The Demand Response Smart Grid Coalition (DRSC) wants equal treatment for efficiency.

The trade group – which represents various companies developing smart grid technologies including Trilliant, Tendril and IBM – unfurled 21 policy reccomendations to incoming President Barack Obama, the House of Representatives and the U.S. Senate (see Tendril Expands Its Reach in Smart Homes).

The centerpiece of the proposals is a reduction tax credit (RTC) which would award companies tax credits for implementing technologies that reduce power consumption. If a subdivision developer installed smart meters in all new homes in conjunction with a local utility, for instance, they'd get a tax credit to offset the costs for the smarter meters.

The group also seeks higher credits for demand-response technologies that curb peak power. In some states, peak power plants are only active for around 50 hours a year, but the cost of these plants and the power that they produce are quite high. Demand response companies – which try to reduce overall peak power by slightly throttling the power going to thousands of homes and offices – include EnerNoc and Comverge.

Efficiency proponents for years have sought to put energy reduction technologies on an equal footing with technologies that produce green power. Solar and wind farm owners receive credits for producing green power and those credits have been instrumental in the growth of renewable energy. A kilowatt not consumed is as good, if not better, for the environment as one produced by solar power, argue efficiency experts.

Efficiency also works. The oft-cited example is California, where efficiency regulations and decoupling (the plan under which utilities can derive profi ts from curbing power consumption) have allowed the per capita electricity consumption to stay flat for about three decades. In the rest of the country, electricity consumption has soared.

The problem, to some degree, has been that efficiency isn't tangible, says Dan Delurey, executive director of the organization. "People can look up and see that wind turbine. No one sees that kilowatt not produced," he said.

The organization would also like to see a smart-grid fund established to modernize the grid. Demand response technologies can also be used to balance out power delivery from wind farms. When the wind isn't blowing, demand response tools can fill in the gap by delivering power from other sources.

Investors and venture capitalists have shown increased interest in smart grid and demand-response technologies. Utilities have repeatedly said that energy efficiency is their highest priority. Many of these companies revolve around hardware and software from the computing world, familiar turf for most VCs.

In the third quarter, VCs invested more money in smart grid and efficiency than biofuels, pushing smart grid to the number to spot in greentech investing.

Still, modernizing the grid will take work. The grid was made for one thing: delivering electrons from a plant to a building. Converting it to bi-directional network synchonized with a communications network will take an overhaul of computer systems, meters and central utility operations.