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Chu Raises Cap on Smart Grid Grants to $200 Million


By Tina Seeley

May 18 (Bloomberg) -- Energy Secretary Steven Chu said the U.S. will increase the amount of individual grants available for companies to develop smart-grid technology to $200 million from $20 million.

Chu made the announcement today after meeting at the White House with about 70 executives from utilities, information technology companies and manufacturers, including representatives of IBM Corp. and General Electric Co.

The $787 billion stimulus legislation signed into law in February included $4.5 billion for smart grid technologies, which aim to improve reliability of the nation’s electrical grid and increase energy efficiency. Industry groups and governors have called on the department to consider raising the $20 million cap proposed in an April 16 notice.

Chu told reporters after the meeting that he was making the move “in order to start pilot plants of meaningful scale,” and because “we’ve gotten a lot of good comments from the industry.”

The government is also increasing the size of the grants for demonstration projects to $100 million from $40 million, according to a department press release.

California Governor Arnold Schwarzenegger last month sent a letter to Chu asking the cap be raised to $200 million.

“The current cap causes utilities to pursue separate, smaller projects that are not as regionally integrated or cutting edge,” the Republican governor wrote in the April 30 letter.

Bill Richardson

Democratic Governor Bill Richardson of New Mexico also called for raising the cap, as have industry members including the Edison Electric Institute, a Washington-based trade group that represents investor-owned utilities.

“These proposed award sizes to not adequately take into account the range, in both scale and scope, of meaningful smart grid deployment projects, and in many cases will not provide anywhere close to a 50 percent cost share,” David Owens, executive vice president of the Edison Electric Institute, said in May 6 comments sent to the department.

Funding decisions for the chosen projects could come as early as this summer, Chu said.

“We believe that bigger deployments are important and that $20 million is insufficient to really demonstrate scaleability of the technology or the real impact of technology,” Bob Gilligan, vice president of transmission and distribution for GE and an attendee of the White House meeting, said in an interview.

Deploy Technology

GE, based in Fairfield, Connecticut, last month unveiled plans with FPL Group Inc. and Cisco Systems Inc. for a $200 million project to deploy smart grid technologies in Miami.

“Lifting the limit on the matching funds allows something of that scale to happen and really I think will attract more investment in other technologies,” Gilligan said.

Chu made the announcement alongside Commerce Secretary Gary Locke, whose department includes the National Institute of Standards and Technologies.

Locke and Chu today announced the first set of standards needed for smart grid development, to ensure that software and hardware work together “seamlessly,” Locke told reporters.

To contact the reporter on this story: Tina Seeley in Washington at [e-mail].

Last Updated: May 18, 2009 14:22 EDT

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