There are two types of technology stocks, those that provide a technological leap that makes life easier, and those that change the way we live and control our lives.

For example, improving the efficiency of photovoltaics or perfecting and distributing nanotech-based water filtration systems have substantial benefits but won’t translate into shifting the way we live our lives. On the other hand, the Internet, wireless communications and computing power have changed the way we interact, perceive and relate to the world.

Here, I’m going to give you a rundown of what promises to be one of biggest infrastructure undertakings put forward since the US grid was built about a century ago.

Its most accessible name is the Smart Grid, and it’s being built right now, a bit piecemeal and with a host players fighting for primacy, but this ship is sailing. It’s not a theoretical concept. Industries, from small software companies to major utilities, are spending tens of millions already. Governments–federal, state and local–are also committed to the Smart Grid. Check out the Energy Independence and Security Act of 2007. And that commitment is just the beginning.

As President-elect Obama gets his financial team in order, he’s already committing to an aggressive economic stimulus package that will have some major infrastructure spending involved in it. Because the fact is, a grid that was built to handle lighting, a radio, maybe an icebox and some minimal amount of electrical gadgetry is now tasked to run our cyclonic vacuums, blow dryers, computers, flat screen TVs, air conditioners and battery rechargers. And that says nothing about the power management systems required for plug-in electric vehicles as well as residential and commercial wind and solar power generation.

The grid is under serious strain, and if you remember the 2003 blackout in the entire Northeast US, you remember the panic, gridlock and frustration it engendered. There are four key principles that underpin the need for a modern, reliable and efficient grid: economy, security, environment and global competitiveness.

While an exploration of each of these is an important exercise, let’s simply take the most obvious from an investment standpoint, the grid and the economy.

Well, that 2003 blackout cost the US economy about USD6 billion. In 2000, a one-hour outage on the Chicago Board of Trade (one of the main Treasury trading floors in the world) resulted in USD20 trillion in delayed trades. Computer and software maker Sun Microsystems (NSDQ: JAVA) estimates that blackouts cost the company USD1 million for every minute they’re down.

From the utilities side, 30 to 40 percent of the plants built by utilities are only used 5 percent of the time. Outrageous as that may seem, in a centralized power distribution model these plants need to exist to provide peak power in hot summer months when the air conditioners are cranking.

Can you imagine? That would be like buying a house 30 to 40 percent larger than you need in case company shows up for Christmas. And then maintain, clean and sustain its operation all year, just in case. Absurd as that seems on a personal level, it’s also a very antiquated solution on the corporate level. The problem is, no one has applied a new lens to the challenge since centralized power was put in place. State and regulatory agencies were developed during the New Deal; from a policy and business side this real challenge has met with little action from anyone.

And the size of the US makes uniformity the most efficient solution to monumental challenges such as lighting the entire country. The problem is, what we needed from the grid even 20 years ago isn’t what we need now, and certainly not in another 20 years. And since the grid was put in place, it’s been patched and pieces have been upgraded, but it hasn’t had a thorough overhaul in its entire history.

In the past 30 years, most Western European nations have decentralized their grids and gone to distributed power systems. They’ve been able to do this through cooperative ventures between power providers and the national governments. Also, because most of these countries are relatively small land masses, and consume much less energy than we do per capita, it makes the task a bit less daunting than it would in the US.

On the other hand, China is building a decentralized distributive power system, and China is about the same size of the US in area. The difference is China is essentially building its national grid from scratch, because much of the rural areas are barely electrified even now.

That puts the US in a difficult quandary: It’s a big country with an extant but outmoded electrical grid.

And just like industry and regulators and policymakers, I’m not going to try to take on this whole thing at one time. This is a start to a very long conversation. Below I’ve broken down the current field into three categories:

1. The utilities that are already involved in Smart Grid work
2. The wire companies essential for the Smart Grid
3. The new companies re-thinking the old paradigm of power management

Some of the companies in the two latter groups aren’t even publicly traded–yet. But they need to be on your radar screen now. Since my penchant is for tech, I’m going to start with No. 3 and work up to No. 1.

GridPoint and Silver Springs Networks are two privately held companies that are making some significant headway in the Smart Grid metering and usage optimization sectors.

GridPoint was selected by Xcel Energy (NYSE: XEL) to build its USD100 million Smart Grid City. It just raised USD120 million and is looking for more acquisitions like its recent purchase of V2Green, a Seattle company that provides plug-in electric vehicle grid integration technology–including on-board vehicle communication devices–to enable utilities to “smart charge” electric vehicles anywhere within a service territory.

