, data management, and electric vehicle integration.

Wednesday's panel at Gridweek was moderated by Martin Rosenberg, whose final question to the panelists was to ask them what they saw as the major roadblocks to smart grid deployment.

• Regulatory landscape - one panelist said that over the past five years, the US has been a leader in smart grid, but because of the complicated regulatory landscape in the US, in the past year or two, the US has fallen behind.  He mentioned the EU specifically as an example of an economic jurisdiction where the regulatory landscape is simpler and smart grid is prograssing faster.
• Technical complexity - no one has built a complete smart grid and a lot of the technology is still unknown.  There is a lot of room for technology innovation.
• Rate design - designing a rate structure that will make the smart grid financially attractive to consumers and to utilities, while motivating them to save energy and reduce emissions is a challenge that has not been resolved
• Security - almost every speaker mentioned security as something you have worry about every step of the way
• Integration - integrating the systems that utilties use like outage management, customer information systems, billing, inventory, records management, engineering design, ERP, dispatch, and SCADA is a major component of smart grid.  As one speaker said the big winners from a business opportunities perspective will be the system integrators.

American Jobs Act includes $60 billion for infrastructure

The proposed American Jobs Act (AJA) contains provisions for increasing investment in infrastructure, estimated at about $100 billion, including immediate investments in infrastructure and a bipartisan National Infrastructure Bank, for modernizing roads, rail, airports and waterways

Immediate investments for highways, transit, rail and aviation

$50 billion in immediate investments for highways, transit, rail and aviation, helping to modernize an infrastructure that now receives a grade of “D” from the American Society of Civil Engineers. The President’s plan includes investments to improve our airports, support NextGen Air Traffic Modernization efforts, and resources for the Transportation Investment Generating Economic Recovery [TIGER] and Transportation Infrastructure Finance and Innovation Act [TIFIA] programs, which target competitive dollars to innovative multi-modal infrastructure programs.

Establishing a National Infrastructure Bank

National Infrastructure Bank would be capitalized with $10 billion, in order to leverage private and public capital and to invest in a broad range of infrastructure projects of nationaland regional significance, without earmarks or traditional political influence. The Bank would be based on the model Senators Kerry (D-Mass) and Hutchison (R-Texas) have proposed.

Project Rebuild

In addition $15 billion for rehabilitating and refurbishing hundreds of thousands of vacant and foreclosed homes and businesses. Building on proven approaches to stabilizing neighborhoods with high concentrations of foreclosures, Project Rebuild will bring in expertise and capital from the private sector, focus on commercial and residential property improvements, and expand innovative property solutions like land banks.

Expanding Access to High-Speed Wireless

Deploy high-speed wireless services to at least 98 percent of Americans, including those in more remote rural communities, while freeing up spectrum through incentive auctions, spurring innovation, and creating a nationwide, interoperable wireless network for public safety.

Modernizing Schools and Community Colleges

$25 billion investment in school infrastructure that will modernize at least 35,000 public schools. Funds could be used for a range of emergency repair and renovation projects, greening and energy efficiency upgrades, asbestos abatement and removal, and modernization efforts to build new science and computer labs and to upgrade technology in our schools. Also $5 billion investment in modernizing community colleges.

Supported by US Conference of Mayors

The $447 billion AJA is supported by the U.S. Conference of Mayors (USCM), the National League of Cities (NLC), the American Institute of Architects (AIA), Smart Growth America (SGA), and the U.S. Green Building Council (USGBC), and by the Association of Career and Technical Education (ACTE) and Building America's Future.

Building America's Future recently released a report “Falling Apart and Falling Behind” pointing out that US infrastructure has fallen behind,

• U.S. infrastructure has fallen from first place in the World Economic Forum’s 2005 economic competitiveness ranking to number 15 today.
• China now boasts six of the world’s top ten ports – and none of the top ten are located in the U.S.
• The Shanghai port now moves more container traffic a year than the top seven U.S. ports combined.
• The U.S. is one of the only leading nations without a national plan for public-private partnerships for infrastructure projects or a National Infrastructure Bank to finance large-scale projects and leverage private capital.

Canada's 2011 Budget: Big on infrastructure

The Government of Canada has released the 2011 federal budget.  Although the primary objective is deficit reduction, several areas have been singled out for increased spending, one of which is infrastructure.  The Government says that it recognizes the importance of investment in public infrastructure, for economic development in general, but also for short term employment growth.

