Great and thoughtful response. While I am confused as to what you mean by “false conflation,” I do agree that the Center for American Progress’s report engages in a degree of conflation- out of necessity.

“The smart grid will do to energy prices what the internet did to the price of information”
-Al Gore, NCEP

“The price of energy will double in the next decade.”
-Joe Romm, http://www.climateprogress.org

This is absolutely necessary if Obama wishes to pursue his aggressive agenda for climate change. There will be a carbon market, this market will increase energy prices, American families will bear the brunt of those prices. The purpose of the smart grid is to alleviate the effect of the price on the American people.

Yes, transmission and the smart grid are not the same thing, however they are very similar and rely on the same infrastructure. It would be a waste to not meet these two challenges at the same time.

As you have explained, the smart grid is primarily a retail and distribution level value phenomena, not a wholesale and high-voltage transmission project. Yes, a smart grid and good prices will shave some consumer demand off the peak, and that will affect wholesale markets and transmission, but that isn’t the main source of value from the smart grid.

On the smart grid+renewable intersection, I see three connections:

*Better retail pricing made possible by advanced metering infrastructure will make better use of non-dispatchable generation like wind and solar. To the extent high levels of wind power output are pushing wholesale prices down, consumer response to the prices can make better use of the supply. Ramteen Sioshansi and Walter Short have a paper out in which they estimate the possible effects for ERCOT.

*A renewable power enthusiast with a houseful of smart grid appliances could tie at least some of his power consumption to the current availability of wind power, for example. Maybe the washer and dryer don’t run if wind power is less than 10 percent of the area’s current power output. (Which is to say, rather than just responding to lower prices, as in the above example, a consumer could respond to the current generation mix.)

*And, as you mentioned, smart grid communications between consumer and distribution company will help support integration of distributed renewables.