SAN FRANCISCO, CA — General Electric and four venture capital partners are offering $200 million to back the best ideas for technology that will speed transformation of the electricity grid into a digital energy network that is smarter, cleaner and more efficient.

GE Chairman and CEO Jeff Immelt and the venture capital firms Emerald Technology Ventures, Foundation Capital, Kleiner Perkins Caufield & Byers and RockPort Capital announced the "GE Ecomagination Challenge: Powering the Grid" today at gathering of about 200 industry thought leaders, customers and members of the media.

GE, which is putting up half the capital for the challenge fund, also took the opportunity to introduce two new smart grid compatible products -- a sleek charging station for electric vehicles and a device to help homeowners manage energy use.

"We believe the digital energy space is going to move fast and big -- we think this is really the key to the future," Immelt said before detailing the challenge fund, which he described as a "call to action and a call for innovation."

Immelt pointed to his company's long history as well as the success of its 5-year-old ecomagination line of 90-plus products -- ranging from household appliances to jet engines, locomotives and turbines -- that deliver high performance and energy efficiency while enabling their users to cut their greenhouse gas emissions. "We want to be known as a company that innovates, but we can't invent everything," he said.

With the Ecomagination Challenge, the largest innovation fund of its kind, GE and its VC partners in the effort seek to "jumpstart new ideas and deploy them on a scale that will modernize the electrical grid around the world," Immelt said.

The challenge works this way:

Companies and individuals have until September 30 to submit proposals for new, original technology that can be applied to creating, connecting or using power. The entry categories are titled:

• Create - Renewable Energy
• Connect - Grid Efficiency
• Use - Eco Homes/Eco Buildings

Participants must be at least 18 years old to enter the challenge. The best proposals will be selected for investment and development of a commercial relationship with GE, and cash awards of $100,000 each will go to the five most innovative and entrepreneurial proposals.

GE and the VC firms will review the entries for investment potential. A committee of industry experts, including Wired magazine Editor-in-Chief Chris Anderson who helped develop the challenge, will also provide input on candidates for possible commercial relationships and select winners of the cash prizes.

While GE has the ultimate say on the outcome, the firm and its challenge fund partners are taking a cue from popular reality TV talent shows and inviting the public to vote on the proposals by logging onto the challenge site at www.ecomagination.com/challenge and clicking on their favorites. The entry with the most user-submitted votes will receive a cash award of $50,000, subject to GE's review.

In late October, GE plans to announce the candidates chosen or commercial relationships with the firm, and in November the company plans to announce any deals that become official.

"I think we'll be shocked about the number of ideas we'll get and where they come from," Ray Lane, managing partner of KPCB, in a media roundtable following the presentation.

Next Page: Hints for challengers and GE's new smart grid products.