I went to a conference last week about smart grids and home networks and learned a few things about how close we are to having a more intelligent power grid. The creation of smart grids will reduce emissions, lower utility bills, enable renewable power to be added, and prevent additional power plants from being built.

Smart meters provide two-communications between the customer's building and the grid and are essential to utilities to be able to better manage power demand. Larry Colton, a marketing manager of Echelon, said it will take between 5 to 10 years for smart meters to become popular in the U.S. Today there are a few pilot projects, such as GridWise with Whirlpool and the Pacific Northwest National Laboratory.

As with solar energy, we're far behind Europe in deploying smart meters. ENEL, a utility in Italy, has installed more than 27 million smart meters at a cost of 2.1 billion Euros. It took only four years after the meters were in place to pay back the investment, Colton said.

Utilities save money by being better able to anticipate demand and by being able to reduce demand when peak usage occurs. Echelon in now working with Duke Energy and McDonald's restaurants here testing smart meters.

The area of direct response -- where utilities work with customers to limit demand at peak times to reduce their costs and the change of demand exceeding supply -- will be heavily pursued during the next few years. Peter Kelly-Detwiler, senior vice president of energy technology services for Constellation NewEnergy, said the market for saving energy through demand response "is infinite."

His company works with independent system operators to aggregate and sell power, and they are paid to work with customers to reduce their peak loads.

Constellation New Energy has joined with smart grid and home automation companies to form the New Energy Alliance. The group will "will work together to help drive innovation across the building automation system industry by sharing best practices, new technologies and advanced energy strategies to bring the economic and environmental benefits of demand response to every building that has a building automation system."

We are finally learning the obvious lesson that the cheapest megawatt is that that isn't produced.