I remember three years ago sitting at a roundtable with Bill Gates and I asking him a question that was off topic and probably underappreciated by my fellow reporters at the table. I asked him what role he saw Microsoft playing in the development of the smart grid. Gates wasn’t dismissive, but he wasn’t that enthusiastic either. He acknowledged that utilities need systems that are reliable, redundant, and have the ability to react quickly to problems or commands. Microsoft, he said, won’t directly play in this market. “We’ll just enable other people to do it.”

Since then, I’ve seen a flood of traditional IT and telecom companies jumping on the smart grid bandwagon. Cisco wants to provide the secure network and wireless infrastucture. Telecom providers such as Bell Canada want to offer energy management services and provide the gateway in homes and businesses that connect appliances to the utility. Alcatel-Lucent is in there. IBM is there, and so is SAP. The list goes on: Motorola, NEC, and, yes, Microsoft. Most are participating through industry alliances, whether it’s the broader GridWise smart grid alliance or the more focused ZigBee Alliance, which is working to establish an open global standard for cheap, low-power wireless networks that enable energy management — monitoring and control. The latest to join is Certicom, a Canadian developer of high-grade mobile encryption technology used by the NSA and licensed by a who’s who of the high-tech sector. “As utility companies worldwide continue to embrace the application of smart meters, it is very important to ensure that the information being transferred along the network — as well as the network itself — are both properly secured from unauthorized intrusion or manipulation,” said Jim Alfred, director of product management at Certicom.

The IT opportunities presented by the smart grid are enormous. Sure, there will be some partnerships with the established giant, such as ABB and Siemens, but increasingly we’re seeing conventional IT and telecom companies playing a direct role. The difference, which didn’t exist just a few years ago, is that utilities are being forced to interact with end customers — households, business, industry — as the need for conservation and demand-management grows and as the addition of renewables adds complexity to the grid. Historically the utilities and power generators have been inward facing, and dependent on proprietary, in-house solutions or technologies developed from a small group of established industry giants. This was the telecom sector 20 years ago. As we move toward smart appliances, including plug-in hybrid and electric cars in need of vehicle-to-grid connections, we’ll come to rely more on the innovation and creativity that we’ve seen in the IT and telecom worlds.

The investment opportunities are unprecedented.