To help consumers save billions of dollars a year, create jobs for our economy, move the country toward energy independence, and reduce the environmental and public health costs of dirty fossil fuels, we need to get smart. Building a dynamic "smart grid" is a good place to start.
A smart grid uses information and networking technologies to improve the ways we make, transport and manage energy - diversifying resources and eliminating enormous amounts of waste. Think of the smart grid as an "energy Internet" primed to transform energy as completely as the information revolution transformed telecommunications, from cell phones to YouTube.
By modernizing electricity generation, delivery and consumption, the smart grid will make far better use of existing infrastructure: just optimizing voltage on power lines will save 3 percent of all the power generated in the U.S., worth $10 billion a year. A smart grid will radically reduce power outages, which now cost the country $80 billion a year: sensors will alert grid operators the moment a transformer is blown or the power is out, and pinpoint exactly where they need to go to fix it and get people's lights back on. With its ability to manage power flows in multiple directions and balance intermittent supplies by adjusting demand, a smart grid will help expand renewable energy sources, including backyard wind and rooftop solar, reducing the need for new power plants and power lines and providing clean electricity for charging electric cars.
Most importantly, a smart grid will enable utilities to give consumers real-time information on how much electricity they're using, and at what price. They'll be able to save money with "set it and forget it" applications for their smart appliances and plug-in car - which will know to power on or charge up when there's clean, cheap energy available. With supporting policies, the smart grid will also allow consumers to make money by selling the electricity they generate or save ("negawatts") back to their utility at peak times when prices are high.
Studies at the Pacific Northwest National Lab and elsewhere have found that consumers could cut bills 10 percent or more by deploying "smart" technologies already available. And if even a small percent of customers shift their electricity use to off-peak hours, everyone's bill can go down. Here's how: The most expensive and polluting "peak power" plants will come online less often -and fewer new plants will need to be built: Over the next decade, a smart grid could reduce U.S. peak demand enough to avoid the need for 1,300 new power plants. That will save money for all customers and enhance our nation's competitiveness while protecting public health.
The potential reductions in greenhouse gas emissions are immense. Assuming continued rapid growth in renewable energy and electric vehicles, a smart grid could cut carbon emissions as much as 30 percent from the electric sector and 25 percent from the transportation sector by 2030, while reducing energy imports and strengthening our national security.
Realizing all these benefits will require forward-looking energy policies, an area where California has long been a leader. Its cutting-edge energy efficiency policies, for instance, have saved utility customers $56 billion during the last 35 years and helped avoid the need to build dozens of power plants.
By pioneering smart grid policies, California is on track to deliver more wins to its electricity customers. Last July, the California Public Utilities Commission issued a decision requiring utilities to implement smart grid deployment plans that help reduce the overall environmental impact of the state's electric system, and last September, the Governor signed SB 1476 (Padilla) to ensure that consumer privacy is protected as plans are implemented.
As smart meters are installed in homes, the real-time information they generate must be made available to consumers, along with a choice of easy-to-use tools for saving energy and money - and the option of sharing that information with energy service providers. These steps will empower consumers to better control their energy use and realize the cost-savings that the smart grid can deliver.
A report commissioned by the Edison Foundation estimated that domestic electric utilities will need to invest $1.5 trillion or more by 2030 on new generation, transmission and distribution, and smart grid technologies to maintain high levels of reliable service. How that money is invested will determine the shape of our energy system for two generations or more: done right, they will help consumers reduce their energy use, protect the environment and create more jobs by generating more of our energy here at home.
The return on this investment- which will ultimately be made by each of us as ratepayers - can be tremendous. A well-designed smart grid will enable the clean energy revolution we need - securing our energy independence, sustaining our global competitiveness in clean energy, the biggest market opportunity of the 21st century, and empowering consumers - all while protecting our air, water and land.
Rey Ramsey is Chairman of One Economy and President and CEO of TechNet. One Economy is a global non-profit dedicated to bringing technology and broadband to low income people. Fred Krupp is president of the Environmental Defense Fund.