Back when I was a broadband reporter for Red Herring magazine, I took a trip to Seoul and did the classic story on how South Korea kick-started its economy with government investment into blazing-fast broadband pipes that created its world-leading mobile and web industries. South Korea’s broadband buildout may hold some interesting lessons for the U.S. smart grid rollout, as I’ve noted before. But the country could also take a leading role in the smart grid market, with South Korean smart grid firms competing directly against the companies in Silicon Valley that are developing the next-generation of smart grid tools. According to a report today in Reuters, South Korea has picked eight consortiums to build a smart grid test bed in the country and South Korea is vying for “30 percent share of the global smart grid industry.”

In the same way (albeit on a smaller scale) that the South Korean government pumped money into developing broadband infrastructure, the government plans to invest 37 billion won (about $32 million) initially into building out the smart grid test-bed. The companies that will start building the smart grid infrastructure include a who’s-who of South Korean IT companies including mobile leaders SK Telecom and KT, consumer electronics and cell phone heavyweight LG, power companies KEPCO and GS Caltex, and Hyundai Heavy Industries. Taking the same approach as the island nation of Malta — isolating the buildout to a geographical area — the South Korean government plans to build the smart grid test bed on the island of Jeju, which is south of Seoul (see map above).

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Now that large, established players — Silver Spring Networks and Cisco (CSCO) — are building out the smart grid network, the next area for innovation will be the applications, software and services designed to run on top of the network. That’s a trend we’ve covered, and it has been heavily discussed at this week’s GreenBeat conference. As Khosla Ventures partner Vinod Khosla put it today, he’s searching for the Twitters and Facebooks of the smart grid.

Khosla, who has seemed a lot more bearish than many investors in terms of the smart grid (in contrast, Steve Westly, partner at the Westly Group welcomed GreenBeat attendees to bring him their business plans), predicted not many of the next-gen smart grid entrepreneurs in the room would be successful, but that there would be enough winners to make the sector “interesting.” Next-gen applications and services could sprout up in the middle of the grid or at the edge of the network. It’s at the edge where Duke Energy CTO David Mohler said earlier this week he aims to “let thousand flowers bloom.” Here’s 3 companies that have developed next-gen smart grid services that were at the GreenBeat show:

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In a long speech on a variety of greentech subjects — ranging from renewable energy technology to prospects for the upcoming climate talks in Copenhagen to the U.S. Senate’s slow pace on the climate bill  — former Vice President and current Kleiner Perkins partner Al Gore singled out the smart grid as a key initiative that will help the U.S. transition off of foreign oil, create jobs and reduce greenhouse gas emissions. Gore made the comments at the GreenBeat conference, which is focused on the smart grid industry. Kleiner Perkins, it should be said, has invested in smart grid companies including Silver Spring Networks. So Gore had a variety of reasons to champion the smart grid today.

Gore highlighted three benefits that the smart grid will provide: a connection to link renewable assets to areas that need it, a way to empower consumers, and a way to drive technology innovation in much the same way the Internet has done. When comparing the Internet to the smart grid Gore said, “the analogy is almost exact.” The energy industry is moving toward a distributed model (solar rooftops and devices at endpoints), from a highly centralized one now. Eventually, Gore predicted the power grid will look more like the distributed model of the Internet.

Arguably, said Gore, the most important effects of the smart grid buildout will be the potential benefits for consumers, who will finally become aware of how much energy they are using and find new options for reducing energy consumption. “Most people are simply not aware of ways to reduce consumption,” he said. Andy Tang, senior director of PG&E Smart Energy Web expressed a similar sentiment on the panel prior to Gore’s speech concerning just how big the change in mentality about energy consumption will be. Tang said many even in the utility industry are just beginning to grasp the large effect that a digital grid will have on consumers.

