Back in my long-ago engineering days, we were once shown a massive motor in a lab. It could, we were told, drive all sorts of experiments in the lab. Noticing a switch and a bright warning panel on the side, we asked the bored electrical engineering professor: “What does this switch do?”

It causes the motor to flip over to gas supply, he said, and then it generates electricity.

Generates? Electricity? What? Really?

Of course, he said. And if you leave it connected to the wall it will put that power back onto the grid, rather than just into the lab. And that, he warned, is a bad idea. It could cause a phase shift in the existing AC supply, not to mention being hazardous to anyone doing work on the main electrical supply.

I know I missed most of the warning part, because this was a revelation for me. You could do what? You could send power back onto the grid … from this device … just by flipping a switch and making a connection? Who knew? Why had no-one ever told me that the power grid was bidirectional? I mean, I knew that power was generated and put onto the grid, but I had somehow imagined, until then, that it was a one-way flow, that outlets didn’t let current in again.

Unsurprisingly, perhaps, we wasted no time in coming back to lab that evening to stare at this dynamo. It seemed impossible, but it could put power on the grid. There was no stopping us: We made the connection, flipped the switch, and turned it on, and whrrr, whmmm, uhhhhhhhhhhhhhh … We were making power!

The exhilaration lasted about ten seconds before we went into full panic. What are we thinking! This is the power company! They know when you do things like this! They’re going to be here in minutes! Turn the damn thing off! As a friend said later, it was like the episode of WKRP in Cincinatti when Johnny Fever busts a phone and then panics and runs when he hears sirens, thinking the “phone cops” are coming. We figured it was only seconds until the “power cops” stormed through the door. Off! Off!

[youtube=http://www.youtube.com/watch?v=cTPzTG1Lx60]

No power cops came. And we never really talked about it again.

But I never forgot the experience. It always rankled that while the power grid was bidirectional by design, there was this wink-wink, nudge-nudge thing wherein we all had to pretend it wasn’t, that you couldn’t really just attach anything to grid and send electricity as straightforwardly as you received it. But I had done it. I had Made Power. Yes, yes, I know, the power grid isn’t something to be toyed with — electricity is dangerous stuff, especially for hackers just messing about.

Then again, the similarities with other grids kept coming back to me, especially the public Internet. For the longest time it felt similarly hierarchical, with it not obvious that you could be a content creator as readily as a content consumer. Plug a website into the web and just like that you’re the peer, in some sense, of CNN, nytimes.com, or whomever, just another provider of bidirectional bits.

Why, I often wondered, can’t the electrical grid work that way? Why can’t we, within reason, plug more things in at the edge, whether it’s startup power providers, or some nutty thing I’m hacking with, and just, you know, have electrical things continue to happen. Why, in other words, can’t we treat the grid as a platform for innovation in much the same way that the public Internet is?

I think we can, at least much more so than we do today. I think we can come up with much clearer and more democratic standards and protocols for interconnection. I think we can begin to separate electrical transport from electrical provisioning, and, in doing so, un-stick innovation that is currently cemented solidly in place.

I made these points, and more, this week at the ARPA-e meeting in Phoenix, Arizona, while telling my engineering lab story. It reflects my views, as well as those of my colleagues at the Kauffman Foundation where we are trying to help drive conversations around grid standards, interconnection, and, yes, innovation. As I said at ARPA-e, when the grid is a safer place for engineering students to mess about without fear of the power cops showing up in their lab we will have made a giant step into the entrepreneurial energy future.

Paul Kedrosky is Senior Fellow at the Kauffman Foundation, where he is focused on entrepreneurship, innovation, and the future of risk capital. In his spare time he is a dangerous Twitterer, analyst for CNBC television, and the editor of the Infectious Greed blog.