Demonstrating that it has more going for it than just a really big contract with Pacific Gas & Electric, Silver Spring Networks has signed a deal to install smart grid networking equipment and host demand response services for Bluebonnet Electric Cooperative.

The service area will cover 14 counties in central Texas and span a number of rural districts, a process that can be more challenging than wiring up urban areas. Roll out will begin later this year. Once the system is up, Bluebonnet will be able to configure and upgrade equipment, update accounts remotely and offer demand response services.

The Redwood City, Calif.-based company has created equipment that carries signals over a wireless mesh network in an unlicensed part of the spectrum. The underlying technology is partly proprietary, but its devices connect to standards-based equipment and software.

Silver Spring's networking equipment is comparatively cheap and reliable, and the technology can be deployed now, executives at the company assert. Mesh networking startups began to pop up at venture conferences in the early part of the decade, but a true killer app to propel demand didn't really exist until smart grid rolled around.

Still, the big question remains: will Silver Spring's mesh network be capable of handling large amounts of data from smart appliances, meters, and other devices and be capable of dealing with the rapid and the constant two-way communication between homes and substations that will likely evolve? Critics and competitors say no. Tools with greater bandwidth will be needed. Silver Spring strongly disagrees. Your smart washing machine isn't going to be sending multi-megabyte YouTube files down the pipe; it will send comparatively small amounts of data. The mesh system will work, they assert. Performance and reliability will be one of the big questions over the next two years.

If anything, the company has the money to demonstrate that it works. It has raised $275 million in VC funds so far. When analysts talk about smart grid companies not needing outrageous amounts of capital, I suppose this is what they mean.