Image courtesy of World Economic Forum flickr Creative Commons (not from GreenBeat)

Cisco has made a ton of noise in the smart grid space — CEO John Chambers told the Wall Street Journal this year that the company had an unlimited budget for smart grid initiatives — but it’s been unclear what exactly Cisco would be selling to utilities. As Laura Ipsen, Senior Vice President of the Smart Grid for Cisco, explained on a panel at the GreenBeat conference today: So far in terms of revenue we’ve been “zero for zero.” But early next year Ipsen says Cisco plans to launch some products directly in the smart grid market.

Ipsen was entirely vague on specifics, but said Cisco sees itself playing at all critical points of the network of the power grid in the areas of “enhancing operations, manageability, and scalability.” You’ll see products from Cisco in those areas early next year, said Ipsen. While Cisco engineers are hard at work on smart grid products, Cisco could also “acquire,” “partner,” with or “invest” in companies developing new tools, she said.

While originally Cisco seemed to be focusing on the home and consumer portion of the smart grid — as it did in its first smart grid deployment with Florida Light and Power, General Electric and network provider Silver Spring Networks — the networking giant is clearly now looking to play across all areas of the smart grid network. Cisco has partnered with Duke Energy on an end-to-end smart grid network, along with several other utilities. While CTOs of utilities will be interested to see what such a large network player has to offer them, we’re guess that all eyes from competitor Silver Spring will be on Cisco’s 2010 launches. Will those products be directly competitive with Silver Springs? We’ll be watching.

We’ve yet to delve too deeply into all of the fisticuffs surrounding the suit filed by a Bakersfield, Calif. resident against utility PG&E for a smart meter that he says tripled his electricity bill. Other residents in the area have complained to the media and PG&E about billing discrepancies. In response, PG&E has slowed down its smart meter deployment in that area. And of course the lawyers are trying to spread the suit down the smart grid supply chain. But from my perspective, and from the position of some of the experts on the panel I moderated last night at the GreenBeat conference, it seems like the whole fiasco offers a lesson about the importance of open communication between utilities and their customers.

Smart grid technology and smart meters don’t represent new or risky or bleeding-edge technology. They use the same type of information technology — wireless networks, silicon, software — that controls our cell phones, computers and Internet, and that plays a massive role in the U.S. economy. It’s just being used in a new industry: electricity. Of course software can occasionally be glitchy, but so can a person manually driving by and reading home meters. As Grid Net CEO Ray Bell told audience members of the GreenBeat conference today “digital meters are rigorously tested, and highly accurate.”

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Duke Energy, a utility that has 4 million customers across the Midwest and the Carolinas, doesn’t want to be in the business of selling and making consumer electronics. The utility is not interested in helping sell iPhones, selecting the devices that consumers want to use for energy management, or rolling out trucks to neighborhoods to repair gadgets, explained Duke CTO David Mohler at the Dow Jones Alternative Energy conference this morning. Instead Duke is working on getting the smart grid network buildout right, and “opening up the end of the wire to products and new services and letting other players get into interacting around energy with our customers.” In this way, Mohler said, Duke hopes to “let a thousand flowers bloom” at the edge of the network.

In other words, Duke plans to enable its customers to choose from a variety of home devices and services that will be developed by third parties, including startups, consumer electronics makers and software developers. “This is one of the most exciting areas ,” said Mohler, adding that he doesn’t think we’ll even know what possible innovations will emerge at the edge of the network. In that way it’ll be like the early days of the Internet, said Mohler: “Who knew the Internet would produce the iPhone?”

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Number eight on our list of 10 Things to Know About Smart Grid Security was this: Utilities need much better privacy safeguards. While the massive amount of data that will be unleashed by adding digital intelligence to the power grid needs to be kept out of the hands of cyber-hackers who would use it to harm the network, just as important is making sure that consumers can keep their personal information private. This morning Ontario’s Information and Privacy Commissioner, Ann Cavoukian released research in collaboration with the Future of Privacy Forum that focuses on how privacy, like security, needs to be built into the foundation of the smart grid.

