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Smart-Grid Stimulus

Utilities hurry up and wait to apply for grant money.

Fortnightly Magazine - June 2009

specific program allocations. If it does, that portion of funding slated for AMI-centric uses also could be small and this may be controversial given the visibility of smart meters within the smart-grid discussion. Given, however, that the Secretary of Energy has yet to complete many senior appointments within the department, it’s questionable whether Secretary Chu will issue definitive and conclusive guidance about program priorities (both funding levels and emphasis) so early in the process.

Funding Criteria

In addition to establishing broad program allocations, DOE also must establish funding criteria. DOE gave some indication of this when it released the NOI, stating the program would provide 50-percent matching grants ranging in size from $500,000 to $20 million for smart-grid technology deployments, and grants between $100,000 and $5 million for deployment of grid-monitoring devices ( e.g., phasor measurement units). Also, the draft FOA proposes to allocate $615 million for demonstration projects involving smart-grid, utility-scale energy storage and grid-monitoring technologies. 2 The NOI emphasizes regional, large-scale best practices, and cooperation and collaboration among utilities and integrated teams across the spectrum of stakeholders ( e.g., utility, vendor, government, financial, etc.). DOE is also placing a strong emphasis on program metrics and cost-benefit analysis, transparency, cyber security, and interoperability standards development, all items stressed by Patricia Hoffman, DOE’s acting secretary of OEDEDR at a March 3 hearing before the U.S. Senate’s Energy and Natural Resources Committee. Hoffman also emphasized that one of her office’s highest funding priorities is to implement the Recovery Plan generally, implying the importance of getting the money working within the economy as a whole.

Others also are offering opinions on the question of funding criteria. The NARUC/FERC Smart Grid Collaborative has offered its own extensive outline of funding criteria for both the regional demonstration and the matching grant programs. It breaks its criteria down into pre-conditions for grants ( e.g., compliance with FERC reliability standards, participation in information clearinghouse, designing for upgradeability, etc.), overarching criteria ( e.g., distribution of funding, project scale, geographic diversity, etc.), conditions for technologies, rate-design considerations, regulatory issues, information requirements, customer privacy and program monitoring. The NARUC/FERC collaborative’s proposed criteria are detailed—there are over 50—and they provide early useful guidance to prospective grantees working on applications development. 3 FERC’s Commissioner Suedeen Kelly characterizes the criteria as a consensus among 19 states and FERC offered in the interest of ensuring stimulus money is put to best use.

FERC and NIST Guidance

Further complicating the funding picture is the important work that NIST must accomplish in the establishment of an interoperability framework for smart grid. FERC put pressure on the NIST by issuing on March 19, 2009 a proposed policy and action plan on proposed interoperability standards and inviting public comment. FERC’s focus is in part trying to force prioritization of the NIST efforts, ensuring that cybersecurity concerns are tackled. The NIST work and FERC’s strong policy plan may influence the nature, type and speed of DOE funding deliberations, especially as cyber security concerns grow. In April and May, DOE convened meetings among industry stakeholders and policy