In 2007, the Government launched the Building Canada plan, supported by $33 billion in federal funding over seven years. The Building Canada plan consists of a suite of programs to meet infrastructure needs across the country, including:

• Gas Tax Fund and full rebate of the Goods and Services Tax paid by municipalities, which provide predictable long-term funding for municipalities.
• Provincial/Territorial Base Funding Initiative, which provides $25 million per year for each province and territory.
• Building Canada Fund, which supports infrastructure projects across Canada
• Gateways and Border Crossings Fund and the Asia-Pacific Gateway and Corridor Initiative to strengthen trade-related infrastructure.
• Public-Private Partnerships (P3) Fund, the first Canadian infrastructure fund dedicated to P3s

In response to the recession, the Government introduced stimulus initiatives under the Economic Action Plan to increase infrastructure spending during the 2009 and 2010 construction seasons. These projects are expected to be completed by the end of October 2011.  It claims to have spent $7.7 billion on almost 8000 projects across the country.

The 2011 Budget makes important investments in public infrastructure and supports the use of public-private partnerships in delivering infrastructure programs and projects.

$2 billion annual investment in municipal infrastructure

To provide greater certainty to provinces, territories and municipalities, the 2011 Budget proposes to legislate a permanent annual investment of $2 billion in municipal infrastructure through the Gas Tax Fund.

Public-private partnerships

The Government believes that Public-private partnerships (P3s) have demonstrated their ability to produce value for taxpayers in the delivery of public infrastructure and plans for Canada to be a leader in P3s. In 2008, the Government established PPP Canada Inc. to increase the effective use of P3s in Canada.  From now on, all federal infrastructure projects creating an asset with a lifespan of at least 20 years and having capital costs of $100 million or more, will be subjected to a P3 screen to determine whether a P3 is a suitable procurement option. Federal departments will also be encouraged to consider a P3 approach for other types of project and service procurements.

Increased federal funding for infrastructure

As a result of these investments, the Government claims that the amount of federal funding available to provinces, territories and municipalities for infrastructure projects will be close to $11 billion in 2010–11, a significant increase over previous years' spending.

Fukushima Daini Reactors Status: Three Reactors Have Achieved Cold Shutdown

According to WNN, Unit 3 cold shutdown appears to have gone exactly as expected, with no systems damaged. The reactor went from power production to cold shutdown - where coolant water is at less than 100ºC - in about 34 hours.

Damage to the emergency core cooling systems (ECCS) of units 1, 2 and 4 led to TEPCO declaring  emergency status. The reactors used the make up water condensate system to maintain coolant levels above the reactor core.

An additional emergency notice was declared for Unit 1 because the temperature of a suppression chamber reached 100ºC.

The Fukushima Daini plant then continued in a relatively steady state throughout 12 March, with coolant levels and pressures contantly monitored by engineers.  Units 1, 2 and 4 were prepared for potential venting, but this was not required.

In the last 48 hours, TEPCO has carried out repairs to the emergency core coolant systems (ECCS) of Units 1, 2 and 4. Unit 1 announced cold shutdown at 1.24 am today and Unit 2 followed at 3.52 am.

TEPCO has completed repairs to the ECCS of Unit 4 and gradual temperature reduction started at 3.42pm.

In contract to Fukushima Daiichi, Fukushima Daini apparently has had off-site power at least since March 12.

Quantifying the Economic Benefits of Infrastructure Investment

In 1989 David Aschauer, an economist at the Federal Reserve Bank in Chicago, published a paper that proposed a link between government spending on non-military infrastructure including roads, bridges, and airports and economic productivity.  It showed that as infrastructure spending increased during the 1950s and 1960s, economic productivity increased and conversely as public investment decreased in the 1980s so did productivity. The paper found that public capital stock, specifically the core infrastructure of streets, highways, airports, mass transit, sewers, water systems, etc., is the most important factor  determining productivity, and that when asessing the role of government in stimulating the economy (economic growth and productivity improvment), it is essential to consider the impact of additions to the stock of highways, streets, water systems, and sewers financed by public spending.

