The New New Deal (44 page)

They were right. Johnson’s enemies leaked internal emails to the inspector general that revealed she had violated federal procedures to fast-track the hiring of a deputy. “The HR process is just too slow,”
she had written. “I need competent bodies now who can help.” No one claimed Johnson was motivated by anything other than her desire to get flailing programs on track, and the investigative report acknowledged that the Recovery Act created extraordinary pressure to hire fast. But it still ended Johnson’s career at the department.

“I’ll never work for the federal government again,” she says.

It’s an unfortunate bureaucratic saga, except for the uplifting coda: Johnson and the Turkey Farm got the job done. On her watch, the weatherization program’s “run rate” increased from 30,000 homes a year to 30,000 homes a month. The program ultimately surpassed its goal of 600,000 homes three months early. Despite audits that found sporadic cases of shoddy work, a national study estimated that the retrofits saved the average homeowner over $400 a year.
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They also provided jobs for fifteen thousand workers. Republicans continued to seize on mini-scandals, like an audit identifying substandard work on fifteen Chicago homes, and pseudo-scandals, like a grant to a legitimate inner-city weatherization nonprofit with the unfortunate name of the African Heritage Dancers and Drummers of Washington.
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But a follow-up by the GAO found the program’s start-up problems were largely solved.
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“It’s a heartwarming story,” Cathy Zoi says.

Zoi recalls reminding Governor Rendell during the program’s dismal first year that Pennsylvania’s quota was 1,500 homes a month. “How many did we do last month?” he asked. Sixty-seven, she replied. She had a similar what’s-the-holdup chat with Governor Schwarzenegger in his famous smoking tent outside the California statehouse. “We’ll fix the prah-blems,” he promised. Governor Perry didn’t even return Zoi’s calls, but his weatherization director assured her not to worry about politics; Texas would make the program work. And eventually they all came through.

Of course, the press was no longer interested in weatherization now that its prah-blems had been fixed. It was just another cat that hadn’t run away.

T
he economy remained weak throughout 2009, but not the clean-energy economy.
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Clean-tech became the leading U.S. venture capital sector for the first time, eclipsing biotech and infotech. The wind industry, which had anticipated a 50 percent decline in new generation before the Recovery Act converted its useless tax credits into cash grants, instead had its best year ever. It added enough new turbines to power over one million homes, the equivalent of twenty coal plants. Solar had its best year ever, too, with forecasts for even better years ahead.

“Before the Recovery Act, we were shutting down our U.S. projects and reallocating our capital around the globe,” says Don Furman, senior vice president of the Spanish-owned wind developer Iberdrola Renewables. “The day it was signed, our chairman turned on a dime and put $6 billion back into the U.S.”

The more America relied on renewable energy, the more it would need a smart grid. But the growing pains of the Recovery Act’s grid program, while less public than its weatherization delays, were in some ways even worse. The smart grid wasn’t just slow stimulus. Initially, it was anti-stimulus.

Everyone agreed that America’s outdated grid needed an overhaul. Its managers constantly scrambled to maintain a balance between generation and consumption, like those old switchboard operators who manually connected every phone call. When demand spiked, they often had to fire up inefficient fossil-fuel “peaking plants” to prevent rolling blackouts. Yet outages still cost Americans as much as $150 billion a year. And the analog grid was a major obstacle to a world of renewable energy and electric transportation. A digital grid could make it much easier to shift juice where it’s needed when the wind stops blowing or clouds hide the sun. It could also help utilities smooth out demand to reduce peak loads without bringing new plants online. And it could give consumers more information and control, so they could save energy
and money, and sell extra power from solar panels on their roof and electric cars in their garage back to the grid.

Before the Recovery Act, almost every U.S. utility was at least starting to plan for a smart grid, and a few were already installing their first smart meters and other digital equipment. But while the passage of the stimulus accelerated the planning, because utilities had to think about their needs before applying for grants, it initially slowed down the installation, because utilities didn’t want to splurge on upgrades if there was a chance the feds would help pay for them. So until Obama announced the winners in October, grid investment froze, which was not the kind of response the stimulus was supposed to stimulate. “It was frustrating. The utilities put everything on pause,” says Raj Vaswani, chief technology officer for Silver Spring Networks, a Silicon Valley smart grid firm. And after Obama’s announcement, the awards were delayed again because utilities objected to paying taxes on them.

