Fresh off of its investment in next-generation geothermal power, Google (NASDAQ:GOOG) last week made another notable cleantech move. The Sultan of Search announced that it's pairing up with General Electric (NYSE:GE) to bring our electric grid into the 21st century.

Though investors have recently treated GE as though the business begins and ends with its financial services arm, we know that the power player is active in everything from wind energy to nuclear to solar. As for the "smart grid," which we'll define in a moment, GE has already begun working with American Electric Power (NYSE:AEP) on this very technology.

In essence, a smart grid is one that enhances information flow between customers and suppliers, providing better efficiency for everyone. Utilities can better monitor usage and adjust pricing in response to peak demand loads. Consumers can get better information about their consumption and be rewarded by cutting back during peak load times. Looking into the near future, a smart grid will be even more critical when folks are charging their plug-in Priuses at night and selling power back to the grid from the SunPower (NASDAQ:SPWR) panel on their rooftop.

Xcel Energy (NYSE:XEL) is one utility that's making strides in this realm. Along with start-up GridPoint and consulting crew Accenture (NYSE:ACN), Xcel is looking to turn the city of Boulder into a beacon for the rest of the nation. Meanwhile, Southern California Edison is rolling out a $1.6 billion metering program of its own.

This is a potentially huge market, and it fits hand in glove both with Google's IT savvy and its vision of cheap, renewable power fueling a fleet of plug-in electric vehicles. While there are purer smart grid plays out there, such as Echelon (NASDAQ:ELON), I can say with much greater certainty that Google will be a prominent player in this field in the years to come.

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Fool contributor Toby Shute doesn't have a position in any company mentioned. The Motley Fool has a disclosure policy.