Smart Grid, Smart Move, Not-So-Smart Investment

President Obama on Tuesday unveiled a $3.4 billion program of infrastructure spending for "smart-grid" technology. Let's talk about what this means for national energy policy and, of course, whether there's a trade in the offing to take advantage of this rather large investment of public capital.

"Smart grid" is a phrase used to describe the installation of meters and timers in homes and businesses, so that electricity usage can be monitored and more efficiently allocated. Right now, the domestic electricity consumer has very little idea where he's using his power and what it's costing him -- all he normally gets is a monthly bill, most often based on an averaged amount. Smart grids will inform the consumer where, precisely, he is spending his money and how he might more economically schedule his laundry and dish washing.

How Much Electricity Do Your Appliances Use? Source: U.S. Dept. of Energy

The consequences of giving consumers better information on their electricity spending could be huge. On its Web site, General Electric (GE Quote) calculates that for every 11 million homes connected to the smart grid, that's the equivalent of almost 700,000 fewer cars hitting the roads, or 3.7 million fewer tons of CO2 emissions.

Avoid Smart Grid Stocks

The Obama money for smart-grid infrastructure is part of the $700 billion stimulus package, but all grants are equally matched, and sometimes exceeded, by private funds, so the smart-grid spending outlay will actually total $8.1 billion. For example, Baltimore Gas & Electric, part of Constellation Energy (CEG Quote), will receive $200 million and invest $251 million of its own to install 1.1 million smart meters and the information systems to manage them. The money also will go toward installing 400,000 in-home devices, including communicating thermostats and in-home displays to help consumers manage their power usage.

Google (GOOG Quote) has begun offering a new application for homes with smart technology installed, called the Google PowerMeter, which can connect to your home's grid and the utility simultaneously to show your usage as it happens and help you manage it.