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Obama Gives Smart Grid a Jolt

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Modernizing utilities shoukd be a key initiative of the new administration.

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"One of the most important infrastructure projects that we need is a whole new electricity grid."
- Barack Obama


President-Elect Barack Obama must be panicking. He's just been made captain of a ship that appears to be sinking. To make matters worse, the rescue boats (made in China) are also taking on water. Are we actually drowning? Probably not. But watching your life's savings wash away in a tidal wave of bad economic data can be disorienting.

President Barack Obama cannot afford to be disoriented, or even to appear disoriented. He has to do something bold and bright to turn the world's biggest economy around.

It appears he's going to emulate the Chinese and announce billions of dollars in infrastructure spending. In addition to work on roads and water utilities, it's a good bet Obama will order a massive upgrade of the country's electricity grid.

This is a politically expedient move that will generate jobs, decrease USdependence on oil and open the door to alternative energy solutions, which Obama is keen on. The stakes are high.

You see, America's total annual electricity bill is $250 billion. That's about half what it spends on oil. There are more than 3100 electric utilities in the US - 200 of them publically traded, 2000 state run and 900 cooperative.

The current electricity grid is frequently compared to a Ford Model T: While China and Europe have modernized their entire infrastructure in recent years, the US continues to do emergency repairs on a spluttering side-valve, 20-horsepower engine that breaks down with startling regularity.

In discussions about energy, electricity is usually eclipsed by oil, when in fact they're part of the same conversation. Toyota (TM) and General Motors' (GM) extended-range, plug-in electric cars are scheduled to hit showrooms in 2010. Oil and electricity are going to become increasingly interchangeable energy forms. The more electricity we use, the less oil we use.

The embarrassing fact about electricity is that 60% of it comes from coal - which is dirtier than oil. Some analysts claim that electric cars will actually increase global warming. But the reason we're so dependent on coal is because of the inflexibility of our electricity grid, which alternative energy inputs very difficult.

A big part of the problem is the current grid is literally chopped into pieces. It consists of 3 independent networks: Eastern Interconnection Grid (EIG), Western Interconnection Grid (WIG) and the Texas Interconnection Grid (TIG). They each function as though they were in separate countries, unable to help one other or share resources.

"I want to be able to get wind power from North Dakota to population centers like Chicago," Obama said. "And we're going to have to have a smart grid if we want to use plug-in hybrids and have consumers sell back the electricity that's generated from those car batteries, back into the grid. That can create 5 million new jobs, just in new energy."

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