A Smarter Electrical Grid

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Similar controllers were put on heat pumps, thermostats, and water heaters. The equipment was linked, via a router-like gateway, in a network and run with IBM software.

Brous, a retired traffic manager at U.S. Steel (X), heard about the project on a local radio station. He immediately volunteered. "I thought it was a very important thing for all people to have," he recalls. The equipment was installed in December, 2005, and was in place through early 2007.

Option to Override the System

Like the other volunteers, Brous and his wife allowed the system to reduce their energy use when prices went up. As a result, the thermostat sometimes got turned down, allowing the house to get colder. Or when they went to dry clothes, the dryer occasionally suggested that they wait until prices declined. But if the house got too cold, or if they really needed to dry some clothes, they could override the system. Brous says, however, that they intervened only about 1% of the time.

He could also control the house from anywhere, telling it, for instance, to warm up just before he and his wife returned from camping trips. "If for some reason we came back early or stayed late, we could jump on the Internet and make changes," he says.

For Brous, the technology was not only convenient and money-saving, it was consciousness-raising. He became more aware of the electricity he was using—and ways to cut use further. Instead of just putting off drying clothes until electricity prices dropped, he and his wife started using a clothesline, "saying that we can save a bit more electricity," he says. "We found we really liked it."

Smoothing Power Peaks

And overall, Pratt says, the project was a big success. The total amount of power needed when demand was the greatest was cut by 15%. Indeed, in times of heavy demand, power consumption went down to 50% of normal for days at a time.

"The first cold snap came in November, 2006, and we were all anxiously looking at the data," Pratt recalls. Would electricity demand jump up and down as usual, or would the smart system tame the rise? "I was absolutely astounded," he says. The system "kept the load absolutely flat for 72 consecutive hours. I've never seen such a thing before."

Applied to a whole region, the smoothing of peaks in electricity use would prevent the need to ramp up power plants to churn out more expensive electricity. And it would obviate the need to build new power plants to meet future anticipated needs. Indeed PNNL's calculations show that such a system could save the nation $70 billion of the projected $450 billion needed in new power generation and distribution capacity in the next 20 years.

Of course, there are still daunting hurdles. State and local regulations often make it hard to implement such systems. Not all consumers are as willing as Jerry Brous to allow technology to control their house's electricity use. And installing smart devices in millions of homes is a massive undertaking. But the ultimate payoff is large—and the demand is there. "When it becomes available, I'll be the first to get it installed," says Brous.

Carey is a senior correspondent for BusinessWeek in Washington .