Later Aschauer proposed that there is a nonlinear relationship between public capital and economic growth. Too few roads, sewers, schools, fire and police stations hinders economic development, but too much public capital means high taxes, which dampens economic development.  Somewhere in between, there is an optimum of public capital to private capital that maximizes economic development.

There have been a number of studies that attempt to quantify the effects of public infrastructure on the US economy.  These studies have looked at particular types of infrastructure such as transportation and particular geographic regions.  Recently studies have started to use spatial econometrics to look at the effect of infrastructure investment outside the local region where the investment is made.

In September, President Obama announced a plan to renew and expand infrastructure in the US which includes a $50 billion up-front investment in a highway renewal program and a National Infrastructrure Bank.  One of the motivations for this plan are the studies I mentioned that show productivity gains from public infrastructure investment.  To make this concrete, a recent analysis found that the average urban motorist in the U.S. is paying $402 annually in additional vehicle operating costs as a result of driving on roads in need of repair.

Recently the Conference Board of Canada has attempted to quantify the impact that infrastructure capital has had on Ontario’s productivity and economic growth between 1980 and 2008.  It concluded that growth in the stock of infrastructure in Ontario contributes an eighth of the gain in labour productivity over the past 30 years and that each dollar of real public infrastructure spending generates $1.11 in real GDP.

 

Report Supports National Infrastructure Bank

A report released last week released by the US Treasury Department and the Council of Economic Advisers supports the development of a National Infrastructure Bank as proposed by President Obama last month.

Its first conclusion is that Americans want more infrastructure investment and cites statistics to support this assertion.

• In 2008, over 80 percent of the 59 transportation infrastructure projects proposed in local referenda were approved by the voting public
• 98 percent of the funds requested for these projects was approved by the voting public
• Americans’ satisfaction with their public transit system ranks 25th out of 32 OECD nations.
• Americans’ satisfaction with their roads and highways system ranks only 17th out of 32 OECD countries
• 19 out of 20 Americans are concerned about America’s infrastructure
• 84 percent of Americans support greater investment to address infrastructure problems
• Poor conditions of roads cost the average motorist who drives in cities on a regular basis over $400 a year
• A two adult household using public transportation could save an estimated $6,250 a year compared to a similar family that is unable to use public transportation

The report says that the average American annually spends $8,600 a year on transportation, one-third more than on food, and concludes that public investments which lower the cost of transportation would reduce transportation-related costs including car maintenance and fuel consumption.

Compared to other major economies the US underinvests in infrastructure and this affects its international competiveness. 

• US         2 % of GDP 
• China     9% of GDP
• Europe   5% of GDP

President Obama first proposed a National Infrastructure Reinvestment Bank in his presidential campaign that would invest $60 billion over ten years in "a world-class transit system, green energy technology, ports, roads, and high-speed rail."

The President's current proposal for renewing the transportation network includes

• $50 billion up-front investment connected to a six-year reauthorization of the surface transportation program
• National Infrastructure Bank
• Rebuilding 150,000 miles of roads,
• Constructing and maintaining 4,000 miles of passenger rail
• Rehabilitating/reconstructing 150 miles of runways
• Upgrading the air traffic control system

The objectives of the National Infrastructure Bank is to increase investment in infrastructure by attracting private capital, secondly, to implement a merit-based selection process for infrastructure projects, and thirdly to encourage investments in multi-modal and multi-jurisdictional infrastructure projects.

The report suggest that investing in transportation infrastructure creates middle class jobs.  The distribution of jobs among the various sectors of the economy most affected is estimated to be

• 61 % of the jobs in the construction sector
• 12 % in the manufacturing sector
• 7 % in retail trade

The report estimates that 90 percent of the jobs in the three sectors most affected by infrastructure spending would be middle class jobs.

US 2011 Budget Adds $100 billion to Stimulus

Here are some highlights of President Obama's 2011 budget request

Eliminating tax credits and subsidies for the carbon industry

• Eliminating more than $2.7 billion in tax subsidies for oil, coal and gas industries. Estimated to generate more than $38.8 billion dollars for the federal government over the next 10 years.
• Terminating Ultra-Deepwater exploration program, saving $50 million.
• Canceling planned expansion of the Strategic Petroleum Reserve, saving $71 million.

