Could Smart Grids Jump-Start the Metals Industry?

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Last week we discussed President-elect Obama’s proposed fiscal stimulus or re-investment plan as he prefers to call it. And as of that writing on January 5, the package included some measures around “energy efficiency” and “infrastructure”. Now a week later, it appears as though part of the stimulus package will include an investment in the nation’s aging electricity grid according to this CNN Money article. This new investment would go toward a smart grid which would include, “… the lines, towers, meters and substations…and money for computers, meters and software to digitize the grid.”

According to The Brattle Group, an industry think tank, the price tag just to keep the nation powered could reach $1.5 trillion. In addition, the price tag for “clean energy” could reach $2 trillion or more to include power plants, transmission lines and energy conservation according to the article. To upgrade the grid – “To make the grid fully smart, money would be needed to change out every utility’s entire computer system, allow renewable energy sources to plug into it from various points, and incorporate electric car recharging stations that also use car batteries to double as electric storage devices.” More practically, a smart grid essentially digitizes the network which would allow with smart home meters and appliances to talk to one another. The data would be communicated back to the utility. In essence the system would allow for more flexible electricity usage by consumers. The article cites the use of a dishwasher. A consumer could ‘opt’ to run the dishwasher during a non-peak time, rather than right after dinner, for example.

Now let’s get to the question most relevant to MetalMiner readers…in addition to new power generation capabilities (e.g. coal, wind/biomass, nuclear, natural gas etc) which we have covered and will continue to cover, the question of what kind of metal demand could be generated as a result of this “investment” in updating the electric grid? Certainly steel would receive a big boost as many of these towers are made of steel and galvanized steel. The lines, or power cables, rely heavily on copper, still the most commonly used material for conductors and to some extent, aluminum would enjoy a demand boost with this type of stimulus package. Transformers, with their fabricated steel structures, copper and wires would also experience growth. Energy efficiency initiatives such as the upgrade of the electricity grid will have huge benefits to the metals industry. We will run additional posts discussing demand figures and estimates.

–Lisa Reisman

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