By now, you know that the smart grid is one of the main recipients of stimulus dollars.
Just a few weeks ago, Obama made a big public announcement about the $3.4 billion being used to install smart meters in 18 million homes and offices around the country.
That sum will be divided by 100 different projects in grants ranging from $400,000 to $200 million.
Not only could this mean a new smart meter for your home. . . it could also mean a windfall investment opportunity.
Because that $3.4 billion will soon be paid to companies that specialize in making smart meters, automated substations, advanced transformers, and all the software that goes with them.
These are the same smart grid companies we've been following for years here in Green Chip Review.
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A Bold Prediction Come True
In the last trading week of 2008, I told you that "2009 is being hailed as the year of the smart grid." In that same article, I showed you a chart of three smart grid companies. Here are those companies and what they were trading for late last year:
Comverge (NASDAQ: COMV), $4.46
Echelon (NASDAQ: ELON), $7.60
EnerNOC (NASDAQ: ENOC), $7.04
And here is their 2009 performance:
Each has at least doubled. And the biggest winner, EnerNOC, has gone from low $7s to mid-$30s — more than a 300% rise.
Year of the smart grid, indeed.
Smart Grid in 2010
Of course, 2009's performance doesn't do you much good if you weren't invested. So let's make sure you're ready for what's store in 2010.
For starters, the smart grid is now a major investment theme. While early investors enjoyed near-universal bullishness, today's smart grid success will require more research and knowledge of unexploited opportunities.
To be clear, I wouldn't expect EnerNOC to climb another 300% in the next 12 months. Instead, we'll have to seek out the next round of smart grid winners.
And I have a few ideas in mind. . .
The masses are currently infatuated with smart meters. And that's understandable, since that's the technology the administration and the media have chosen to focus on.
To stay one step ahead, we'll now have to focus on smart grid sectors that will receive secondary and tertiary benefits.
Wires, Lights, and Energy Networks
The introduction of smart meters is only the first leg of the smart grid profit race.
Remember, executives from both GE and Cisco have alluded that the smart grid will be bigger than the internet. That means there's still a lot of development and profits yet to come.
And, since the smart grid is essentially "the Internet for energy," networks are quickly emerging as a central theme.
In a nutshell, this means all of your devices will eventually communicate with each other and with the utility. Substations, meters, appliances, chargers, and lighting systems will soon all be smart, meaning they'll store information and share it to ensure maximum cost and energy efficiency.
The next round of profits will come from the companies taking these networks from theory to reality.
This will surely benefit companies like ESCO Technologies (NYSE: ESE) and Telvent Git (NASDAQ: TLVT). ESCO offers two-way power line communication systems along with the matching software and support. And Telvent specializes in IT solutions for energy management.
Lighting is also going to play a crucial role.
There's opportunity to be had in the transition away from incandescents and toward fluorescents and light emitting diodes (LEDs). And profits will also come from making entire lighting systems more efficient, say in a parking garage, office building, or grocery store freezer.
Companies like Cree Inc. (NASDAQ: CREE), among many others, are already making this happen.
And finally, there's a host of companies pursuing other niche smart grid opportunities. In this coming energy Internet, there will be plenty of demand for switches, routers, wires, and other specialized devices.
The world may have found out about the smart grid in 2009. But 2010 can still be your year to profit from it.
Call it like you see it,
Nick
P.S. I'm heading to GreenBeat next month, self-described as the seminal conference on the Smart Grid, bringing together leading entrepreneurs, investors, utilities, technology executives, and policymakers to accelerate the development of a leaner, more efficient electrical grid. I'll share everything I learn upon my return. If you'd like to read more about the event, click here.
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MSNBC carried a long interview with Jared Bernstein, Joe Biden's chief economic advisor. Bernstein was on a roll about what a good thing it is for the country to be gifting $3.4 billion in stimulus money to electric utilities and private companies in 49 states to 'modernize the nation's electrical power system'. For good measure, he made sure to say this is "supporting green building and jobs". Not likely.
The bulk of this money will do nothing more than supercharge the building of more transmission lines and add a layer of radiofrequency radiation (RF) to the system for monitoring and reporting. And, not a penny for or a single line about potential health effects. Now, your electrical power lines can bring you two potential carcinogens, instead of one.
A big slug of this money is specifically for new "smart grid meters" that require an RF blanket over entire communities. More wireless. No public input. No health effects discussion. No way to opt out. Smart meters are supposed to help reduce energy usage by letting consumers know when to do their energy-consumptive chores like washing clothes. It also allows utilities to spread out energy demand, which saves them from worrying about outages and shortfalls in load.
Bernstein should go back to his boss and say "hey, the public isn't so uninformed" anymore about EMF health risks. They are not buying the "green" transmission line story. They want 2% of the money ($68 million) to go to independent review of health issues over the next five years. and they want 6% ($204 million) to go to undergrounding of power lines to reduce health effects and loss of property values. They don't want smart meters forced on them before the National Toxicology Program finishes up the study on RF that is not due out until 2014 (and, they are wondering why if this program started in 1999, its taking 15 years to complete). Doesn't make sense to fund utilities to do things the same old bad way, when public health experts says change is needed. And, why put billions into new wireless technologies that are already recognized to come with a health price-tag... when - yes - as a nation our number one imperative is to reduce out-of-control health care costs.
Google's CEO, Eric Schmidt was on the nightly news talking up this $3.4 billion giveaway straight from the US treasury. He serves as Obama's economic advisor. He must also have seen the gold lining in smart meter technology. Google stands to benefit mightily from this boondoggle given their push into the wireless market. Conflicts abound here and should raise the hackles of anyone who questions why we would give this much away without asking for something back that we really want. Freedom from health risks from the projects these stimulus dollars will certainly fund.
What the heck, giving a slice of the pie for independent health research (better late than never) and for undergrounding of existing power lines? This, too, will also stimulate the economy, and might even modernize our electric power grid so it harms people less. Now, there is an idea.