“It was one holdup after another,” Rogers says.

Once the grants were exempted from taxes, the first order of business for most of the winners was installing smart meters, just as Rahm had hoped. The stimulus will increase the U.S. totals from 8 million to 26 million. But inconveniently, the main up-front benefit of digital meters is their ability to replace human meter readers. The Phoenix-area utility Salt River Project’s new meters helped it complete over one million service orders remotely in the first year, saving 82,000 hours of labor, the equivalent of slashing forty jobs.

Smart meters weren’t the political hit that Rahm had hoped, either. Across the nation, ratepayer advocates and consumer groups like AARP have fought rate increases to help pay for them. In Northern California, a stimulus-funded push to install millions of meters sparked a particularly intense backlash, mainly because a heat wave made customers think the new devices had jacked up their bills, partly because of unfounded health fears about radiation, but partly because by themselves smart meters don’t do much for consumers. I found this out when my own analog meter in Miami Beach was replaced with a Silver Spring digital model through a $200 million stimulus grant to my utility, Florida
Power & Light. Now my family can check online to see how much power we use and when we use it. But so what? We can’t tell how much energy our various appliances are wasting, and we can’t save money yet by running the dishwasher at different times of day.

“It’s like giving people Ferraris, without giving them the keys,” says Jon Wellinghoff, Obama’s top energy regulator.

It’s ironic, since what Rahm liked about smart meters was their visibility, but so far their benefits have been largely invisible. The utility savings on meter readers and home visits should eventually translate into lower rates; for example, in addition to its reduced labor costs, Salt River saved 44,000 gallons of gas from avoided “truck rolls.” And digital meters will help utilities do a better job keeping the lights on. But as a political matter, customers don’t notice when their meter alerts the grid to a potential problem they didn’t know they had.

“The holy grail in outage management is to avoid the outage in the first place,” says Elster Solutions CEO Mark Munday, whose firm provides smart meters to Salt River. “There’s so much you can do without even engaging the customer.”

That’s true of the entire grid. The better it works, the less we notice it. In that sense, Obama’s moon mission is another things-would’ve-been-worse-without-us achievement. Another example: Millions of fans watched Stanford defeat Virginia Tech in the 2011 Orange Bowl, but none of them knew that an aging transformer almost overloaded while feeding power to the stadium, triggering voltage alerts that gave new meaning to the term “red zone.” The problem was detected by Florida Power & Light’s new smart grid equipment, which quickly diverted the electricity to healthier transformers, avoiding a midgame blackout. The utility used to inspect its transformers annually; its new sensors and other smart machines now monitor them every second. “It’s like having an EKG or a blood pressure machine strapped to you twenty-four hours a day,” says Bob Triana, the operations manager for the stimulus-funded Energy Smart Florida project.

And yes, the synchrophasor revolution is quietly under way. The Recovery Act is financing a 500 percent increase in “phasor measurement
units” that are producing rivers of real-time data, giving grid managers visibility over the entire high-voltage transmission system for the first time, dramatically reducing the chances of another wayward tree branch downing a power line and blacking out eight states. Industry researchers believe the new gadgetry will eventually reduce electricity losses over transmission wires by 20 percent, saving enough energy to power two million homes.

“It’s incredibly cool, and it’s a very inexpensive way to prevent the next New York City blackout,” Rogers says. “But it’s pretty hard to explain.”

It certainly isn’t as easy to explain as the New Deal’s grid upgrades, which extended electricity to families that never had it. But the Recovery Act’s grid money may be jump-starting America’s next trillion-dollar industry.

