SAN FRANCISCO -- As lawmakers and President-elect Barack Obama mull another economic stimulus package, businesses and congressional leaders are jockeying to be in position to receive the first trickles of federal cash intended to stem losses of jobs and raise energy efficiency.

Two sectors, in particular, stand to benefit, judging by the debate so far. Labor unions are pressing for a package that focuses on "green jobs" like renewable energy generation and retrofitting buildings for energy efficiency, as well as traditional construction projects aimed at roads, bridges, schools and transit.

The "PowerPortal," a wireless device that tells you how much electricity your house is using and projects your monthly bill. Photo courtesy of Comverge Inc.

The other major beneficiary is shaping up to be "smart grid" improvements, or advanced technologies aimed at increasing the efficiency of the country's aging electricity infrastructure and accommodating emerging energy sources such as solar power. Benefits could take the form of increased borrowing authority for transmission projects, or could be distributed more indirectly through grants to states that provide incentives for policies like net metering and decoupling revenue from sales, both of which encourage alternative energy and efficiency.

California, especially, is hoping the package -- expected to be in the range of $800 billion -- will salve its deep economic wounds. State Treasurer Bill Lockyer decided last month to postpone $3.8 billion in infrastructure projects and stop awarding contracts through at least June 2009, in response to a budget deficit that is projected to reach $42 billion by mid-2010.

An example of the type of business that stands to capitalize is Silicon Valley's Echelon, a 20-year-old company that makes systems that allow energy systems and office buildings to communicate with each other online. Echelon's LonWorks platform is used in buildings and transportation systems worldwide, most notably in Honeywell heating and air conditioning systems but also in the New York City subway system, Army Corps of Engineers facilities and McDonald's restaurants.

Commercial buildings are the prime target for energy efficiency programs

With increased consumer awareness of energy in general, in part because of climate change, the stimulus package could go a long way toward improving efficiency at the ground level, said Steve Nguyen, Echelon's director of marketing. Commercial buildings use about 70 percent of U.S. electricity generation capacity, and 70 percent of that energy is consumed by lighting and HVAC systems, he said.

Echelon is pushing for incentives or regulations that encourage smart retrofits, Nguyen said. Having greater control over an electronic device should be the first line of defense in curtailing energy use, he said. "Anything that can be controlled electronically consumes a lot of energy," he said. "The more you control a device, the more you can control how much energy it consumes."

"We're not looking to mandate a specific technology, but we think it's appropriate to encourage building owners to retrofit their systems so they can respond to the needs of the grid," he said. This could include contracts with utilities that guarantee availability of a certain amount of power on demand, he said. "What that means is when a utility grid is strained, the energy management company works with commercial building customers to say, "We'll manage an interface between your energy needs and your utility. We'll put in some equipment so you can understand what you're using."

While smart grid advocates haven't been as vocal as alternative energy companies in touting job creation, some are attempting estimates. Bob Chiste, CEO of New Jersey-based energy efficiency company Comverge, said that demand response programs could create one job for every megawatt of electricity saved. With the potential to gain 25 gigawatts from demand response and 50 GW from energy efficiency programs over the next three to five years, Comverge projects such programs could result in the creation of 75,000 to 100,000 jobs.

The Demand Response and Smart Grid Coalition, a trade group that counts Google, IBM and about 20 other technology companies as members, says smart grid companies aren't as adept at quantifying their economic value because the sector is relatively new compared to alternative energy generation.

Demand response programs needed to maximize incentives

Alternative energy and traditional energy efficiency companies "have been around a little bit longer and have more data to work on," said the group's executive director, Dan Delurey. "Smart grid is the newest energy sector of them all, so there's not as much good data out there, and not as much support infrastructure. That's why everyone is eager to try and provide that."

Delurey said he thinks Obama and legislators are likely to fold the stimuli for smart grids into existing legislation. One potential vehicle is the Energy Independence Act of 2007, which included several provisions for smart grid development -- sections 1304 and 1306 -- that were never funded. Other options include an investment tax credit or a depreciation incentive for companies to write off investment in capital equipment. But if smart grid technologies don't get a big boost in the stimulus package, he expects Congress to follow it up with another energy policy bill.

Comverge is looking for two ingredients in a stimulus package: cash incentives for commercial and residential demand response programs, and incentives to verify efficiency and demand response gains. Chiste said he favors subsidies on the order of $25 per kilowatt reduced for companies that manage demand response programs, which attempt to match energy consumption with supplies -- a particularly helpful practice when utilities draw from intermittent sources like wind power.

Some companies see the stimulus package as more important to modernizing the grid than regulations might be. "Greenhouse gas regulations are going to be complex," Chiste said. "Some utilities are going to be very distraught and others are not. Incentives, cash incentives, will react much more quickly. The stimuli will be much more driven by cash incentives than the cap-and-trade program."

The possibilities for managing and reducing energy consumption are innumerable, if utilities and manufacturers address all steps of the energy chain, said Echelon's Nguyen.

"We think of the smart grid as a metering system, but it doesn't stop at the meter. It's everything downstream of the meter, as well. How do you shift load, how do you manage so you don't have to switch loads in the first place? How do you avoid firing up 30-year-old coal plants?" he said. "We realize a lot of this stuff is already out there. A lot of it uses our technology and our competitors' technology, but the point is, it's there. The cost impediments, incentives, regulatory impediments -- those are the kind of things that need to change."