The company also has been working with Duke Energy (NYSE: DUK) on incorporating Smart Grid technology into equipment for plug-in electric vehicles. From the news release:

GridPoint Inc., a leading clean tech company whose smart grid platform benefits electric utilities, consumers and the environment, and Duke Energy announced positive results from what is believed to be the first commercial test of utility-controlled “smart charging” for plug-in hybrid electric vehicles (PHEVs).

Duke Energy engineers tested GridPoint’s smart charging capability by plugging a PHEV into a garage wall outlet controlled by the GridPoint SmartGrid Platform in the late afternoon. Duke began charging the vehicle at 10 p.m. and completed charging prior to the morning peak, leaving the car fully charged for the driver’s morning commute. GridPoint’s platform successfully controlled, measured and verified the charging of an electric vehicle parked in a residential garage.

Again, this is where developing a Smart Grid becomes absolutely essential. To be able to successfully deploy electric vehicles you have to have an electrical grid that supports charging them, whether through high voltage quick charge systems like portfolio holding AeroVironment (NSDQ: AVAV) specializes in, or a slow drip system like plugging in your mobile phone to a charger. The drain on the grid would be constant with various peak times and many surges around rush hour as people “fill up” for the commute from fast charge “service stations” or home units. AeroVironment is a buy up to USD35.

GridPoint’s systems also maximize decentralized distributed power by allowing residences and commercial structures that generate solar or wind power to upload that power onto a local grid that helps alleviate strain on the centralized system and acts as a way to protect the entire grid from blackouts or brownouts from surges. If you’ve been to Germany or Spain recently, this is the kind of system employed in many locations where localities to keep power at home when possible and create less of a drain off the central system. That’s a tougher proposition with the current US grid system.

Silver Springs Networks takes GridPoint’s system one further by working on the advanced metering infrastructure (AMI) and automated meter reading (AMR) with devices that allow consumers to get real time information on how they’re using electricity so they can make better choices about how they consume electricity. The company makes chip sets and software that allows the consumer and the power provider much more transparency about power consumption and distribution and does it on a system built on Internet protocols (IP).

Legendary tech venture capital firm Keiner Perkins has ponied up USD75 million in financing, and Silver Spring has already inked a deal for 100,000 of its Intelligent Endpoints for Florida Power and Light, the largest IP-based AMI system in the nation.

Itron (NSDQ: ITRI) is leading metering company that will play a significant part in the Smart Grid. The stock has been pummeled in the market meltdown, but it’s seeing some life now that a major infrastructure package is the core of the new administration’s economic stimulus package. Buy Itron up to USD50.

Another piece to the Smart Grid is the next generation of wires that carry power. New highly efficient superconducting wires or similar technologies can carry three to five times more energy than traditional copper cables in the same space with virtually no power loss. That means the power generated is the power received, which isn’t the case today by a long shot.

If we increased the efficiency of the grid by merely 5 percent it would be the equivalent of taking the greenhouse gases from 58 million cars out of the atmosphere. It also means utilities wouldn’t have to site, build, maintain and operate new power plants to keep up with demand at the pace they do today.

Privately held BPL Global is making great strides in this sector and has some major Middle East money behind it as well as major players like Siemens and Morgan Stanley. It’s also partnered with Xcel Energy to create the Smart Substation project that will support improved reliability, lower maintenance costs as well as better employee safety and extended transformer life. Keep an eye on this one.

The other company in this space worth watching is Portfolio holding American Superconductor (NSDQ: AMSC), the world leader in superconducting wires. The stock came out of the portfolio in the last market bloodbath, having fallen 50-plus percent from its initial recommended price. But the company has a great pilot program in New York developing its Secure Super Grids, which is a priority for Homeland Security under the EISA Act. The company also has a growing reputation in wind turbines and support systems for wind farms. American Superconductor is a great long-term buy at current depressed prices.

On the top of this Smart Grid food chain are the visionary utilities that are already spending their own cash to adapt to the inevitable changes in the power industry and its distribution network. And the two that are worth your time right now have already been mentioned in this article because they’re actively engaged with these cutting edge technology companies as I write.

Duke Energy has one of the most forward thinking CEOs in the US power business. And with its traditional rock-solid customer base, it will surely be a poster child for the new thinking that will be expected of all US utilities in years to come. Duke Energy is a buy up to USD17.

Xcel Energy serves the heartland, from Canada to Mexico. And its Colorado subsidiary will certainly benefit from Xcel’s alternative energy initiatives; Colorado has some of the most lucrative incentives to developing and deploying alternative energy technologies. The company’s forward thinking management is evidenced in its involvement with major Smart Grid players when it would be more “prudent” to hunker down. Xcel is a buy up to USD20.