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The Smart Grid Revolution: Two Tech Stocks Ready to Profit
by David Fessler, Energy and Infrastructure Expert
Thursday, January 28, 2010: Issue #1185
One of the key areas of focus at the Conference on Innovative Smart Grid Technologies was on how to foster seamless communication between the various devices on the Smart Grid.
That’s where Fred Baker comes in. He’s a Fellow at Cisco Systems (Nasdaq: CSCO) – one of the world’s leading manufacturers of Internet infrastructure technology, many of which are destined for Smart Grid applications.
Fred’s knowledge of Internet communications is exhaustive – and for good reason: he was instrumental in its design. So it’s not surprising that he has some strong opinions on how Smart Grid technology and communications should be set up.
I chatted with him at the conference – and here’s what he had to say…
Preventing Smart Grid Mistakes… And Locking Out Hackers
David Fessler: What do you see as the biggest challenges with regard to Smart Grid communications?
Fred Baker: As I said during my presentation, don’t reinvent the wheel. If you’re going to make mistakes, make new ones, not old ones. The good news is that by using the standards already in place for Internet communications, it will save a lot of time and avoid a lot of the mistakes made over the past 20 years.
David Fessler: Another critical issue is security – preventing attempts to hack the system. What are the risks here? Will the Smart Grid be able to be hacked as easily as the Internet?
Fred Baker: With something as vital as a national energy grid, the critical communications networks in the Smart Grid will be physically disconnected or “air-gapped” away from the public Internet. Hackers just won’t be able to get into them easily, if at all. And with those devices that are connected to a public network, proven measures already exist that eliminate most security risks.
For more on the basics of the infrastructure/business side of the project and to read what Dr. George Arnold had to say to me, about the Smart Grid initiative.
But what does it all mean for the millions of Americans, who’ll eventually depend on the Smart Grid for their energy needs? For that, I turned to another influential figure at one of the other key corporate players…
How John Q. Public Stands to Benefit From the Smart Grid
As Dr. Arnold told me: “There are currently 130 major Smart Grid projects underway in 45 states. The grid will fundamentally change how energy is priced and how we think about and use energy, both at work and at home. But in the end, it’s the consumer who’s going to have to pay for the Smart Grid. Unless they see the benefits, they’re not going to spend money on it, or things to connect to it.”
And there’s no doubt that on the consumer side, energy efficiency will be a big focus, according to Dr. Tariq Samad, Corporate Fellow at Honeywell’s (NYSE: HON) Automation and Control Solutions division.
I discussed this with him in between presentations…
David Fessler: In layman’s terms, how would you define what the Smart Grid is – and what it’s attempting to do?
Dr. Samad: With the Smart Grid, we’re basically taking the existing electricity infrastructure and power grid, then overlaying the latest information technology and communications networks on it for the purpose of automation, control and energy management. Basically, we’re modernizing the system.
David Fessler: What area do you think will benefit the most from the Smart Grid?
Dr. Samad: The Smart Grid will be a huge enabler in the area of energy efficiency. Flattening out the demand-response-supply problem that utilities face every day will save billions of dollars annually and eliminate the need for additional power plants.
David Fessler: Tell me about Honeywell’s involvement in the Smart Grid.
Dr. Samad: About 60% of our business is focused on improving energy efficiency. Honeywell Automation manufactures industrial controls, building controls, thermostats, home energy management, security systems, sensors and similar products. All these products interface between the consumer and his environment and will potentially be connected to the Smart Grid.
So how can investors take advantage of this bold new energy initiative?
Getting Geared Up for The Grid
With the preliminary standards in place and roughly $18 billion in government stimulus money flowing into the energy and infrastructure sector, it’s a safe bet you’ll be hearing a lot more about the Smart Grid investing in the months ahead.
If you’re looking for a way to profit, big players like Cisco and Honeywell both stand to reap substantial rewards as the Smart Grid infrastructure gains traction.
However, there’s another player in the thick of the Smart Grid action, too. It’s a tiny company located in Michigan whose revenues could soar more than ten-fold as a result of the build-out that’s already starting. You can read about it here.
Good investing,
David Fessler
- America’s Smart Grid: Four Companies Set to Profit from a Federal Cash Injection
- The Smart Grid/Enernet Initiative: The First Great Infrastructure Project of the 21st Century
- How Our Nation’s Future Energy Security Can Boost Your Portfolio Now
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4 Responses to “The Smart Grid Revolution: Two Tech Stocks Ready to Profit”
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David Fessler is an Advisory Panelist for Investment U and The Oxford Club, one of the world’s most exclusive and prestigious networks of private investors.
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January 28th, 2010 at 3:58 pm
I think the article was an excellent resourse.There is another company that has been in this area ,however ,i do not know if there products are suitable for the proposed grid.The trading symbol is AMSC.Thanks A.Martigniti
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January 28th, 2010 at 6:50 pm
I have serious doubts that smart grid projects will be able to maintain reasonable kw/h costs to residential consumers-in the face of “Cap & Tax” being touted by the Brainless Trust leadership in the USA.
These people voice concern for consumers but their actions betray their intent. Woe is USA.
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January 28th, 2010 at 10:38 pm
I remain skeptical that the Smart Grid will be sufficiently invulnerable to hacking. The “air gap” between the smart grid control line and the internet will reduce vulnerability. But there must be some form of interconnectedness between those outside communications lines that are connected to the internet and the control lines which implement changes in the grid for it to function unless you are going to have a human manually enter changes when needed. That is a bridge that hackers will have to cross. Optically controlled signal transfer devices could be used to convert control signals originating outside the grid and thus isolate the two systems from magnetic interference and possibly some hacking, but ultimately there must be communication from one system (outside the actual grid) to the other (inside or controlling the grid).
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February 2nd, 2010 at 8:13 am
It’s obvious Obama doesn’t want the public to figure out what is really behind the ’smart grid.’ However some of us have done the research. This is ALL about ‘control.’ And the word is used here in article too.
It would do well for people to stop and think of the consequences of this smart grid; especially since Obama rarely thinks of consequences when idealizing about his ‘pet projects.’ No way this thing is NOT hackable. If a human is behind setting up security features; then a human smarter than that person will eventually ‘hack it.’
Another big problem; when that happens, EVERYONE will be in the dark if everyone is to be all connected to one grid. That is absolutely the most asinine thing I’ve ever heard proposed. Obama’s constantly using two words that we all need to beware of; “fundamentally change.” Which means, ‘progressive socialism.’ Which means, “control” the people. I don’t trust this guy at all and this is NOT a good thing. Fortunately, people have awaken to his meaning of ‘fundamentally changing America’ and it’s not a good thing. The unsaid interpretation he meant to get across to us was that the change would be good; good for who? This oppressive president and congress, that’s who. Not what the people will want. Thus, now he feels the need to ‘protect us from the internet’ by wanting to give govt increased say/power over your right of privacy. He thinks he can spy on your every move on the internet. Wake up the rest of you. Willing to sell your freedom for what?
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