As the saying goes, information is power. And as far as smart electric grids go, power information can be, well, powerful.

Fundamentally, smart grids apply digital processing and two-way communications to the flow of electricity. The net result provides better control of both the amount and timing of power use to optimize cost management. Smart grids can also optimize the use of low-carbon energy generation, including the use of renewable energy from the wind and sun.

Remarkably, although smart grid research is being conducted in many sectors for a variety of interests—by utilities, universities, the US Department of Energy, and others—it’s in a relatively early stage of development. Nearly everyone believes that smart grids have potential value, but practical test applications verifying that potential require lots of coordination.

Further, there are entrenched ideas about who owns, controls, and delivers the smart grids. The utilities, right? Not necessarily, says Michael Munson. “The marketplace of ideas is what makes the electric system ‘smart,’” says the principal of Metropolitan Energy, who is also a consultant to the Building Owners and Managers Association (BOMA) of Chicago. “Large commercial buildings, for example, have what can be considered localized smart grids called building automation systems. There is not simply one static grid where one provider delivers all the answers but a series of systems where many stakeholders can provide unique and complementary values.”

Total buildings involved in the program. The smart grid test began with three office buildings, and seven additional buildings are in line.

Range of power-price fluctuation (in dollars per megawatt-hour) in Illinois. Within 24 hours, the cost can go from $240/MWh to -$40/MWh.

Smart meters retrofitted for residents and smaller businesses by the local utility. They’re not yet receiving smart grids, but the goal is similar: to reduce peak demand with cost-savings incentives.

Three large office buildings in Chicago’s downtown Loop district are experimenting with building a smart grid under the direction of BOMA Chicago. It is a bold move, perhaps only possible because BOMA Chicago acts as an advocate for the 260 office buildings on matters such as fair utility costs and enhancing competition in the energy industry. Michael Cornicelli, executive vice president of the organization, reminds us that those buildings are among some of the world’s tallest—and huge consumers of electricity. Electricity costs are their second greatest operating expense, exceeded only by property taxes. By aggregating multiple buildings in a smart grid, BOMA Chicago gains leverage with vendors and the utility through economies of scale that work to the benefit of the buildings and their tenants as well as the power grid as a whole.

Cornicelli and Munson also stress that an awful lot can be done to improve energy efficiency in new and older buildings alike. While architects and builders concentrate on tight envelopes, consumers of electricity are nonetheless subject to prices that fluctuate as frequently as every five minutes. Peak usage is when prices are typically highest—for example, hot summer afternoons—but if a power plant is down due to malfunctions or maintenance, prices can jump at any time of day or night. As older coal plants close in response to the increased costs of new environmental regulations, electricity supply is reduced, and the cost of the scarcer commodity increases.

Under current non-smart grid technology, building owners and tenants—both of whom have incentives to reduce energy costs—at best learn about inefficient and expensive electricity use 24 hours later, and mostly from their monthly bill. With a smart grid, they get real-time information that enables them to make cost-saving adjustments when it matters. For example, hot days in July are fairly predictable and correlated to high energy prices, so pre-cooling buildings in the cheaper, early morning hours can save money through smarter operations. But if prices rise for other reasons, building owners and tenants can dim lighting in certain areas, deactivate an unneeded  elevator bank, or alter temperature settings in underused rooms and hallways.

This may or may not drive more use of renewable energy, says Munson, but it certainly can prompt conservation as electric peak shaving uses no fuel, green or otherwise, to perform. “With smart grid information, engineers and building managers can positively affect the energy costs through intelligent application of information,” he says. “There has to be this kind of awareness on the demand side to become more sustainable in the long run.”