The power grid of the future is one of humanity’s boldest visions. Gigantic wind farms on the sea and ginormous solar fields in the desert are to generate the bulk of our power in future. But consumers and companies are also producing energy with mini-power plants in their very own basements and solar panels on the roof. And intelligent appliances are saving energy in our homes: communicating washers, dryers and refrigerators that wash, dry or cool when electricity is cheapest.

The electric era is immediately at hand in six regions of Germany: the technology of the future is going to be tested, under the label E-Energy, in several cities. It is estimated that more efficient power supply management could save 10 terawatt-hours (i.e. a billion kWh) of energy a year, which corresponds to the annual consumption of 2.5 million households. Industry experts are urging Germany to spearhead this future market. But there is plenty of competition: the International Energy Agency expects to see investments of several billion dollars worldwide by 2030 in projects to generate electricity, manage consumption and modernise power grids.

Private homes, energy suppliers of the future

In early September, carmaker Volkswagen and powerhouse Lichtblick launched their first major offensive on the national power grid: the two companies intend to put up to 100,000 combined heat and power units (CHPs) in the basements of regular blocks of flats. They will be fired by natural gas, later on possibly by biogas.

This model transforms the consumer into a producer who can make some money in the energy market. They are also testing a pricing model in which electric rates depend on supply and demand: when the amount of available energy goes down, the rates go up. Users can monitor the system on an Internet portal and generate energy whenever the price peaks – thereby also stabilising the overall supply.

Customers will be able to cut their electric bills, moreover, by pinpointing off-peak hours to run their energy-intensive machines. This sort of energy management is the main prerequisite for a power grid running largely on renewable energy. Supply and demand have to be tightly controlled to keep the grid from crashing. If millions of small power stations are feeding the mains with a fluctuating quantity of electricity, and millions upon millions of terminal devices and home management systems are transmitting energy consumption data or receiving commands, the grid operators’ systems could go haywire. The power transmission has to be continually adjusted at millisecond intervals.

An intelligent power grid

That is why setting up such an intelligent power grid is probably the biggest challenge of the new electric era – and one of the most lucrative markets. The hitherto dominant energy giants are suddenly faced with new and formidable foes: technology groups keen on seizing control over energy supplies on the Internet. Siemens CEO Peter Löscher puts the volume of the smart grid market at €30 billion up to the year 2014.

A market in which energy is traded according to supply and demand will provide immense opportunities for service-providers and startups. Some are developing systems to predict rate fluctuations based on weather forecasts and behavioural statistics. Mobile software, e.g. iPhone-Apps, are likely to figure prominently in this sector.

Resourceful start-ups can also come up with business innovations for an energy grid 2.0, e.g. setting up social networks to help and hone ecological householding. In the US, a new generation of startups is already sounding the clarion call to an ecological revolution on the Web. Web visionaries say the Net has the potential to revolutionise the way we think about the environment: For one thing, it can bring invisible waste and pollution to light. Secondly, it can bring wasters and polluters out of the closet. That should give rise to a collective environmental conscience, forcing us to think more critically about how we use energy.