Toby - you make some good points, but you’re point that “alternative energy” causes more peak energy events is not really accurate.  There is certainly an issue with such sources as wind and solar which cannot reliably supply base load power, but in places like California, solar is a great source to deal with peak power, where their peak events usually occur on sunny days in the summer when solar is most efficient and effective.

Nice write up of some complex activities going on right now. I would add only one aspect missed.

The real opportunity of the smart grid is its ability to work with more business models then the current top down reliable far-away power for dumb buildings and homes. The smart grid will support a network of power, with a network of new business opportunities for technology to insert itself into the energy chain.

Alternative Energy changes the grid because it is unreliable. If any significant amount of power on the grid comes from unreliable sources, we will have more peak energy events, when demand exceeds supply, per day than we now have per year. Distributed energy means that the neighborhood wind farm is now a full peer on the grid. Net Zero Energy means your dishwasher might bid against the grid for the output of your solar panel.

The smart grid offers choice. Homes and business will choose what power they buy, and they will want the smart grid to be auditable that they actually are getting it. A decade ago, supermarkets laughed at the idea that a significant number of consumers would choose more expensive groceries. Today, Whole Foods has transformed that industry and nearly every chain offers an organic produce section. Why, you may even buy conventional reliable power to run your business but tell the fountain out front to run only when it can buy wave power. You may agree to pay a slight premium for your neighbors wind power when he is on vacation to keep his system working.

Some homes might not need or want smart meters. Some businesses and homes might have internal grids making internal allocations with many meters. We, or our software agents will be active market participants in the national smart grid, in regional smart grids, in neighborhood smart grids, and even in in-building grids.

Who is kidding who here with every smart grid integrator interfaced with the Internet they all must use IP standards. You can use IP standards with always on powered devices, however the challenge is in battery powered or energy self proficient devices. Water meters gas meters propane etc, you will have issues on power. Also has anyone calculated how much power will a smart meter draw from the grid to have IP addressable devices? Seems to me there must be a pull from the grid on the digital devices that need processing power to convert analog to digital impulses and interface them with IP addressable silicone. I would fair to say that if you calculated the pull from smart meters you would see a calculated spike or pull on the current infrastructure that is almost none exsistant with mechanical analog spinning wheels on houses.

Smart Meters are like any other computer that processes data the more you process the more you pull power. Companies like Landis Gyr, Elster, Sensus, GE etc. are driving the smart meter fever however for their own interest, sell more meters, the solution is not increasing consumption by installing SMART METERs that are IP addressable which increase load on the grid. One would think the goal is to reduce consumption. 

With that thought Smart Grid does not neccessary mean smart meters installed on every home in America. With the internet stacked with more processing power servers than any meter could possible have, one collect data from almost any pulse our sensing IO and agragate and profile data that no meter can do. All you need is a tick count or a pulse count on a house. Smart Meters are part of the pull on the grid that is not neccessary. IP is IP once a device is connected to the internet it is IP capatiable. The smart grid is new and so is the Internet in relative terms.