Utilities are grounded -- manufacturers aren't

H. Christine Richards | Jan 12, 2010

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When the energy industry talks about smart grid jobs, the talk tends to focus on utility companies and utility jobs. So I found it exciting to see recent discussions about how smart grid will impact the "smart grid suppliers" (aka manufacturers). However, all this talk about the promise of clean-tech manufacturing -- and the manufacturer incentives being thrown out there to help fulfill that promise -- is making me a little bit nervous.

In addition to government incentives to help utilities build smarter grids, governments are doling out incentives to encourage companies to produce clean-tech products, including smart grid technologies, in the United States. You can see that with President Obama's recent awards for clean-tech manufacturers, which Kate Rowland discussed in yesterday's daily article, to efforts Ohio Gov. Ted Strickland talked about in a recent press release. Gov. Strickland said, "Pairing Ohio's strengths with aggressive policies is creating good jobs for people who work for a living while establishing Ohio as a leading supplier of clean energy."

Clean energy and smart grid certainly seem poised to help grow the economy, but I am not a huge fan of government incentives aimed at attracting companies and creating jobs in specific areas. I mean, if it made business sense to produce something in a certain location, why wouldn't businesses already be producing that product in that location? Aside from my general dislike of such incentives, it makes me much more nervous to give incentives out to manufacturers as opposed to utilities. The reason is that utilities are grounded -- and not just in the electrical sense. Although some utilities continue to tinker with outsourcing, it is hard for utilities to pack up their things and pull out of a region entirely. Of course utilities can merge, acquire and spread across state lines, and ultimately purchase products from manufacturers, but at least for now, many utility jobs stay in the regions they serve. Manufacturing jobs just don't face the same location constraints as utility ones.

So when these incentives run out (or someone offers a better incentive), if it didn't make business sense without those, what is the incentive for clean-tech manufacturers to stay put? As seen in other manufacturing sectors, many products used in the United States seem to eventually end up being manufactured somewhere else besides the United States. With smart grid technologies, governments may be working to lay the foundation for better infrastructure and energy security to the support the needs of a 21st century economy and 21st century businesses. But a big question that still remains for me is: what will happen with all the "smart jobs" once governments build that foundation?

We look forward to discussing this and other issues with all the players in the emerging intelligent utility. If you have thoughts you'd like to share, please contact me by e-mail at crichards@energycentral.com or by telephone at 303-228-4762.

 

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