Obama says yes to Smart Grid

Erika Lovley Erika Lovley Wed Mar 4, 4:24 am ET

Move over, Big Oil. There’s a new VIP guest in the White House: Silicon Valley.

Employees from some of the nation’s biggest high-tech companies bet heavily last year that famously tech-savvy Barack Obama would be good news for their bottom lines.

And it seems their wager paid off. Obama’s $787 billion economic stimulus bill includes $4.5 billion in funding for the so-called Smart Grid, an ambitious plan to modernize the country’s electric grid that many Obama contributors are helping to shape.

Among the companies with significant stakes in the Smart Grid are technology giants Google, Microsoft and IBM, whose employees were top donors — and, in some cases, advisers — to Obama’s campaign last year.

Workers at Microsoft, along with family members and other associates, gave more than $800,000 to Obama, while people connected to Google contributed nearly $784,000, according to the Center for Responsive Politics. And those with ties to IBM gave more than $517,000.

Executives at some of the companies also helped line Obama’s coffers. Google Senior Vice President and Chief Legal Officer David Drummond gave $4,600, and so did Robert Alan Eustace, senior vice president of engineering and research. At IBM, three senior officials gave either $2,300 or $4,600, and at Microsoft, two senior officials each gave $4,600. IBM’s Michael Parham also was an Obama campaign bundler, committing to raise $200,000.

In contrast, Republican presidential nominee John McCain received well under $100,000 from people associated with Google, IBM and Microsoft, the most notable sum being $21,500 from Googlers.

Now most companies can only speculate how they’ll fit into the picture, since the Energy Department still has weeks to determine how the stimulus funding will be distributed. But thanks to a warm relationship with the Obama administration — and high-level interest in developing the Smart Grid, which would exploit technology to make producing and distributing electricity cheaper, greener and more efficient — none anticipate being left out in the cold.

Technology experts say they expect the money to be doled out to electric utilities rather than to technology developers. So Silicon Valley giants are moving quickly to secure long-term partnerships with power distributors, which will allow them to share in the proceeds and deploy technology they’ve peddled on Capitol Hill for years.

“We definitely expect to be working with clients that will be applying for stimulus funds,” said Allan Schurr, IBM’s energy and utilities vice president, who recently testified before the House Select Global Warming Committee. “We’ve been speaking with the Obama administration quite a bit.”

Amid the competition to partner up, Google is blazing its own trail, aiming to make itself indispensable not only to utilities but also to appliance manufacturers.

The company is shopping around Google PowerMeter, a developing online application that tracks home energy use online. But the application can’t be used without new meters and other infrastructure updates, so Google has partnered some of its efforts with General Electric, which is poised to sell millions of Smart Meters in the budding market.

“This will be something on the Web for people to use for free. It may create more traffic for us, and if that happens, that’s fine with us,” said one Google official.

Months before Obama was inaugurated, technology companies say they were talking to his transition team, paving the way for a stimulus package that would employ a revolution of energy transmission.

IBM was asked by the transition team to provide recommendations to develop jobs and national infrastructure — including the Smart Grid, which IBM estimated could create as many as 477,000 jobs with a $10 billion investment.

Schurr said that after nearly a decade of educational pushes on Capitol Hill, IBM finally saw serious headway when its ideas were echoed in Obama’s policy statements on the campaign trail.

“There has always been a low level of interest in this topic,” said Schurr. “But what really tipped the scale is when commodity prices started getting high, utility prices and pump prices went up. It really got people thinking about economic values.”

Google — a regular participant in White House tech talks — was particularly well-positioned to capitalize on the administration’s interest in the Smart Grid. The company’s climate change director, Dan Reicher, was a member of the Obama transition team and reportedly was on Obama’s shortlist for energy secretary. And he helped with the campaign’s Cleantech for Obama committee, which raised about $2 million. During the Clinton administration, Reicher was assistant secretary for energy efficiency and renewable energy.

Google CEO Eric Schmidt campaigned for Obama, has attended economic summits with the president and reportedly turned down an opportunity to be considered for the White House technology czar job.

Long before the stimulus became law, many of the companies had begun to forge private-sector relationships to deploy their technology, spurred by the increasing growth of the renewable energy industry.

IBM is already providing Smart Meter technology to CenterPoint Energy, a Houston-based utility that is planning to deploy 2.4 million meters using IBM software over the next five years.

“If our wishes come true, we would look to apply for stimulus money that would allow us to accelerate the program we have under way,” said Tom Standish, operations president at CenterPoint, who estimated that his company could add as many as 2,000 new jobs per year with the additional funds.

“We could take a five-year project and accelerate it to a two- or three-year program,” he said. “We can immediately put people to work.”

Officials say the rush to join forces is partially because companies don’t have an entirely clear idea of what the Smart Grid revolution will look like — or where the Energy Department might steer future funding.

“We are trying to partner up,” said Shawn Cooper, spokesman for Pacific Gas and Electric Co., which hopes to provide 9.3 million new meters in California in the coming years. “We’re not sure what kind of conditions the stimulus will have. But with or without it, we’re moving forward with Smart Grid.”