A smart policy

Published: January 26 2009 02:00

When President Barack Obama talks about his priorities, energy always comes high on the list, and with good reason. The plunge in oil prices may have reduced their political salience, but securing energy supplies and averting the threat of climate change are as important as ever. An idea at the heart of his programme is the creation of a "smart grid": an electricity network that uses information technology to manage flows of power. The cost of such a grid would be enormous, but it would be money well spent.
The smart grid has become today's equivalent of the "information superhighway": a piece of trendy high-tech jargon. Yet that fashionability should not be allowed to obscure its merits. One of its strongest supporters is Steven Chu, Mr Obama's energy secretary, and no one could accuse him of being a dilettante. A Nobel Prize-winning physicist, he has been serving on the electricity transmission sub-committee of America's Energy Future, a research group backed by the national academies of science and engineering.
A smart grid would be a national asset comparable to the interstate highways launched by President Dwight D. Eisenhower in the 1950s. It would make possible a huge increase in the use of renewable energy in the US, connecting up vast wind farms in South Dakota or solar arrays in New Mexico to the centres of population on the coasts. It would enable the network to manage the intermittency that is inherent to wind and solar power, balancing supply and demand when the wind does not blow and the sun does not shine. It would also cut the losses caused by transmitting electricity, and make the network more resilient to equipment failure, preventing blackouts.
Supported by "smart meters" - devices in the home that monitor energy use and can send and receive information - the grid can also cut consumers' energy use. Trials in the US have suggested household electricity use can be cut by between 10 and 15 per cent. Those that generate their own power, for example with solar panels on their roofs, would also be able to sell any excess to the grid.
Mr Chu has suggested a national smart grid would cost up to $1,000bn. But with the US spending $400bn a year on electricity, a mere 10 per cent reduction in power use would cover the cost in 25 years. Rural electrification was one of the great, lasting achievements of President Franklin D. Roosevelt's New Deal. It would be fitting, as well as a sound investment, if Mr Obama were to update that project for the 21st century.
Copyright The Financial Times Limited 2009