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Investing in the Smart Grid

Written By Nick Hodge

Posted June 23, 2009

The smart grid is delivering two-fold profits. I know this because I’ve personally reaped dividends from both folds.

First, from what I call the non-sexy side of smart grid: efficiency.  And secondly from the very sexy side of smart grid: investing.

Here’s an account of each. . .

Smart Grid Savings

We’ve barely reached the first rung on the ladder of smart grid deployment, and it’s benefits are already apparent.

When it comes to wealth, protecting it can be just as important as growing it.  Limiting how much goes out is one way to protect it.  And the smart grid can help you do that.

This past winter, months before air conditioning was on anyone’s mind, I made a call to my local utility, Baltimore Gas  & Electric (BGE).  Through their Smart Energy Savers Program, they offer something called Peak Rewards.

In a small nutshell, Peak Rewards offers a discount electricity bill to anyone who signs up.  I got a $36 credit last month.  My bill was $130, so I had to pay $95-a 27% savings.  I, and several thousand other customers, will enjoy that same discount throughout the summer.

Peak Rewards is a fancy way of saying the smart grid has arrived.  Upon signing up, an appointment was made for a switch to be installed on my outside air conditioning unit.  On days when electricity demand is excessively high, a radio frequency will be sent to my switch telling it to cycle my unit.

Cycling means my fan continues to run, but the unit doesn’t cool the air, saving electricity that can then be used where needed.  During a cycling event, which don’t happen that often, the temperature in my home can be affected by a degree or so.  And they usually happen during peak hours, when I’m at work anyway.

So the smart grid is already paying me $35 a month.  But this is only the beginning.  The very beginning.

Because over the next 20 years, over $2 trillion will be spent on revolutionizing our electricity infrastructure.  When complete, my switch will seem archaic.

That’s because the grid will finally be in the 21st century, instead of lumbering around like Edison was still here.  You’ll monitor your home’s electricity use from a webpage, charging your car and turning off lights with a click of the mouse from your laptop.  I’m serious.

You may even be able to choose which wind farm you want power from.

It’ll help consumers save billions of dollars (and kilowatt-hours) by engaging them in electricity use, rather than alienating them from it with a complex monthly statement.  But it’s also a mega investment opportunity.

Smart Grid Investments

Somewhere down the line BGE partnered with a smart switch provider.  A contract undoubtedly worth millions.  In this case, Honeywell is the name stamped on the switch.

This process is being, and will be, repeated hundreds of times as utilities across the world adopt smart grid practices.  As I said earlier, the total will top $2 trillion.

But it’s not just switches.

It’s smart meters.  Software.  Batteries.  Transmission wire.  LEDs. Substations.  And more.

Hundreds of multi-million dollar contracts will drive related stocks higher.  It’s the second fold of smart grid profits. . . and they directly affect your portfolio.

So while you’re knocking a third off your utility bill on the front side, you can be reaping double and triple digit winners on the back end.  It’s going on right now:

Smart Grid Stocks

If you’re not on board yet, don’t worry.  This is a decades-long process, and the benefits will only grow.

Call your local utility and see what kinds of new programs they’re offering.  Encourage them to adopt an efficiency or related rebate program if they don’t have one already.

And by all means, start investing in the companies making the smart grid a reality.  But don’t do it on a whim.  Take a few minutes to read this detailed smart grid report.  

It explains how the smart grid will come to be, what technologies it will encompass and, most importantly, how you can start profiting today.

Call it like you see it,

Nick Hodge