Economists sometimes get confused - especially when the real world doesn't fit into their neat boxes.
Moreover, utility R&D has been even further depressed by the uncertainty of restructuring. The pharmaceuticals industry, for example, reinvests approximately 15 percent of gross revenues back into research. For electric utilities, the corresponding figure is 0.3 percent-proportionately, one fiftieth as much. At a time when grid constraints are wreaking havoc with regional economies, it is clear that this neglect of the potential role of next-generation grid technology has been penny-wise and pound-foolish.
In the debate over SMD, the stakes are high. There can no longer be any question that a much stronger and more flexible power grid is essential to the economic health of the country. Electricity has been called the lifeblood of modernity; for a century, overall economic growth has been closely linked with electrification. Indeed, a strong case can be made that healthy national economic growth will not resume unless and until transmission policy issues are correctly resolved. The SMD proposal provides a workable policy framework to attract needed innovation and investment in the network. Policy reforms alone, however, will not surmount the challenge. New, low-impact grid technologies offer the means to modernize and refortify the grid in ways that are compatible with 21st century land-use and environmental values.
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