I
got a glimpse of how my smart meter Ferrari might run with keys at FPL’s home automation lab in Miami. Two screens displayed competing “home energy controllers”—from Cisco and General Electric—with dashboards for tracking and adjusting the electricity use of every appliance in a home. They weren’t fancy, but they provided actionable intelligence a family could use to save energy. “We’re still in a 1.0 world,” lab manager Patrick Agnew explained. “We haven’t gotten from the lab to the living room. So customers haven’t seen what a smart grid could be.”

The grid is physical infrastructure, but the smart grid is a tech play, using megabytes of data to move megawatts of electricity. As a business opportunity, “we think it can be way bigger than the Internet,” says Cisco’s top smart grid executive, Laura Ipsen. It will require lots of the kind of hardware that Cisco built for telecommunications networks, and lots of sophisticated software to help utilities manage an avalanche of data. It will also inspire applications that haven’t been dreamed up yet. No one knows what the eBay or Wikipedia of the grid will look like—or the pets.com of the grid. But it’s no coincidence that Silicon Valley giants like Cisco and Oracle have moved into the hardware space, while start-ups are racing to develop software and apps. Since
the Recovery Act passed, the mega-players have created scores of alliances to offer utilities one-stop “networked solutions,” just as they once did for telecoms.

“This feels a lot like the early days of the Internet,” says Tropos Networks CEO Tom Ayers, a Silicon Valley entrepreneur whose wi-fi firm has expanded into the grid. “Because of the stimulus, we’ve moved beyond the early adopters. Around here, we talk a lot about ‘crossing the chasm.’ This market is crossing the chasm.”

Silver Spring is the kind of cutting-edge green business that Obama has in mind when he talks about the post-bubble economy. Founded in 2003 by software engineers who realized no one was building networks for the grid, it has raised $300 million and deployed ten million advanced meters worldwide. The smart grid now reminds the bearded, ponytailed Vaswani of the Internet circa 1994; just as the browsers of that era foreshadowed online banking and video on demand, today’s smart meters are harbingers of smart refrigerators that can adjust their temperatures according to price signals sent by utilities—I saw a prototype in FPL’s lab—and software that alerts you when an appliance needs to be fixed.

“I try not to use the word ‘explode’ when I talk about the electric grid, but that’s what’s happening,” Vaswani says. “There was a lot of talking, then a lot of thinking, and the Recovery Act pushed this over the edge into doing.”

“I
t’s hard to amaze me,” said Glenn Beck, who actually professes to be amazed all the time, “but this is one of the more amazing stories about what our country and our government has turned into.” Beck loved stimulus stories—the nonexistent subsidies to ACORN, the porn he imagined the NEA must be funding, a bogus report of a $1.4 million door at a military base—and this was a stimulus story about green energy, another one of his go-to targets. But it was really a story about
the corruption of the Obama administration, his favorite source of amazement. His guest was fellow Fox personality John Stossel, who told the saga of Serious Materials, another Silicon Valley firm that manufactured energy-efficient windows.
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Stossel announced that Serious had been mentioned in a speech by Obama, which was true, and visited by Biden, also true, before receiving “a special tax credit that goes to no other window company,” which wasn’t true at all.

“We found that the head of the weatherization department of the Department of Energy is sleeping with the vice president of policy for the company!” Stossel said.

“John, the arrogance of these people astounds me,” Beck said.

Yes, Cathy Zoi was sleeping with a Serious executive. They were married. But Zoi hadn’t started yet at Energy when Obama and Biden were citing her husband’s firm as an eco-friendly innovator. And Serious never got special treatment from Zoi or anyone else, just a green manufacturing tax credit that other window makers received as well. A geologist by training, Zoi had led a clean-tech fund in Australia and had developed the Energy Star program for energy-efficient appliances in George H. W. Bush’s administration. But to Beck and Stossel, she was just a Gore lackey who had run his Alliance for Climate Protection and was now scamming taxpayers in the name of eco-nonsense. “She said she’s going to recuse herself from anything having to do with this company, but basically she would have to recuse herself from her whole job,” Stossel said. “Her whole job is weatherization!” More lies: Zoi oversaw all of Energy’s efficiency and renewables programs, and anyway, Serious windows were too expensive for the home weatherization program.