Is this the grid of the future?

An 8,000-square-foot, nondescript, two-toned box of a building in Salem, Ore., looking like so many you’d see in a thousand industrial parks, could represent the future of energy management.

It’s Portland General Electric’s Salem Smart Power Center – part of the larger Pacific Northwest Smart Grid Demonstration Project – and at its heart is 5 megawatts of lithium-ion battery storage. The center will serve about 500 homes and businesses in southeast Salem as a microgrid, and PGE says its implementation will allow the company to figure out how to efficiently take advantage of more clean power.

Salem Smart Power Center (image via Portland General Electric)

“Outfitted with a large-scale energy storage system, the center is designed to help PGE test how to store and better integrate variable renewable energy sources like solar and wind into the electrical grid, along with several other smart technologies,” the company said last week as company officials and politicos – including U.S. Senator Ron Wyden – celebrated a ribbon-cutting.

The key to smartening up the grid is integrating real-time economic signals into the production and purchase of energy on the route that begins with generation and ends with your air conditioning unit clicking on.

Battery banks at the center (image via Portland General Electric)

The Pacific Northwest National Laboratory, one of the many organizations in on the project, calls this “transactive control” – “a single, integrated, smart grid incentive signaling approach utilizing an economic signal as the primary basis for communicating the desire to change the operational state of responsive assets,” as the lab puts it [PDF].

Here’s what that means in practice in Salem, according to PGE: “PGE business customers are volunteering to cycle their heating, cooling and other systems on and off throughout the day or shift their use to off-peak. In addition, residential customers are letting PGE automatically cycle their water heaters on and off for brief periods throughout the day.”

PGE said the center should help a familiar company’s solar array – among other renewable energy assets – become a more valuable grid contributor: “Salem-based Kettle Brand, pioneer of the kettle-cooked potato chip and industry leader in sustainability, is connecting its 616-panel rooftop solar installation to the project to help test storage and bring solar energy into the grid when it’s needed most.”

The Pacific Northwest Smart Grid Demonstration Projct is a five-year, $178-million, regional undertaking that launched in 2010. The Salem center cost $23 million, split between PGE and the U.S. Department of Energy.

* Pete Danko, EarthTechling