Do you know what the National Academy of Engineering named as
the world's greatest engineering feat?
It wasn't the pyramids. It wasn't Hoover Dam. It wasn't the Burj
Khalifa, the world's tallest building at 2,717 feet, either.
It was the United States' electrical grid.
The grid is an amazing marvel (it contains 186,000 miles of
transmission lines!), but here's the surprising thing --
fundamentally we're still using the same technology Thomas Edison
and Nicola Tesla used over a century ago. But I think that's about
to change... and in a big way.
You may know that I'm the Chief Strategist behind
. My entire goal is to find situations where a major shift is
taking place. When I find these game-changing events, I also find
stocks that will profit from it. And I think the update to a "smart
grid" is going to be a game-changer.
Profiting from the smart grid
The name "smart grid" really doesn't tell us much. But those two
words imply a ton of changes to our current system. The smart grid
is simply a series of upgrades to the nation's power delivery
system that increases utilities' ability to manage power generation
and distribution and enables customers to monitor their use.
What really drives home the benefit of an updated grid is the idea
of "lost power." The existing system is a one-way enterprise that
does not provide any information about power once it leaves the
generation plant. The smart grid, using sensors, advanced meters
and other upgraded devices, allows for real-time monitoring of and
communication with every component on the grid. With a smart grid,
a utility would know exactly where on the grid an outage, or a
leak, is occurring.
And during peak demand periods, the grid could allow the utility to
conserve power by, for example, adjusting thermostats or disabling
clothes dryers. Pricing could also be adjusted. If demand is
running high, like summer afternoons when the country's air
conditioners are running as hard as they can, utilities could raise
their prices, which would incentivize major industrial customers
like factories to scale back their use, perhaps shifting production
to the night shift and easing the burden on electrical resources.
The existing grid -- which is actually three separate systems, the
Eastern grid, the Western grid and a sub-grid just for Texas -- is
also limited in its ability to add non-traditional sources of
power. Renewable sources like solar and wind energy are good and
getting better all the time, but they're weather dependent and not
Adding technology to the grid that would let it sense when and
where those resources are available would help integrate the assets
to the grid. What's more, integrating the three grids and building
it out in key areas could lead to a far more meaningful level of
renewable power use. As it stands, several huge renewable power
projects -- including one backed by T. Boone Pickens -- have been
put on hold because they literally couldn't be plugged into the
What I think makes the smart grid the most exciting, however, is
that just about everyone would benefit. It's rare that you can line
up interests like this. When you do, it's a tell-tale sign that
it's time to get in front of the trend.
will be able to use the grid's features, like smart meters, to
help control their household expenses.
Business and industry
will be able to monitor their costs, increasing profitability
that will add to theeconomy -- and not just peanuts. These
upgrades can put a few percentage points on
, and at a very robust return on investment.
themselves will have a much more efficient system with lower
costs, easier maintenance, satisfied customers, and fewer
outages. Simply finding lost power could add +10% to their top
- The whole system will require
thousands of jobs
, from people to build the equipment to those who will install it
to those who will monitor it and keep the system running.
users will have better access to more renewable "green" power.
- The upgrades include added features that will increase the
grid's security features, making it less vulnerable to cyber
attacks, which will please
national defense interests
Action to Take -->
There is also another class of people in line to see benefits: the
who own the companies that will do all the work -- and make all of
The federal government has committed $3.4 billion in stimulus
funding to update the grid, which has been matched, so far, with
some $8 billion in private sector funding. That's more than $10
billion already dedicated to the project, and the select few
companies with the technology and know-how to update the greatest
engineering feat of all time will see the lion's share of that
If you're a conservative investor, the big names in the industry,
, should see plenty ofcash flow into their coffers thanks to
updating the grid.
But when I find a game-changing opportunity, I'm most interested in
the smaller upstarts. These companies offer the most opportunity
for growth. In fact, I highlighted several of these small companies
in a recent issue of
[Out of fairness to my current subscribers I don't want to mention
the smaller game-changers I highlighted in my recent issue. But if
you sign up for
today, you can read the latest issue immediately. We're also
offering a 30-day money-backguarantee , making your subscription
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Andy spent a decade as a financial journalist writing for some
of the largest newspapers in the nation. His acumen helped guide
the financial news read by over a million people each day. Read
Disclosure: Neither Andy Obermueller nor StreetAuthority, LLC
hold positions in any securities mentioned in this article.