Two of the world’s most pervasive networks — the Internet and the electricity grid — are about to collide, with significant consequences for IT organizations everywhere.

With governments across the globe making large-scale commitments to the adoption of “smart grids,” IT organizations will be increasingly drawn into efforts to integrate these intelligent energy components and networks into existing infrastructures — with real gains to be had in energy efficiency.

The scope of that convergence is evident in how the US’s Institute of Electrical and Electronics Engineers defines the smart grid: “An automated, widely distributed energy delivery network characterized by a two-way flow of electricity and information, capable of monitoring and responding to changes in everything from power plants to customer preferences to individual appliances.”

From an IT industry perspective, it’s about “when energy meets the Internet of things,” to borrow from Hitoshi Matsumoto, CEO of Fujitsu Laboratories of America. Fujitsu, along with the likes of Cisco, Intel and Google, is an active player in the Internet Protocol for Smart Objects (IPSO) Alliance, the primary advocate for IP networked sensors, actuators and other embedded devices for use in energy, consumer, healthcare and industrial applications.

When deployed in smart grids, such devices stream information over networks in near-real time to report on how much energy a large machine or process is consuming, providing opportunities to optimize their usage.

The prediction is that managing such devices will fall within the CIO’s duties, as will handling the analyses of the streams of data they generate.

According to IPSO Alliance’s Geoff Mulligan, the US’s adoption of IP within smart grids to interconnect energy components such as smart meters and microcontrollers will involve the deployment of between 300 million and 500 million tiny devices. All of these will need IP addresses, which is one of the main reasons for the upcoming shift from IPv4 to IPv6.

That translates into some pretty big spending predictions. Estimates for the IT element of world smart grid expenditure range widely, from $30 billion to $300 billion, according to analysts at The 451 Group.

But some of the challenges will be familiar to IT executives, say Andrew Lawrence and Adam Page, authors of The 451 report, “The Smart Grid: A major opportunity for the IT industry.” They highlight: the immature state of standards; the security threats to these new networks; and the daunting prospect of continuous upgrades in an environment used to low-tech kit.

“Those involved in smart-grid deployment face challenges that enterprise IT will instantly recognize,” says the report. “However, the balance of forces that have given the smart grid momentum to date — technological, political, environmental, economic and operational — are likely to strengthen, not weaken.”

Data feed

• In 2009, the US government set aside $3.9 billion to kick-start the modernization of the US grid, to be matched by private funding. “Smartening” European grids is estimated to cost in excess of €200bn ($276bn).

• Sensor and response products represent the largest part of the smart grid-enabling products market, accounting for 53% or $47bn of the $90bn market in 2010. (SBI Energy)