Companies and governments are investing heavily to digitize much of the world’s power grid with sensors. The worldwide spending estimates range up to $2 trillion over the next decade for everything from so-called smart meters and thermostats in homes to sensors on transformers and power lines. But if power-curbing and cost-saving sense is to be made of all the data flowing from those sensors, something more is needed — intelligent software.

The new Siebel Energy Institute is dedicated to helping address the smart-grid software challenge. The institute, which combines philanthropy and university research, announced its first round of grants on Tuesday. The grants are intended to hasten the development of algorithms and machine learning tools to improve the efficiency, safety and security of the emerging digital energy networks.

The money comes from the software entrepreneur Thomas M. Siebel, founder of the customer relationship management software company that bore his name and was sold to Oracle in late 2005 for nearly $6 billion. His family foundation, the Thomas and Stacey Siebel Foundation, is known for its targeted funding for an eclectic range of projects, including grants of $35,000 to 85 graduate students in science and business each year as well as a program to combat methamphetamine addiction.

“We kind of look for interesting problems where we can have an impact,” Mr. Siebel explained.

The energy institute is a tightly focused effort in a large field. It is being set up with a modest sum of $10 million, and the initial 24 grants come in two sizes, $50,000 and $25,000. The recipients are working on software for predicting equipment failures, harnessing smartphones as monitoring sensors, modeling security risks in power grids and other projects.

“What we’re trying to do is accelerate things as we build out this cyberphysical system,” Mr. Siebel said. “This is Big Data meets the Internet of Things in the energy infrastructure, a field that is in its infancy but is going to change the world.”

The institute’s strategy, he said, is that its smaller grants will help nurture innovative research efforts that then go on to get major funding from government agencies like the Department of Energy and the National Science Foundation.

The new institute’s director, S. Shankar Sastry, the dean of the college of engineering at the University of California, Berkeley, said the seed funding was to advance policy, as well as science. “We’re taking our physical infrastructure of energy and putting a cyberheart in it,” Mr. Sastry said. “And we need to rethink what this instrumenting of the world — all that data being generated and collected — means for privacy and how all this data is used.”

Mr. Sastry, a former director of the office of information technology at the Defense Advanced Research Projects Agency, said those issues would need “to be debated widely” before the technology was commercially mature. “We shouldn’t just leave this to the companies — General Electric, Google, Nest, Siemens and the rest,” he added.

The institute is a collaboration with seven research universities, in addition to Berkeley: Carnegie Mellon University, École Polytechnique, the Massachusetts Institute of Technology, the Polytechnic University of Turin, Princeton University, the University of Illinois at Urbana-Champaign and the University of Tokyo. Later rounds of grants, Mr. Siebel said, are likely to involve other universities as well.