Exciting new business opportunities? Check. A stepping-stone to even more innovation? Check. An open-door invitation to a lawsuit?

Check.

As the smart-grid industry matures and evolves, it should come as no surprise that there will be mergers and acquisitions, winners and losers … along with increasingly fierce competition along the way. And with the competitive territory comes an increased likelihood of litigation.

Now that advanced energy meters and smart thermostats have entered the mainstream, the competition is heating up. This week, Honeywell dialed up the temperature a bit more by filing a lawsuit against Nest Labs, which last year unveiled its Nest Learning Thermostat.

Honeywell alleges that Nest is infringing on seven of its own thermostat technology patents: “among other things, simplified methods for operating and programming a thermostat including the use of natural language, user interfaces that facilitate programming and energy savings, a thermostat’s inner design, an electric circuit used to divert power from the user’s home electrical system to provide power to a thermostat, and controlling a thermostat with information stored in a remote location.”

Filed in US District Court in Minnesota, the Honeywell lawsuit also names Best Buy, which carries the Nest thermostat. The suit seeks to halt the sale of Best thermostats and also asks for monetary damages.

Honeywell recently also filed suit against Venstar Inc. and ICM Controls for “infringing thermostat and combustion controls patents.”

Google that question, and you’ll quickly find more than 1 million results, including definitions from the US Department of Energy, its spin-off website SmartGrid.gov and Wikipedia. All, though, are describing essentially the same thing: an energy infrastructure with built-in, automated and real-time or near-real-time sensing, monitoring, measurement, communications and control capabilities.

What the smart grid does, on the utility side, is make it possible to manage energy demands and issues not only at the consumer level but at every key point along the transmission and distribution network.  Another benefit is demand response, in which energy users reduce or switch off non-essential energy-using devices during times of peak demand to reduce stress on the grid.

On the user side, the smart grid would give people and businesses insight into how much energy they’re using and when. It would also enable them to easily and automatically control their consumption through web- and smartphone-based portals, managing tasks like — for example — automatic scheduling of dishwashing for times when electricity prices are lowest.

The smart grid is often called the “energy internet,” and it’s a useful (though not 100-percent accurate) analogy. Essentially, it connects every element of the energy grid much in the same way the internet connects every networked computer, so all the parts can send and receive information from one another. and control and manage applications. It probably won’t end up being as entertaining as the ‘net, but the potential benefits — in energy, money and carbon emissions saved; improved resilience; better support for green energy and electric cars; etc. — could be equally huge over time.

For an idea of what that revolution could look like, consider a cluster of around 30 commercial and industrial buildings in an area west of London. Part of a £30-million project called the New Thames Valley Vision (NTVV), the investment here pales in comparison to billions pouring in to build London-area venues for the 2012 Summer Olympics. Over the long term, though, the impact of this project could far outweigh that of a new stadium or athletes’ housing complex.

“NTVV has the potential to revolutionize our existing networks, and help us to manage resources and equipment more effectively as the UK heads toward a low-carbon economy,” said Stewart Reid, NTVV Project Director at Scottish and Southern Energy Power Distribution.

The New Thames Valley Vision is one of many “smart” technology projects being supported by energy regulator Ofgem’s £500-million Low Carbon Networks Fund. The project’s goal: to help move energy consumption “from data to decisions.”

That means connecting all the buildings in the test area into a single network that not only monitor and measure how much energy they’re using, but automatically adjust consumption when peak demand begins stressing the electricity grid.

Part of that solution will lie with what’s called automated demand response (DR) technology. The system will alert building managers when energy use is getting high and will kick into effect pre-arranged responses to temporarily cut consumption. One company, for instance, might choose to automatically switch off lights in parts of the building that are unoccupied at the time, while an industrial user might prefer to cycle certain equipment on and off.

Combine all those individual building strategies into one network, and the result could be a potential “shaving” in peak energy demand of around 10 megawatts, according to Honeywell, the company that’s installing the DR technology.

“A smarter grid is essential to balancing supply and demand in the most efficient, sustainable way possible,” said Paul Orzeske, president of Honeywell Building Solutions. He added that, “utilities also need to connect with their customers in new ways and Auto DR creates those bonds.”

That’s the premise behind a new suite of tools and products unveiled today by the smart-grid firm Echelon. Designed for building owners and professionals working with energy technologies, the new offerings are designed to help make buildings more “grid-aware” and ready to respond to a changing energy environment.

Built on Echelon’s existing energy-management platform, the new suite includes a guide for defining and building “grid-aware” buildings, an application that integrates current building automation standards, a royalty-free network operating system for energy management and grid awareness, a software and wizard toolkit for custom energy management solutions and a module for enabling smart-building networks.

