What if your electric meter could provide real-time data on your energy consumption and your power company could offer you electric service tailored to your consumption needs? If you live alone and work all day away from your home, you could save big on your electric bill by using most of your electric power during off-peak times at cheaper, off-peak rates. Take this a step or two further: what if you could check your consumption and control your appliances from your office computer-or your Blackberry? Or allow your electric company to control your appliance use and maybe select the best service plan for you?
A generation of technologists, entrepreneurs, and policy makers have envisioned an electric grid that could not only seamlessly deliver electric power to end users but also provide grid and user data and allow remote coordination and control of grid supply- and demand. The "Green" imperative, combined with smarter, faster, and cheaper technologies allowing the economic integration of every-day technologies like electric meters and WiFi devices have placed the Smart Grid at our doorstep-and it is here to stay. And it is big business. To date, more than 8 million Smart meters have been deployed in the United States. This number is expected to reach 33 million by 2013. Billions of dollars have been and will be invested. Some estimate that $40-50 billion will be spent nationwide on Smart meters alone, with as much as $165 billion for total investment over the next twenty years.
Regulatory policies favor Smart Grid investment by allowing utilities to (1) capitalize Smart Grid investments and put related expenses in their rate bases and (2) establish accelerated depreciation rates for electric meters and other systems and system components to be replaced with "Smart" technologies. But the single biggest boost to Smart Grid in the United States occurred within the last several weeks when the United States Department of Energy ("DOE") disbursed approximately $4 billion in Smart Grid grants under the American Recovery and Reinvestment Act of 2009 with individual grants as high as $200 million. Communications infrastructure, of course, is an integral part of making Smart Grid work. It too is a work in progress. Electric companies will need to add to their existing communications capacity and functionality, both at the local distribution level and all the way back to the generating source. At the end-user level, utilities must establish communications links with every meter so information can be hauled back to the utility HQ.
Many questions regarding end-user communications remain unanswered. Will wireless companies, or "local exchange" companies, or cable companies provide the last links to the tens of millions of Smart meters that are expected to be deployed in the next few years? Or, will utilities seek to build their own proprietary networks? If utilities seek to do so at the local distribution level (and many will), will they need additional spectrum? Will these new networks disrupt the operations and services of existing providers?
Today's cable operators already pass 90+ percent of electric meters with high-quality reliable net works that provide service to over 100 million customers in the United States. Likewise, wireless service is nearubiquitous in or near significant population centers. How big a role will these players have in Smart Grid? And what are the privacy and data-usage and management implications of Smart Grid? Entrepreneurs are hard at work designing integrated solutions.
From a legal stand point, Smart Grids require a multidisciplinary expertise, drawing from electric utility regulatory experts, communications, and privacy experts. Hogan & Hartson currently advises wireless and technology providers, and major cable industry players on the far-reaching and enduring implications of Smart Grid, how it affects high-level business, policy, and regulatory strategy, and the nuts and bolts of network operations. With household names like AT&T, Cisco, Deutsche Telekom, GE, IBM, Cisco, and Verizon (not to mention Goldman Sachs) placing big bets, Smart Grid will continue to grow, as will our work for our communications clients in this expanding sector.