Terence Chan's  Instablog

Whenever the words "stimulus" and "green energy" can be attributed to any stock, it should certainly be considered as a core investment holding. Smart grid plays are one of the green energy plays that are being boosted by stimulus grants. The difference between smart grid systems and other renewable energy plays is that the former are already easily implemented as compared to the latter (like solar and wind) which currently have large technological and distribution barriers to overcome. Today, President Obama named the utilities that will benefit from $3.4 Bil in stimulus grants to implement smart grid systems. From the Wall Street Journal:

"The Obama administration on Tuesday named 100 utility projects that will shae $3.4 billion in federal stimulus funding to speed deployment of advanced technology designed to cut energy use and make the electric-power grid more robust.

When combined with funds from utility customers, the program is expected to inject more than $8 billion into grid modernization efforts nationally, administration officials said."

The benefits can be enormous:

"The Department of Energy said grants of $400,000 to $200 million will lead to the installation of at least 18 million advanced digital meters, which should bring the nation's total to about 40 million, or enough to cover one-quarter to one-third of U.S. homes.

The new meters -- also known as "smart" meters -- funded by the stimulus grants differ from conventional meters because they are electronic, not electro-mechanical, and they contain communicating modules and software that enables them to receive signals and communicate to utilities or to utility customers. They are the backbone of demand-reduction efforts because they will allow utilities to charge different rates at different times of day and they can be programmed to alert consumers when grid conditions require special action."

For me, the real winners are those who produce the smart grid devices... the current trend is for small firms with cutting edge smart grid technology partnering with bigger firms who can better distribute and utilize the technology. Among the small firms are ELON, COMV and ENOC. Their current or potential partners include ETN, ITRI and JCI. I have bought a small position in ELON for the model portfolio.

Disclosure: Long ELON in model portoflio