“Smart grid security” is most often discussed in the terms of national security — a hacker develops a worm that can jump across smart meters and black out neighborhoods, for example, or can make a generator blow up remotely. Privacy — keeping personal information in the hands of the consumer and away from advertisers, the utility or any other third party — is an entirely different concern that utilities have to be prepared for with the buildout of the smart grid. Most importantly it will shape the relationship between the consumer and the utility.

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While we put conglomerate General Electric on our list of “Tech Vendors That Will Cash in On the Smart Grid Stimulus Funds,” we didn’t get the full impact the funds could have on GE in the days after the awards were announced. But the Wall Street Journal’s got that this morning, and says that around a third of the smart grid stimulus awardees are GE customers. The conglomerate, which makes smart meters, smart appliances, and in home energy management products, expects these customers to “use a good chunk of that money to buy its [GE] equipment.” Already, GE has announced utility customers including Florida Power and Light, Oklahoma Gas & Electric, and Pepco Holdings.

What’s as interesting as the size of the impact of the smart grid stimulus funds on GE, is the method in which GE looked to influence the smart grid stimulus funds. GE CEO Jeffrey Immelt, a longtime Republican, sits on the President’s Economic Recovery Advisory Board alongside Kleiner Perkins partner John Doerr. According to the Journal article, Immelt was a “driving force” behind stimulus funding gains for smart grid initiatives. GE invested $7.55 million in lobbying efforts in the second quarter of this year, a 34 percent increase from the company’s lobbying spending in the prior year second quarter. The investments — in initiatives including promoting the Democratic stimulus package, lobbying for smart grid stimulus fund increases, lobbying for the max smart grid stimulus award to be $200 million, helping customers apply for the stimulus funds, and developing “a colorful two-page fact sheet” on the stimulus for its customers — have apparently paid off.

More specifically GE’s fun-filled fact sheet told its customers that GE would “be involved with setting national standards and energy-transmission policy,” and said that GE could “help regional utilities and governments win federal stimulus money earmarked for making the power grids more efficient,” says the article. Although, GE General Counsel Brackett Denniston III explains that just because GE provided counseling on the Recovery Act legislation “does not ensure its clients will win the resulting contracts.” But with a third of its customers winning the smart grid stimulus funds, clearly GE’s counseling didn’t hurt.

At this point, the number of creative ways that companies have developed to help home owners monitor and manage their energy consumption, seems to far surpass the volume of consumer interest. That’s OK, though, because the home energy management market is so new, and it’s still unclear which services and technologies will be the most successful. Here’s another new startup which had some funding news this morning: PowerHouse Dynamics, a year-old Newton, Mass.-based company, which has built the energy management tool “eMonitor.”

According to VentureWire, which chatted with the CEO Martin Flusberg at the GreenBuild conference this week, the company is in the process of raising $2 million from undisclosed investors. PowerHouse Chairman and CMO Dan Kaplan confirmed the planned funding with us this morning, and according to a regulatory filing, the company has already raised $225,000 out of a planned $750,000 round.

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On Friday Microsoft plans to announce that its energy management online tool Hohm is now live and available to utility Xcel Energy’s 3.4 million customers. Troy Batterberry, Microsoft’s product unit manager of its Energy Management & Home Automation division, plans to break the news at an event tomorrow at the Microsoft Fargo campus, which is supposed to host the likes of North Dakota Governor John Hoeven, U.S. Congressman Earl Pomeroy, North Dakota Public Service Commissioner Tony Clark, and Fargo Mayor Dennis Walaker.

While Microsoft announced that Xcel Energy was one of its utility partners — in addition to Sacramento Municipal Utility District, Seattle City Light, Puget Sound Energy, and a “half a dozen” utilities in the queue — back when Hohm was revealed in June, the fact that the utility’s large customer footprint can now test out Hohm is a big step for the computing company’s energy tool. The news is also important because it shows how companies are building ways for customers to start monitoring and managing energy consumption before smart meters get installed in larger numbers.

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