President Obama's push to modernize the electricity grid will require agencies to get a lot smarter about how they track energy use.

You can't fault President Obama for a lack of ambition. Besides planning to overhaul the health care and public education systems, rebuild aging infrastructure, and wean the country from its addiction to fossil fuels, the new administration intends to retool the engine that powers the entire economy-the electricity grid. If the nation were an ailing patient in a hospital intensive care unit, that would be the equivalent of conducting a bone marrow transplant, a couple of hip replacements and a blood transfusion.

Electricity is the lifeblood of modern life. The infrastructure that delivers it to virtually every citizen is so massively complex and inextricably linked to human endeavor that a recent Energy Department report describes it as an ecosystem of more than 9,200 electric generating units strung together by more than 300,000 miles of transmission lines. The National Academy of Engineering identified the electric grid as the most important engineering achievement of the 20th century. But as it closes in on 100 years old, the network is getting long in the tooth. It needs more than rehabilitation; it needs to be reinvented.

Since 1982, peak demand for energy has been rising faster than the rate of increase for transmission capacity by almost 25 percent per year, according to Energy Department data. The growing population with its insatiable appetite for bigger televisions, more powerful computers and other electricity-guzzling devices has fueled an unsustainable trend and put pressure on an overtaxed system. Outages and brownouts are estimated to cost the economy more than $100 billion annually on average. And that's just the current economy. Throw in the electric vehicles, massive wind farms and solar arrays many energy experts and economists advocate, and the nation will need to build an electricity transmission system substantially different from the one it has now.

In a speech at George Mason University in Fairfax, Va., shortly before taking office, Obama pledged to do just that: "We'll put people to work repairing crumbling roads, bridges and schools by eliminating the backlog of well-planned, worthy and needed infrastructure projects. But we'll also do more to retrofit America for a global economy. That means updating the way we get our electricity by starting to build a new smart grid that will save us money, protect our power sources from blackout or attack, and deliver clean, alternative forms of energy to every corner of our nation."

The smart grid is widely understood to be the interconnected collection of new technologies that can be used to improve the reliability, security and efficiency of the nation's electricity system. The Energy Department's Electricity Advisory Committee, a diverse group of utilities, consultants, environmentalists, private developers, as well as state and federal regulators, explains how vital this is in its December 2008 report "Smart Grid: Enabler of the New Energy Economy":

"While much of the technical and policy discussion about how to ensure a sustainable energy future focuses on energy efficiency, renewable energy sources, storage and plug-in electric cars, it is often forgotten or underemphasized that these solutions all depend on a smarter grid to achieve scale and cost-effectiveness. A smart grid is therefore foundational for a sustainable energy future; and if there is a growing consensus within the United States that clean energy is a platform for rebuilding the American economy, then it follows that the realization of a smart grid is also critical to economic growth."

It would be hard to overstate the challenges inherent in creating a smart grid. Electricity production and transmission is a highly fragmented enterprise with multiple private and government players whose objectives and incentives differ widely. The industry is regulated by an equally complex web of private, state, federal and tribal regulations. Utilities vary, from investor-owned, for-profit companies to rural electric cooperatives and public power systems. It can take a power company many years to navigate the legal and regulatory wickets necessary to build power generation plants and transmission lines. Tapping renewable energy sources such as wind and solar is further complicated because they typically are located far from the population centers that need the energy they could produce.

Most stakeholders agree that expanding the capacity of the electric grid is contingent upon improving its efficiency. But you first need to know how you're using energy-not just where it's going in a particular building, but when energy is being consumed in relation to other users and to the cost of generation. Energy Department officials and others maintain that broadly applying what's called advanced metering infrastructure is a fundamental early step in modernizing the grid. AMI is not a single technology but the integration of multiple digital technologies that create an intelligent, two-way connection between consumers and electricity system operators. Using sophisticated meters that measure energy consumption and pricing in real time, linking them to home and commercial area networks, and then using integrated communications technologies to link consumers and providers, AMI provides information that allows consumers and providers alike to use energy more wisely.

"AMI is relatively new in the past two to three years," says Bill Anderson, the Navy's director of smart grid, who manages the AMI program. "Most people have never heard of AMI. Maybe they've heard of [automated meter reading] or smart meters," but few people in or outside government fully appreciate the potential benefits, both economic and operational, of harnessing smart meters into an interactive network, he says.

Some utilities have installed advanced metering systems in targeted metropolitan areas, but none has attempted anything as extensive as what the Navy is hoping to accomplish during the next three years. By creating a global network of advanced, two-way meters, service leaders expect to gather the data necessary to significantly cut energy use, incorporate more renewable energy production, and better manage the service's consumption in relation to fluctuating prices and production levels.

In short, Anderson and his small band of government engineers are attempting to link in near real time, 20,000 facilities at 120 installations across every time zone to gain visibility into 95 percent of the service's energy consumption. With an annual utility bill of about $1 billion and requirements to cut energy consumption by 3 percent per year across the department, the Navy stands to gain a great deal. And the lessons drawn from the program will inform policymakers, regulators and utilities about key elements in the national quest to develop a smart grid.

Building a Micromodel

The federal government is the single largest energy consumer in the nation, and agencies have been under more pressure to cut consumption since the 1970s. At the Defense Department, which accounts for the biggest chunk of federal energy consumption, the military services cut 30 percent of their electricity use during the 20-year period between 1985 and 2005. The 2005 Energy Policy Act required another 30 percent cut (measured against a 2003 baseline) during the next decade-a goal the Navy is on track to meet, says Chris Tindal, deputy director for renewable energy in the Navy's Energy Policy Office at the Pentagon.

