Boulder, CO, should soon boast the world's smartest--and thus most efficient--power grid, thanks to a $100 million project launched last week by Minneapolis-based utility Xcel Energy. The project will equip homes with smart power meters that help people reduce demand when electricity is most expensive. Substations will also use information from the meters to automatically reroute power when problems arise. Among its other benefits, the project should help Boulder residents take better advantage of renewable power sources.

In today's power grids, a steady but essentially blind flow of electricity is all that links power plants, distribution systems, and consumers. Mike Carlson, Xcel's chief information officer, says that Boulder will test how much more reliable, cleaner, and cheaper grid operation can be when each element communicates with the others. If the benefits prove as great as Xcel expects, Carlson says, the Boulder experiment could unleash rapid investment in "smart grids." The equipment is ready, Carlson says. "We're not talking the Jetsons or Star Wars here. If we can get the right standards and the right incentives and the right financial structures, it's viable technology today."

Rob Pratt, who runs the Pacific Northwest National Laboratory's GridWise program, agrees that Xcel's project should--if fully implemented--provide the best test to date of smart-grid benefits because it will make Boulder the "densest concentration" of smart-grid technologies. "You can't have one smart-grid customer in Boulder and two over in Fort Collins and a few dozen in Denver, and have it mean as much as having all those people on one street," says Pratt. "Here we're talking about a whole city, which would be amazing."

Carlson says that Xcel chose Boulder for its relatively isolated electrical distribution system and its population of roughly 120,000 (including students). Xcel plans to install 50,000 new smart meters serving about 100,000 of those residents, a large enough pool that the company can experiment with different approaches. It could, for example, deploy meters from different vendors, which send information in different ways: either wirelessly, or over the power lines themselves. The company could also experiment with sending different signals to the meters to try to influence consumer demand. (See "Gadgets to Spur Energy Conservation.")

One scheme that Xcel plans to test is a way to make better use of renewable energy. On today's grid, intermittent sources of renewable power--such as wind--must be backed up by more conventional fossil-fueled or nuclear power stations. "Xcel's leading the country right now in wind power--we have almost 3,000 megawatts on our system and plan to double that--but we have a consumer base that doesn't modify its habits when that wind isn't blowing," says Carlson.

Instead of trying to store renewable energy for when it's needed--a pricey proposition--Carlson thinks that the smart grid may be able to "store" demand for when the wind happens to blow. Xcel plans to send signals when the wind is up, and some consumers will be able to program their smart meters to, say, activate their dishwashers or heating panels in response. "If the system could signal wind availability--or any renewable energy source, for that matter--would we see an adjustment of consumption? We think yes," says Carlson.

Similarly, real-time pricing signals should reduce consumption during peak hours, when the price of wholesale power spikes and power lines can overheat. In January, Pratt's group at Pacific Northwest National Lab completed a demonstration project that showed that real-time pricing can cut peak power usage by 10 percent, reducing congestion and power losses on the lines. It also means that the least efficient and most polluting fossil-fueled plants, which utilities would rather not fire up, can be left on the sidelines.

Continuous feedback from smart meters and substation sensors should further increase power reliability in Boulder by enabling rapid and precise response to grid problems. The system will pinpoint lines or substations at risk of overloading and activate remotely operated substation switches to reroute power. If problems persist, the system can send a signal to the smart meters of customers on the troubled lines, who have been offered some type of financial incentive to reduce demand when necessary.

Sharing the costs of the Boulder project are a consortium of equipment and networking providers, including Current Group, a Germantown, MD, company developing systems for sending broadband communications signals over power lines, and substation switch and sensors firm Schweitzer Engineering Laboratories, in Pullman, WA. Their combined investment resolved a chicken-and-egg dilemma that has been delaying the large-scale implementation of smart grids. State public utility commissions have been reluctant to let utilities pass on the cost of smart-grid investments to consumers until they can prove that consumers will share the benefits, too; but the utilities can't prove that consumers will benefit until they introduce smart-grid technologies on a large enough scale. "With our partners and the shared risk, we can go after those hypotheses and not put the burden on the rate payer to suffer through our R&D process," says Carlson.

The project has also helped smooth the relationship between Xcel and Boulder's municipal government, which had grown rocky in recent years. Boulder has committed to reducing the city's overall greenhouse-gas emissions to 1990 levels by 2012--a 22 percent reduction from 2006 levels. Electricity accounts for more than half of Boulder's greenhouse-gas emissions, and when 2006 saw a rise in both power consumption and emissions, the city began to consider establishing its own utility to take over the electricity supply. Xcel's smart-grid plan, along with financial risks identified in a preliminary study of the municipal-utility proposal, helped convince Boulder's city council to officially shelve the idea on Tuesday.

Boulder assistant city manager Kara Mertz estimates that shaving peak demand and delivering power more efficiently could provide up to a quarter of the emissions reduction that Boulder has set for itself, while the greater reliance on renewable energy enabled by the smart grid could deliver another quarter. "It's a big promise," says Mertz.