More data, more problems…and more opportunities.

At the 2011 ARPA-E Innovation Summit, attendees spoke of the immense challenges utilities will face in making the most of the data overload that will accompany the transition to a smarter grid.

“How do [utilities] deal with information flow that today is massive and tomorrow is going to be 10 times or 100 times or 1000 times [bigger]?” asked Matt Rogers, a McKinsey Director and former DOE Senior Advisor. 

“It is going to require new ways of processing data -- new algorithms, heuristics, pattern recognition [and] signature analysis -- that can take information and say this is what we need to do, not only today, but tomorrow, to make sure that we can always balance generation and load,” said Michael Howard, President of the Electric Power Research Institute.   

Utilities don’t need help tomorrow.  They need help yesterday, even if they are slow to realize the potential benefits.

“Most utilities have said that about 90% of their data, they throw away,” said Laura Ipsen, the General Manager of Connected Energy at Cisco. “More information is a huge opportunity for operational excellence and innovation and it is very challenging for utilities. [...] How do you harness that [data] both for operational benefits and transformation?”

“Utilities are getting far more data than they have ever had and are just beginning to think of how they might take advantage of that operationally,” said Paul Straub, a director at Claremont Creek Ventures. “For example, AMI [is] driving adoption of meter data management systems.  As [utilities] move to time-of-use billing, how do [they] take data from meter management systems and come up with interesting rate structures?”

“As an investor who comes from an IT background, it is exciting, because all of a sudden there are a lot of potential applications,” continued Straub.

For example, utilities will require assistance securing the new data streams.

“Security has to be built in, not bolted on as we get more and more information into our control rooms,” said Terry Boston, President and CEO of the PJM Interconnection. “An example is the phasor measurement units that are part of a DOE grant. We are going to be bringing in 10 to100 terabytes of data per second. We have to make sure that we have the security we need in these kinds of data transfer scenarios.”

Other, more creative applications may be necessary to enable delivery to customers of customized electricity portfolios.

“Today, we are building a system for a single level of reliability, and everybody enjoys the same level of service,” said Eugene Litvinov, Senior Director of Business Architecture & Technology at ISO New England.  In the future, “we are talking about having a quality of service for electricity because we have an AMI structure that allows two-way visibility [with] customers. Customer[s] could subscribe to different portfolios of electricity.”

However, the extent to which greentech startups -- as opposed to say, Cisco or IBM -- will be able to help utilities make the most of their data will depend on the utilities themselves.

“The more progressive utilities are very interested in the problem [of data management and analysis] and are looking into licensing software from startups to try and address it,” said Straub.  “Some utilities…are very interested in this problem but like to buy from known vendors, so if a startup wants to address the problem, it is best to find a partner.”

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Yoni Cohen is a JD-MBA student at the Yale Law School and the Wharton School of the University of Pennsylvania.  A former college basketball writer for Fox Sports, he tweets about greentech @Cohen_Yoni.