The integration application provides a gateway that brings together two communications protocols for building automation and control networks: the industry-developed BACnet and Echelon’s LonWorks.

“The industry needs to move beyond the notion that LonWorks and BACnet are competing standards — they are both open standards that have complementary strengths and real-world buildings are hybrids of both,” said Varun Nagaraj, senior vice president of product marketing and management at Echelon.

The communications protocols enable automation and control of building systems for heating, ventilation, air-conditioning, lighting, security and other activities.

In one way, the analogy works pretty well: the “regular” internet links computers (and now smartphones, etc.) around the world with one another to create one giant, interconnected, information-based thing. In a similar way, the smart grid would network homes, businesses, power plants, transmission and distribution systems, electric cars, etc., to create one giant, interconnected, energy-based (and information-based) thing.

When you think about how each of these internets is used, though, the resemblance isn’t so clear. We rely on the server-based web for news, business, social interaction and entertainment. But the internet of things would be all about monitoring, measuring and managing energy — hardly fun-and-games-type material.

Or is it? Some smart-grid observers believe fun and games (along with game theory) hold the key to getting the most out of the internet of things. The argument boils down to psychology: when it comes to choosing long-term benefits over short-term rewards, we humans are notoriously hard to motivate, and the smart grid is nothing if not long-term-focused. While a single networked appliance, used properly, could save us, say, $30 a year or $300 over a 10-year span — which sounds like real money — that boils down to an average energy bill impact of $2.50 a month. For many of us, the resounding response to that is likely, “Meh.”

Turn that $2.50-a-month savings challenge into a game or competition, though, some say, and more of us might actually jump aboard the energy-efficiency bandwagon.

For example, Navetas — which makes a variety of home energy monitors, displays and apps — developed a game that lets users test their knowledge about which household appliances are the biggest electricity-guzzlers. Originally developed as an educational tool for schools, the online Navetas Energy Challenge can provide some eye-opening surprises, even for those who consider themselves energy-savvy. Who would guess, for instance, that, over the course of a week, boiling an electric kettle three times a day (5.25 kilowatt-hours) consumes more than twice as much energy as running the washing machine four times (2.24 kilowatt-hours)?

The goal of the game is to help raise awareness of just how tricky conserving energy can be, and how more information — especially the right information — about consumption can help lower bills. Unfortunately, that’s information many consumers aren’t regularly getting at the moment.

“Energy users are faced with electricity bills that present a total usage figure and cost, with absolutely no insight into how this breaks down at an appliance level,” says Chris Saunders, CEO of Navetas. “Our study has revealed that many consumers could be jumping to the wrong conclusion about how much it is costing them to use certain appliances and not taking into account household behavior. Without this detailed information, many attempts at being more energy efficient could be focusing on completely the wrong areas.”

According to Navetas, the government — particularly the UK government, which is currently planning a nationwide rollout of smart meters — needs to do a lot more to help make this happen.

Utility companies can play a part too. A Colorado-based tech firm called Simple Energy is targeting them with a software-as-a-service platform that supports online, community-based contests for saving electricity. Using social networks like Facebook, along with game mechanics, Simple Energy’s solution lets utilities offer real prizes for customers who save the most energy in competitions.

“People are naturally social and they like competing to win points and prizes,” says Yoav Lurie, Simple Energy’s CEO and co-founder. “This is an intuitive way for people to easily save energy.”

Late last year, PJM Interconnection — a regional transmission organization (RTO) that handles energy trading and operates high-voltage networks serving more than 58 million people — saw five years of work and $200 million in investment come to fruition with the launch of its Advanced Control Center (AC2) program. The program replaced aging technology with two state-of-the art centers for managing the electricity grid and wholesale power markets.

Why two control centers? The idea is to make sure that grid management and power markets worth $35 billion a year can keep going even if operations at one center were to completely fail. The system makes PJM the only grid operator in North America (and one of just a few worldwide) to have dual primary control centers.

Using the Spectrum Power energy management system from Siemens, the two control centers can operate independently or together as a single, “virtual” facility.

“This is a formidable breakthrough for grid operators worldwide,” said Jan Mrosik, CEO of the Smart Grid Division of the Siemens Infrastructure & Cities Sector.

Making the Tres Amigas (“three friends” in Spanish) SuperStation possible will take more than money — at least $1.5 billion worth — and transmission and distribution technology smarts. It’ll also require lots of advanced networking and communications to coordinate all the complex interactions involving multiple power sources, markets and prices.

A lot of the innovations making the project possible didn’t even exist just a few short years ago, according to chief operating officer David Stidham. For example, the SuperStation will feature cutting-edge Voltage Source Converters, or VSCs, that can efficiently connect two or more asynchronous grids by converting alternating current (AC) power from one network into direct current (DC) power and then back into AC power that’s fed into another grid. And powerful software will help manage the massive amounts of data driving it all.

