Solar energy may play a bigger role in the smart grid than you think. Image source: SolarCity.

The electric grid is a piece of the energy industry that hasn't changed a lot in the past 100 years. Centralized power plants send electricity to the grid, utilities charge consumers for the electricity they use, and consumers have very little choice in the matter. But that's changing quickly as distributed energy (solar rooftops) become more common and regulators demand smarter energy choices by both utilities and consumers.

For investors, that presents an opportunity in the smart grid. Here are the stocks to watch as the smart grid revolution begins taking over the country.

If the grid is going to get smarter, it'll do so by demand responding to supply prices, not a one-way supply response to demand (as it is today). That'll entail paying customers to lower demand, offsetting expensive peak energy generation, or customers adjusting to higher price signals during peak load. Both can be lumped into a category called demand response and that's what EnerNOC (NASDAQ:ENOC) does best.

EnerNOC's main business until recently has been demand response in the PJM market, where it could be paid for having customers lower demand when energy prices were high. But its latest business is in working with commercial customers to understand their energy usage and be smarter energy customers. This could be through lowering demand charges (utility charges based on the peak usage, no matter how long it's sustained) or working with energy storage and solar to adapt to time of use rates. At its core, EnerNOC's business is now about data collection and that's why a partnership with SunPower (NASDAQ:SPWR) in commercial projects could be so valuable to smart grid customers long term.

Tesla Motors may get all of the attention for its Powerwall, but it's SolarCity that will make money off energy storage. Image source: Tesla Motors.

SolarCity and SunPower
Residential and commercial solar system installers will play an increasingly important role in the smart grid by tying on-site electricity generation with customers' loads, utility prices, and even stored energy. SunPower and SolarCity (NASDAQ:SCTY.DL) are leading the way by building systems, particularly in the commercial space, that react to the smart grid to maximize the value added to customers.

What may separate solar installers from many competitors is their ability to add value on multiple levels. Solar electricity generation, energy storage, and demand response can all work together using a single smart inverter. That's the capability SunPower is adding in partnerships with Stem and Sunverge for energy storage and Tendril and EnerNOC for data collection. In many ways, these companies could be the key to the smart grid of the future.

Google and Apple
What would the smart grid be without a platform for customers to interact with? That's where Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) will play a large role, whether they planned it that way or not.

Google's Nest home energy management platform is breaking into demand response with Rush Hour Rewards that pay customers to lower energy usage at peak times. Nest will also be the hub that smart home devices use to connect with the cloud as well as consumers.  

Apple's HomeKit will serve a similar function on iOS, providing a platform for control systems and smart devices to communicate. Smartphones are getting smarter all the time and they'll play a big role in the smart grid's development.

Investing in the smart grid is no safe bet
From smart meters to smart lighting to smarter inverters, companies have been chasing the smart grid for years without much success for investors. The companies I mentioned above are both focused on the smart grid and have diverse enough businesses to survive if the smart grid business model changes.

The smart grid is a big opportunity, but it's also a high risk as an investor. The more a company does to add value in the energy business, the better.