GE wants to spark a revolution in the way we create and distribute electricity. Seizing on a critical underfunding of grid investments by the U.S. government (a paltry $3.4 billion), the second largest company in the world (as ranked by Forbes) wants to do something about it.

GE is partnering with four major venture capital firms, including Al Gore-advised Kleiner Perkins, to issue the $200 million challenge to "...businesses, entrepreneurs, innovators and students to share their best ideas and come together to take on one of the world’s toughest challenges — building the next-generation power grid to meet the needs of the 21st century." 

It sounds almost philanthropic, and it is to a degree. But GE CEO Jeffrey Immelt is not attempting to hide the financial windfall expected to come GE's way if a networked smart grid were to be implemented in the U.S. Even with the recession, the smart grid sector is expected to grow 25-30 percent annually. Compare that to the renewable energy sector, which is likely to see double-digit growth but nothing close to 20 percent.

The reason? Big renewables — like concentrating solar frams and wind farms — will not really scale until there is a grid to which these these new energy products can be sold. This, according to a Huffington Post interview with Immelt, who explains the reasons behind the Ecomagination Challenge.

The entries are likely to be on the wonky and impenetrable side, but it will be interesting to see who emerges as the reigning king/queen of grid innovation during the next few months.

Two more announcements by GE:

GE announces $200M smart grid challenge
GE Ecomagination contest hopes to solicit the smartest solutions for a much-needed quantum leap in electrical grid technology.