In the past year, the grid has seen some remarkable highs, while also being tested to meet the basic needs of society.

On one hand, big advances have flourished, fundamentally changing the way we power our lives. Roof-mounted solar panels have gone from a costly oddity to a competitive selling point for many homes. Battery-powered vehicles have gained traction – once a car-show phenomenon, plug-in cars are now a fast growing segment. On the other hand, the idea of progress has been challenged by a slew of weather woes that have shaken consumer confidence in our energy infrastructure. A series of intense storms, heat waves, and drought combined to make 2012 one of the toughest years globally for the grid in many years.

So what will 2013 bring? This year’s extremes all point in the same direction: towards the growth of the smart grid. A new stage is opening – where the public was once ambivalent about the smart grid, consumers are now starting to demand these improvements, spurred by the need to improve reliability, participation and the resiliency to recover from large scale grid events.

This shift has been years in the making, starting in 2009 when the U.S. invested in adding intelligence to the electrical system. Going into the New Year, pressure to rebuild the northeast’s grid with more resilience will further boost trends that point towards investment in these smart technologies to continue to expand by more than 10 percent per year over the next five years.

And while efforts to date have focused on improving the grid’s heavy-duty backbone, a look ahead suggests that coming smart grid efforts will reach more directly into everyday life. Here’s what’s in store for 2013:

Renewables and Smart Grid will reinforce the growth of one another. It’s no secret the costs of wind power and solar systems are falling fast. Per unit of capacity, today’s solar systems are a third of the price from a decade ago. Less well known is that a portion of the decline comes from falling “soft” costs, such as the price to install, inspect, connect and operate the PV panels.

More intelligent interconnection with the grid, using new smart meters, makes it easier not just to install these systems, but to track and manage their output, as well as the savings they deliver to your energy bill. There’s plenty of room for more savings, too. A recent study of solar prices in Germany suggests that streamlining these soft costs could reduce prices for PV systems in the US by half again.

Just as the smart grid is helping to spur solar, the benefits are reciprocal. Solar panels reach their maximum output on hot, sunny days when demand for air conditioning can sometimes overwhelm the supply of power. Utilities are finding that the addition of solar capacity can help provide a critical buffer of extra supply, reducing the risk of blackouts. Additionally, plug-in electric vehicles can be recharged synchronously with the availability of renewables like solar and wind, which may have excess energy in off peak hours.

Watch for solar to continue to grow, as prices to keeping falling, while utilities push ahead with grid modernization efforts to make the most of new renewable resources.

Distributed generation will go mainstream. Another reason for the growth in solar is its promise to generate power even when weather events take down the traditional grid. Yet, having solar panels alone doesn’t guarantee they’ll operate during blackouts-in some areas, grid rules require that solar panels shut down during black outs. To keep homes lit up, solar panels must be paired with intelligent meters under grid rules amended to permit the home or business to island “behind” the meter, even when the wider grid is down.

Extreme weather events have revealed other weak links in our energy infrastructure too, for example, without electric power, gas stations cannot pump the fuel they have on hand. There are easy solutions to this problem that the smart grid can help deliver. For example, stations outfitted with batteries, backup generators and/or canopied with solar panels are able to keep pumping, and lessen the stress on communities during power failures.

Watch for more homeowners and companies to invest in distributed generation technologies, including gas-powered alternative in geographies benefiting from abundant new natural gas resources. At the same time, regulators will face pressure to modify rules that make it easier for grids to handle two-way power flows, and for customers to generate power independently.

Social networks will cement their status as power restoration and crisis communication tools. Utilities are learning to take advantage of the expansion of social networks, such as Facebook and Twitter. During many of this year’s grid-damaging weather events, Twitter feeds from utilities often proved to be the most up-to-date sources of information to monitor storm impacts. In the aftermath, utilities’ Facebook pages regularly became a sort of virtual village square where restoration efforts are publicized, and where the public can post problems or share thanks.

To make the most of efforts to communicate via social networks, utilities will need to improve the sophistication of integrating smart meters as outage sensors and the related data systems to communicate with customers. In an era driven by social media, it’s now important they also track customers’ opinions and concerns online, using them to speed up response time to customer requests that come in through these non-traditional channels.

Watch for energy companies to formalize these efforts combining advanced metering with smarter customer services data systems, as they recognize that keeping the public apprised of grid developments, repairs and outages is no longer a nicety, but a necessity.

Smarter analytics will be necessary to deliver these new services. As grid enhancements mature and multiply, each is demanding more computational horsepower to handle the big, new flows of data they generate. Utilities are already working to develop advanced analytics to orchestrate the complex operation of their grids, repair crews and customer communications in near real time.

Let’s say a storm is inbound. Analytics can enable the utility to model risk of wind and flood damage in key areas, giving the utility a head start to pre-position repair crews. With customer relationship systems, the utility can be proactive, notifying at risk customers in advance, via texts, tweets, or voicemails. And if bad weather does knock out power, smart meters can signal the utility precisely which houses are affected, and notify customers of the initial outage, as well as keep them informed of ongoing restoration work.

Watch for utilities to double down on the resources to optimize their operations through smarter information processing and management.

These advances are primed to take off in the coming year, thanks to a combination of growing public demand, rising regulatory urgency, and ready-today technology. IBM Smarter Energy is helping to spur this transformation by optimizing grid management and preventing blackouts, by streamlining the ways customers interact with utilities, and by applying data analytics to help speed recovery and to predict where extreme weather will hit the grid hardest.

Every New Year brings with it wishes for prosperity and security. The smart grid is poised to deliver that and more in 2013.

Brad Gammons is General Manager, IBM Global Energy and Utilities Industry.