Smart Grid Could be Worth $20 Billion in Five Years - "1,000 Times Bigger than the Internet"

When many people think green energy, they picture windmills and solar arrays. An often-overlooked frontier of the renewable energy revolution is the massive task of upgrading the nation’s electricity grid.

Creating a "Smart grid" is very big business and major players are unveiling new technologies to cash in on this transformation. This week computer giant Cisco Systems [CSCO] rolled out its new line of “end-to-end” products aimed at allowing utility companies and their customers more efficiently manage their energy needs.

Cisco believes this suite of software, high tech energy routers and electricity meters will contribute to a market worth $20 billion in sales by 2015. They also predict their technology and others will reduce the nation’s energy consumption by as much as 15% and create up to 280,000 new green jobs.

How big could building this smart grid be?

"Our expectation is that this network will be 100 or 1,000 times larger than the Internet, said Marie Hattar, vice president of marketing in Cisco's Network Systems Solutions group. “If you think about it, some homes have Internet access, but some don't. Everyone has electricity access--all of those homes could potentially be connected."

Last month Cisco, GE and other players announced a $200 million partnership with Miami to showcase many of these technologies, including smart energy meters, thermostats and home energy use dashboards. This pilot project aims to install one million two-way energy meters.

Improvements like this allow residential customers to sell surplus wind and solar power back to utilities when it is not needed. A more modern grid will also allow power producers to better predict when to fire up generating stations, and efficiently utilize intermittent renewable sources like commercial wind and solar.

The importance of modernizing the nation’s antiquated energy distribution system is a major priority of the Obama Adminstration. This year’s economic stimulus plan set aside a whopping $11 billion to convert our existing “always on” energy infrastructure to a more efficient “on-demand” distribution network.

Energy Secretary Steven Chu and Commerce Secretary Gary Locke met at the White House this week with over 70 business industry leaders and state and federal regulators to discuss the standards needed to update the country's transmission system.

Industry and regulators were told in no uncertain terms this was an “urgent national priority” and decisions were going to be made whether everyone agreed or not.

According to Locke, “in the end, if there is not unanimity, if there is not even strong consensus, we in the Department of Energy and the Department of Commerce...will make the decisions to get us moving forward as quickly as possible."

Hardware is not the only major market in this national infrastructure transformation. Software giant Oracle Corporation [ORCL] announced its intention to get in on the action with a utilities network management system aimed at managing the mountain of data needed to maximize the benefits of a newer and smarter grid.

The software side of this emerging market is also enormous. A survey this March by Oracle showed that only 16% of utility companies hard started implementing smart grid technologies.

Other major software players like SAP, as well as startups like eMeter and Ecologic Analytics are licking their chops at this ballooning new market.

Stay tuned for the latest "smart grid" news as this fast moving story unfolds.