The 2011 Budget provides $28.4 billion for the Department of Energy (DOE) to support scientific innovation, develop clean and secure energy technologies, maintain national security, and reduce environmental risk.

Increased support for nuclear power, renewable energy, and the smart grid

• $36 billion in new loan authority – for a total of $54.5 billion – to expand support for DOE loan guarantees for nuclear power facilities.
• $500 million in credit subsidy to support $3 billion to $5 billion in loan guarantees for innovative energy efficiency and renewable energy projects.
• $144 million for research, development, and demonstration activities to modernize the grid including smart-grid technologies that will spur the transition to a smarter, more efficient, secure and reliable electric system, resulting in energy- and cost-saving choices for consumers, reduced emissions, and growth of renewable energy sources.

Investment in clean energy technologies

$4.7 billion in clean energy technology investments at DOE, including:

• Nearly $2.4 billion, an increase of $113 million, for energy efficiency and renewable energy programs including $302 million for solar energy, $220 million for biofuels and biomass R&D, $325 million for advanced vehicle technologies, and $231 million for energy efficient building technologies.
• $545 million for advanced coal climate change technologies to focus resources to develop carbon capture technologies with broad applications to advanced coal power systems, existing power plants, and industrial sources.
• $300 million for the Advanced Research Projects Agency–Energy to accelerate game-changing energy technologies in need of rapid and flexible experimentation or engineering.
• $793 million for clean energy activities and civilian nuclear energy programs, including research and development and infrastructure programs. The budget includes a new cross-cutting research program to address technology needs for all aspects of nuclear energy production.

The Department of Energy has identified additional high performance goals including

• Double renewable energy generating capacity (excluding conventional hydropower) by 2012.
• Assist in the development and deployment of advanced battery manufacturing capacity to support 500,000 plug-in hybrid electric vehicles a year by 2015.
• DOE and HUD will work together to enable the cost-effective energy retrofits of a total of 1.1 million housing units through 2011.
• Commit (conditionally) to loan guarantees for two nuclear power facilities to add new low-carbon emission capacity of at least 3,800 megawatts during 2010.

Government of Canada Says 97% of Stimulus Funding Committed

The Government of Canada's fourth quarterly report on the implementation of Canada's Economic Action Plan, which earmarked about $12 billion for infrastructure spending including $4 billion to restore aging infrastructure, reports that 97 per cent of the stimulus funds has been committed to more than 12,000 infrastructure and housing projects, of which 8,000 or over 65% have already begun.

The projects are distributed all over Canada as you can see at the Government of Canada Economic Action Plan web site.

Department of Energy ARRA Stimulus Smart Grid Grant Awards

A list of the DoE $3.4 billion grant awards is available.  The awards are matched so that the total value of the projects is $8.1 billion according to DoE.  Apparently only about a quarter of the 400 applicants under this program won funds. The DOE said the process was very competitive.

Canadian Stimulus Report Card

Prime Minister Stephen Harper tabled a report that said that 90 per cent of the funding for the 2009 stimulus has been committed and that of the 7,500+ projects that are on the drawing board across the country, 4,000 have actually begun.  At the beginning of the year the government's budget provided a $40 billion stimulus to be spent over two years.  The government believed that the stimulus would create or protect 265,000 jobs by the end of 2010.

The stimulus included almost $12 billion in new infrastructure stimulus funding for roads, bridges, broadband internet access, electronic health records, laboratories and border crossings and $7.8 billion to build quality housing, stimulate construction and enhance energy efficiency.

Canada's Economic Action Plan (Jan 27)

                                                           2009 2010 Total

                                                                 (millions of C$—cash basis)

Help Canadians and Stimulate Spending 5,880 6,945 12,825

Stimulate Housing Construction                  5,365 2,395    7,760

Housing leverage                                     725    750    1,475

Immediate Build Infrastructure                  6,224 5,605 11,829

Infrastructure leverage                                  4,532 4,365    8,897

Support Businesses and Communities          5,272 2,255    7,527

Sectoral leverage                                  1,300            1,300

Total federal stimulus                                 22,742 17,200 39,942

Total stimulus (with leverage)                 29,298 22,316 51,613

    As a share of GDP                                                    (%)  

Total federal stimulus                                      1.5       1.1        2.5

Total stimulus (with leverage)                      1.9       1.4        3.2