The project has now gotten a financial and technology boost with the addition of a new partner, Mitsui. The global trading, IT and industrial infrastructure services company has not only agreed to invest $12 million into Tres Amigas, but will bring along its expertise in smart-grid IT, renewable energy development and management, and carbon dioxide emissions mitigation strategies.

“Apart from the purely electrical engineering aspects of the project, the commercial operation of the SuperStation requires intensive use of information systems and technology, as well as management of large-scale infrastructure,” said Phillip Harris, president, CEO and chairman of Tres Amigas. “Mitsui’s worldwide experience in these areas will be invaluable.”

Construction of the first phase of Tres Amigas is scheduled to start this year, with early commercial operations expected to begin in 2015.

An all-out cyberattack on a highly integrated energy infrastructure could make us long for the days of garden-variety denial-of-service attacks we encounter from time to time today, however inconvenient those can be. Why? Because a fully developed smart grid would control not only electricity but a vast array of other services we take for granted: sewer and water systems, phone service, traffic control, emergency communications and more. That’s why it’s called the “internet of things.”

And if you think the normal internet going down for a while is a pain, imagine shutting down an internet of things.

That’s why the Obama Administration has just announced a new initiative aimed at protecting the US power grid from cyberattacks. The unimaginatively titled “Electric Sector Cybersecurity Risk Management Maturity” project, to be led by the Department of Energy and the Department of Homeland Security, will involve both public-sector and private-industry experts in an effort to develop a “more comprehensive and consistent approach” to protecting the grid from cyberattacks.

“This effort will be focused on performance-based strategies and concrete steps to measure progress of cybersecurity in the electric sector,” said Howard A. Schmidt, White House Cybersecurity Coordinator. “It is important to understand the sector’s strengths and remaining gaps across the grid to inform investment planning and research and development, and enhance our public-private partnership efforts.”

The project will do that by developing a “maturity model” for utility companies and grid operators. That will help energy providers measure their current capabilities and analyze any gaps in their current cyberdefenses. The model is set to be available this summer, and more than a dozen utilities and grid operators are expected to participate in the program on a pilot basis.

You can’t explain it away by saying opponents are ignorant, uneducated, uninformed or technophobic. While there are probably some people you could call Luddites or worse, the outcry over the prospect of having a more advanced, radio-controlled energy meter installed in one’s home is also coming from lawyers, business owners, accountants and other professionals.

Nor is the opposition confined to tiny, remote communities where things that are “different” typically have a harder time winning acceptance: you can encounter smart-meter skirmishes in places like tech-centric Silicon Valley, urban Vancouver and upper-middle class suburbs like Naperville in Illinois.

While subsets of smart-meter-haters are also anti-cellphone, anti-wi-fi and anti-other-wireless technologies, it’s fair to assume at least some of those involved use iPhones, Bluetooth devices and laptops on the go. So what’s the deal?

Here are a few theories:

• It’s a fundamental of human psychology that change is hard. And the smart grid represents a sea change in how energy will be generated, transmitted, used and paid for. Some people will just need more time than others to wrap their heads around that.
• Mandates are always met with pushback. It’s one thing to decide for yourself that you’re going to go online this afternoon and buy an iPad. It’s an entirely different thing to have someone else — say, a utility company or government authority — tell you that you’re getting a new technology whether you like it or not.
• Mandates delivered with a dash of arrogance or force are even worse. While numerous studies have failed to link radio-frequency communications to measurable or significant health risks, some experts presenting those findings have come off sounding dismissive of skeptics’ concerns. And warning smart-meter opponents that a police escort will usher installers into their homes if they don’t sign up for a non-wireless alternative is heavy-handed, adding fuel to the fire and, sorry, just plain dumb.

Major transitions like the one from a “dumb grid” to a smart one will always encounter some bumps and obstacles along the way. To make the passage as smooth as possible requires understanding not just technology, but people.

That’s how much global technology giant Siemens says it helped achieve in 2011 with all the different environmental technologies it offers. Its portfolio of smart-grid technologies, efficient rail systems, logistics solutions and building, power distribution and security systems enabled customers last year to reduce their carbon emissions by nearly 320 million tons, the company claims.

Among Siemens’ latest innovations is a smart-grid application that lets utilities access time-synchronous network information via advanced energy meters. The technology allows electric companies to measure power quality as a means of improving network stability and supply security, and can even deliver graphical displays via smartphones and tablets.

It’s also developed a new “Smart Grid Compass” consulting and analysis tool for utilities, cities and building operators. The solution is designed to analyze existing power systems before they’re transformed into smart grids, and to identify ways to create new intelligent networks affordably and securely.