14 Jul 11 Smart Grid – A hacker’s playground

No other industry has adopted a new technology with as much gusto as the utilities industry when it embraced the ‘Smart Grid’ network. It is easily the most disruptive technology to hit the market since the upgrade of utilities’ legacy systems way back in the 1980s. The Smart Grid is a digital, two-way electricity distribution network that can intelligently integrate the behavior and actions of all users connected to it to efficiently deliver sustainable, economic and secure electricity supplies. Energy data is collected from each meter and sent back to the utility, where customer information systems and analytics software process it to calculate consumption patterns, demand response and load balancing. This processed information is then relayed back to help consumers efficiently manage energy usage.

 Today’s grid is in an ever-changing phase with dynamic patterns of system load, fluctuating transmission line performance and unpredictable demand. To counter this, leading utilities in North America and Europe started investing in smart grid infrastructure for networks in 2007 with encouragement from governments. Interest among electricity distributors in the APAC region is also growing.Some of the initiatives include:

  • Support for the smart grid became federal policy in the United States, with the passage of the Energy Independence and Security Act of 2007. This policy set out $100 million per fiscal year, from 2008-2012, to establish nationwide programs to build smart grid capabilities and modernize the entire distribution network. The American Recovery and Reinvestment Act of 2009 set aside an additional $11 billion for the creation of a smart grid throughout the country.
  • The European Union will invest $80 billion by 2020 to install more than 200 million smart meters across Europe as part of a plan to modernize the European electricity distribution network. This is in line with the EU’s vision to reduce greenhouse gas emissions and dependency on fossil fuels.

The benefits of the smart grid are that it:

  • Allows consumers to manage their energy usage
  • Provides consumers with information on energy supply
  • Reduces the environmental impact of the entire electricity supply system
  • Improves the level of system reliability, quality and security of supply

Since consumers’ participation is important, experts and consultants are discussing the need to educate them on the benefits of smart grid for their home energy usage consumption.

Data security – Critical aspect
The need for privacy in the smart grid starts from the data gathered at each smart meter which is transmitted along the network to the utility. Like any electronic transaction, there are potentially many data points which can be vulnerable to hacking. Issues may arise from the exploitation and usage of this data for commercial purposes. A security breach can result in the grid being stalled on a local or national level. Phishing attacks by malware have, in the past, used information from unsuspecting consumers to use or sell consumer information. In the case of the smart grid, these solutions can be used to extract home energy usage patterns. These patterns can then be sold to unauthorized users such as rival power companies and energy traders. With the rise in cyber warfare and cyber-crime, this will pose a huge problem for utilities worldwide.

Solutions to make it viable in the long-term
According to estimates utilities worldwide will have to spend $21 billion by 2015 to improve cyber-security for smart grid. The security spending will focus on equipment protection and management of data. Energy consultants and IT firms are working to devise security solutions for the grid. Utilities and smart meter manufacturers are working with data security firms to develop solutions to encrypt data and prevent breaches at every possible data device point and hub.

A significant amount will also be invested in securing distribution automation and next-generation smart meters. This will involve collaboration between governments, international regulatory bodies, utilities, equipment manufacturers, service providers and data security firms to ensure that energy data for consumers is not compromised.

Inputs by service providers will be crucial
Leading outsourcing service providers are building industry-specific solutions to help utilities in implementing smart grids. These include customer information systems, home energy management solutions, assistance in meeting government and international compliances, and procurement of secure meters and equipment from manufacturers. The service providers can also help in tackling security issues with grid security solutions to mitigate threats and counter physical and cyber threats. Accenture, Wipro and IBM are some of the companies that are already providing services in the segment. The smart grid market is expected to grow at a CAGR of over 20 percent over the next three years, which will create tremendous demand for outsourced services in this area, especially for data security solutions.

ValueNotes Research
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