The internet, distributed renewable energy, electric vehicles and energy management are ready to coalesce: the impact on cities and our lives will be profound. The US-China Green Energy Conference (sponsored by the US-China Green Energy Council) held Friday in the Silicon Valley took a deep bi-national dive into what smart grids are and what they will mean for so-called smart cities, their wired citizenry and the future of global carbon emissions.

Smart grids specifics are finally starting to emerge from the marketing haze. They will rely heavily on smart buildings, and are a critical solution in making renewable energy more scalable through more efficient energy transmission systems. Cities like Dubuque, Iowa are working with 1,000 residents to test smart grid applications and have reportedly lowered their water use by 6% in early trials with IBM.

Elsewhere, China is testing a four-square kilometer smart grid pilot area in its national urban eco showcase, Tianjin Eco-City. The smart grid includes a 30kw PV solar microgrid on the roof of the Tianjin “Eco-City Business Hall,” where residents will be able to charge their electric vehicles while they view virtual reality demonstrations of how the smart grid works, including its “self-healing” capabilities within the Eco-City’s network.

In terms of renewable energy, smart grids will be a killer app. Right now, when the wind completely dies in larger areas of wind power generation, such as the West Texas plains, the transmission system supplying electricity to cities, including Austin and Dallas, suffers a “mad scramble,” according to Liang Min, of the US Electric Power Research Institute (EPRI). In fact, according to Chuck Wells from OSISoft, such power hiccups are currently so disruptive, that 45% more fossil fuel is needed to back up regional energy grids having large-scale wind and solar generation versus regional grids that rely only on fossil fuels.

On the home or business side, people are responsible for about 30% of a typical building’s energy system performance, said John Skinner, Managing Director of Intel’s Open Energy initiative. The more reliable information people have, the more likely they can make smart decisions about energy use, and the more likely they can pay less for energy than they do with analog meters (the ones with the wheels turning inside them).

Energy transactions will become more transparent through next-generation smart grid transaction languages, such as TeMIX which was presented to the US-China energy conference by Edward Cazalet, CEO of TeMIX. Cazalet’s presentation reminded me of how the internet was optimized when TCP/ IP, the unifying data transfer protocols behind the web, were created. The capability for energy systems to use a unified language around energy use and transactions will be critical. This language will allow governments, businesses and residents to better manage their energy consumption. Currently, energy costs can  vary tremendously based on factors including climate, usage and equipment, costing as much as five times or more during peak hours. Few people outside of large businesses realize they can cut energy costs dramatically by changing their behavior, which can be as straightforward as running energy guzzling appliances to during off-peak hours.

None of this means that smart meters are a panacea. In cities throughout California, smart meters have been rolled out clumsily by the utility Pacific Gas and Electric. After four years of replacing residential and business analog meters with wireless smart meters, a vocal and well-organized group of citizens are objecting to the continuous signals they transmit. Others object based on invasion of privacy or fear the new meters would overcharge them. PG&E has finally gotten around to a public education program extolling the benefits of smart meters, which they say are mandatory for their customers. Besides the heavy handedness, even with the new PR campaign, PG&E has not made the case for compelling consumer benefits.

Consolidated Ed of New York City, on the other hand has managed their smart meter pilot program more effectively. Con Ed ran an extensive public education program and transparent opt-out option for those that did not want smart meters (2% did not want them) on their home or business for their New York City pilot program. The utility offered participants in its pilot program rebates of $25-50. Six rate structures with hourly rate changes and a web-based consumer dashboard explained and demonstrated different rates, according to EPRI’s Liang Min.

Many companies including Microsoft, Cisco, Intel, General Electric and Google are eyeing the nascent smart grid for its potential not just to make cities more eco-efficient, but for also for lucrative smart-grid revenue streams as they penetrate the last major untapped digital pathway into our lives.

“We are cooperating with many high tech companies,” Kai Xie, General Manager of the US Office of the China State Grid told the US-China Energy Conference. “We have also developed some in-house products for our customers, including a dashboard (with Intel) as part of a two-way communication combined smart meter and consumer portal. “

Our information, communications, photographs, entertainment and medical industries are all now increasingly digital, and soon our energy will be digitized, too. Let’s hope the planet and our cities will benefit from a smooth and well thought out transformation.