On August 14 2003, a major blackout hit Northeast America, causing more than 40 million people in eight states and 10 million people in Canada to lose power for up to several days.

The cause was traced to a software bug in an alarm system in Ohio, which failed to reroute power from an overloaded power line. The wire overheated and sagged down onto a tree near Cleveland, which tripped a circuit and caused power to be rerouted to another line, which overloaded and brushed against another tree, setting off a cascade of failures that resulted in one of the most widespread blackouts in history.

More than a decade later, our electrical grid is still vulnerable to some of these failures. But new data monitoring tools have the potential to transform the grid by providing real-time feedback from the system, solving problems caused by weather and congestion, and helping incorporate renewable energy sources and smarthome technology.

Insights from GE Natural disasters can devastate cities, but the Industrial Internet can cut down on power outages through self-healing smart grids. While 500,000 customers lost power during Hurricane Irene, nearly half of them had their lights back on within an hour thanks to GE's grid visibility. Learn how GE is keeping the lights on »

This is the concept of the smart grid — a connected system of sensors, secure two-way communications, and analytics.

"Mining the data becomes the real gold in the next decade and beyond," Massoud Amin, a senior member of the Institute of Electrical and Electronics Engineers, told Business Insider.



But this smart infrastructure poses new challenges, such as dealing with this deluge of data, keeping it secure from hackers, and getting politicians to fund new innovations.

A self-healing smart grid

A smartgrid can be thought of as self-healing, like the human body, Amin said. It has the ability to sense and quickly correct problems. "When a major storm comes, it's localizing damage to only the areas that have been hurt, not [letting] it spread," he said.

Toronto skyline during the 2003 Northeast blackout Camerafiend/Wikimedia Commons GTM Research, a firm that monitors trends in the electricity industry, valued the global utility data analytics market at a cumulative $20 billion between 2013 and 2020, growing from $1.1 billion in 2012 to nearly $4 billion by the end of the decade.

The investments include sensors that can identify vulnerabilities in the grid and send feedback to utility companies. For example, phasor measurement units, or syncophasors, measure the electrical activity of multiple parts of a grid simultaneously. The US has installed more than 1,000 of these sensors across the country, funded by the Recovery Act Smart Grid Investments.



During Hurricane Sandy in 2012, having PMUs installed throughout the eastern US reduced the storm's impact, Amin said. The physical damage was done, but sensors prevented the damage from spreading to other areas, causing cascading failures, like those in the 2003 Northeast blackout.

That blackout would not have not happened if we had this kind of infrastructure, Amin said. A substation in Central Ohio started having voltage fluctuations on a Monday, and the blackout occured that Thursday. "If we had local intelligence and a smarter grid, [the fluctuations] would have been detected and stopped long before that, which could have reduced the impact to a local region," he said. "We're not only smarter, but also stronger."

In 2007, Congress passed the Energy Independence and Security Act of 2007, which laid out a policy for establishing a smart grid in the US. These efforts were expanded by the Obama administration.

Less theft, more clean energy

Smart grid technology can also help utilities crack down on energy theft, which costs them millions of dollars every year. The world loses $89.3 billion annually to electricity theft, according to the annual Emerging Markets Smart Grid: Outlook 2015 study by the Northeast Group, LLC.

A view of houses with solar panels in the Mililani neighbourhood on the island of Oahu in Mililani, Hawaii, December 15, 2013. A new rule went into effect in September that requires homeowners on Oahu - Hawaii's most populous island - to get the utility's approval before installing photovoltaic rooftop solar systems. In areas like Mililani, the utility's power circuits have reached a threshold where it would be dangerous to add PV systems without investing in upgrades to the distribution system. Picture taken December 15, 2013. REUTERS/Hugh Gentry In addition to monitoring the grid in realtime and reducing energy theft, the smart grid also helps utilities know when to rely on renewable energy, which accounted for 13% of US electricity in 2014. It enables two-way communication that allows utility companies to adjust how much energy they sell to or buy from customers using solar panels or electric cars, for example.

The smartgrid will also be able to integrate with smart home or smart building technology.

But with these advantages come some challenges.

A 'data tsunami'

For one thing, most utilities have more data than they know what to do with.

As of 2009, US utilities had 194 Petabytes of stored data. By comparison, the entire digital collection of the Library of Congress is just 3 petabytes.

"It's a data tsunami," Amin said, "but it's also an opportunity."

The question becomes, how much of that data do you store? And with all that stored data, security becomes very important. But as long as the smart grid is secure and the data are only kept for clear purposes, the system is actually more secure, Amin said.

The main barriers are not technical, but rather political and economic. And overcoming them is going to require a change of mindset.

For most utility companies, the number one goal is to keep the lights on. But we have to start thinking of utlities as powering opportunity and progress, Amin said.

"This is very different than what CEOs are used to. This is real-time, operational data," he said.