"Since 1985 we've plucked a lot of the low-hanging fruit," says Tindal, referring to relatively quick and inexpensive things individuals and organizations can do to cut consumption, such as replacing incandescent light bulbs with fluorescent ones and adjusting temperature controls on water heaters and air conditioning systems. Like other agencies, the Navy can't justify upgrading facilities and equipment unless the savings achieved from cutting energy use warrants the investment. So, over the years, the Navy has packaged inexpensive changes, like lighting upgrades, with more expensive ones, like replacing central heating and air conditioning systems, in which the payoffs are much slower.

With the low-hanging fruit largely harvested, the Navy views AMI as a way to meet future energy reduction targets. "Experts agree you can save about 2 percent off your annual electric bill [with advanced metering]. That might not seem like a lot, but when you multiply it over all of our facilities, it adds up," Tindal says.

BJ Penn, the Navy's assistant secretary for installations and environment, says, "We think this program will yield significant dividends in energy savings by giving us data on consumption we currently don't have." Penn, a former Navy pilot, recalls the $11 million utility bill he received his first year as commanding officer of Naval Air Station North Island, Calif., near San Diego. "That was 20 years ago," he says. "I became very interested in energy." Besides the edict to cut consumption, the 2005 law also required agencies to install advanced electric metering at buildings where it made economic sense to do so (in the Navy's case, the threshold is any building whose utility bill exceeds $35,000 per year). That requirement was expanded in the 2007 Energy Security and Independence Act when agencies were required to meter gas, water and steam.

"Way back when, we just had one electric meter at the gate" that collectively measured consumption at all buildings on an installation, Tindal says. But some buildings are a lot more efficient than others. By measuring consumption at buildings individually, the Navy can target the biggest energy hogs for rehabilitation.

But the advanced metering infrastructure project aims to allow the Navy to do much more than that. The data it collects will help building engineers make operational choices that could have significant energy and cost savings by showing them how much they're paying for electricity at a given time (most utilities charge more for electricity during peak load times).

Last fall, the Navy awarded a $250 million contract to three firms to support AMI worldwide: American Systems, based in Chantilly, Va.; Square D, based in Palatine, Ill.; and Weston Solutions near San Antonio, Texas. They will design, test, procure and install advanced meters for the Navy through 2013. In March, Anderson's team will oversee the installation of about 300 advanced meters in a pilot program, mostly electricity but also gas, water and steam, at three bases on the California coast: San Nicholas Island, Point Mugu and Port Hueneme. "This will be a micromodel of our corporate global network," Anderson says, with Port Hueneme, where Anderson is based, representing the hub.

The network must meet security and information assurance requirements set by the Navy Marine Corps Intranet network, which will carry data for the AMI project. "What makes it particularly tough for us is these requirements are an expanding, moving target. It's a continuing challenge for the government to make sure its networks are secure," Anderson says. Not all requirements are easy to anticipate. At one site, for example, the advanced meters, which communicate wirelessly, have to be installed in such a way as to not interfere with operational testing that uses another wireless communications band. "We had to build a whole new feature in functionality to comply with that," he says. "We're going to see more and more things like that. There are about 58 wireless protocols out there."

Anderson's task also is complicated by the fact that his meters have to communicate with more than 90 utilities. There are international and geographical hurdles as well. Every country hosting Navy bases has its own restrictions on wireless communications and which frequencies can be used. "The fact that I'm trying to find a solution that works in Japan as well as Europe makes this harder, as well as the fact that we're back-hauling data from remote sites like Cuba, Diego Garcia and Guam," he says. He explains how the needles from coniferous trees in the Pacific Northwest interfere with wireless operations. "It's the only place it's happening, but it affects our solution," he says.

Ready, Fire, Aim

According to "The Smart Grid: An Introduction," an Energy Department primer on rebuilding the nation's electric infrastructure, "If the grid were just 5 percent more efficient, the energy savings would equate to permanently eliminating the fuel and greenhouse gas emissions from 53 million cars." That assessment, along with an analysis by the international consulting firm KEMA, which estimates a government investment of $16 billion in smart grid incentives would drive projects worth $64 billion, helps explain why both the House and Senate endorsed spending several billion dollars on smart grid programs in the economic stimulus bill.

"The impact of these projects would result in the direct creation of approximately 280,000 new positions across various categories, of which more than 150,000 will be created by the end of 2009," KEMA's Will McNamara wrote in a January white paper. "Furthermore, we estimate that nearly 140,000 new direct jobs would persist beyond the smart grid deployment as permanent, ongoing high-value positions." In-direct job creation is more difficult to quantify, McNamara noted, but he projected it is much larger.

The likelihood that Congress will release a large amount of new money for smart grid development both excites and worries Anderson. Because stimulus funding can be used in the United States only, the Navy would have to modify its plan for the network overseas.

"I'm particularly cautious, protective really, because my fear is that in answering the call to push this money out we might lose a lot of our potential impact because we're not doing it as we originally wanted," he says. "That said, it's like anything else. You've got to strike a balance. You don't just have the luxury of studying this in perpetuity to do it perfectly."

Anderson has been working with officials at Energy's Smart Grid Task Force and is optimistic the Navy's AMI program will be among a handful of demonstration projects aimed at proving smart grid technologies.

"My strategy when I started this was I wanted to get the pilot running, kick the tires, test it, break it, try different things, and take that information and apply it to the first of 10 regions. Then you want to make sure you get it right in the first region before you go on to the second. But this is kind of like in the Army: 'Ready. Shoot. Aim.' We have a strategy and we have a plan to aim, it's just that we might not have time to aim."

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