The concept of the “smart grid” isn’t new. But it’s a concept that’s gaining national traction as utilities look to new solutions for meeting customers’ growing energy needs.

Two of the largest cleantech initial public offerings of 2007 were for smart grid companies: Comverge and Enernoc. Both companies, using different technologies and business models, provide utilities and other customers with “virtual” peaking demand and intelligent energy services. Utility customers can meet their energy needs by deploying demand-response solutions instead of installing new, expensive, greenhouse-gas-emitting generation (such as power plants fired by natural gas or coal).

Meanwhile, the financial markets are placing a premium on next-generation demand-side management activities. East Hanover, N.J.-based Comverge is currently valued at more than $700 million, while Boston-based Enernoc is currently valued at $800 million. 

Another smart-grid company making headlines is Washington, D.C.-based GridPoint. The company has garnered nearly $90 million in venture capital since it was founded in 2003. In mid-October 2007, Goldman Sachs and other investors financed GridPoint’s largest funding round with more than $48 million in Series D financing.

GridPoint takes a somewhat different tack from that taken by Comverge or Enernoc. Instead of aggregating large commercial and industrial users, GridPoint focuses on installing its application in homes and small business to help them better manage their electricity.

GridPoint also provides demand-response solutions for utilities and other customers. GridPoint's platform provides utilities with an intelligent network of distributed energy conservation and generation resources (including on-site renewables) that controls load, stores energy and produces power.

So what do all these developments have to do with the Pacific Northwest? Unfortunately, none of the aforementioned players call the Pacific Northwest their home. 

Ten years ago, when the concept of the smart grid was relatively new, companies such as Liberty Lake, Wash.-based Itron were in the vanguard. The company, currently valued at more than $3 billion, is one of the world’s leading automated meter-reading companies. All told, the company has deployed more than 40 million of its meters and serves more than 8,000 utilities worldwide.

Pacific Northwest National Laboratory (PNNL) has been a longtime leader in smart grid development, testing and deployment. The Bonneville Power Administration has also been at the R&D forefront for smart-grid technologies. But even with such strong players, the Northwest is falling behind as next-generation technology and service providers kick into gear.

It’s not completely the region’s fault.

As the smart grid has matured, the concept has flourished into second-generation technologies and solutions, and companies have sprouted up all over the nation. Like many of its cleantech brethren, smart-grid technologies aren’t emanating out of a single nexus point. Instead, they are sprouting from locations such as the Bay Area, Boston and New Jersey.

“The Northwest has spawned very few of the second-generation companies,” explains Jesse Berst, executive editor of Smart Grid News. He lists a number of reasons for the shortfall, including a corporate culture among the region’s smart-grid leaders that didn’t engender incubation. Berst also points out no single Northwest city has acted as a regional cluster for smart-grid technology, and political leaders have focused on supporting cleantech initiatives rather than the smart grid.

So how can the Northwest maintain at least a modicum of leadership in such a dispersed environment?

Our local utilities need to more aggressively pursue smart-grid implementation. Portland General Electric (PGE) took a significant step toward the goal when it announced in September 2007 it would begin deploying advanced metering infrastructure systems to approximately 850,000 of its residential and commercial customers (subject to regulatory and board of director approvals, according to the company).

The company expects to install the majority of the new meters in 2008 once initial system testing is completed. The utility estimates that, assuming the meters are in place in 2011 as planned, the $132 million project would result in annual operating savings of around $18 million (with an estimated payback period of around seven years). Other regional utilities will need to join PGE in the smart-grid movement if the region wants to be ready to meet customers’ growing energy needs.

Regional governments could also support smart-grid development by making it one of the cornerstones of the area’s cleantech initiatives. And PNNL, which remains such a rich local resource, needs to be better tapped for its innovations.

Fortunately, it’s not a completely dire picture for the Northwest’s smart-grid sector. Traditional smart-grid companies such as Itron will continue to wield influence, and some emerging companies could build momentum. Companies such as Seattle-based V2Green (headed up by former Microsoft veteran David Kaplan) are developing software and hardware so utilities can better manage power flows to plug-in hybrid electric vehicles (PHEV).

But the company will potentially face some stiff competition from the likes of well-funded GridPoint, which is also now focusing on the vehicle-to-grid opportunity — and the company will have to wait for PHEVs to become widely available in order to deliver on its promise.

There’s no doubt the Northwest can no longer “own” the smart-grid market — the opportunity passed some years back. But with the right combination of smart policy, capital investment and tech advancement, there might still be a few home runs left in our backyard.

Ron Pernick is co-founder and principal of Portland-based Clean Edge Inc. and co-author of “The Clean Tech Revolution.”