October 17, 2012
Utility companies have not fully come to terms with how to protect their customers that have mission critical operations from grid instability. Utilities have evolved in our digital age where various types of attacks are present whether it be general hackers, the dangerous volley of viruses out there with worms and botnet attacks, and lastly nation-state actors that have unlimited funding available to conduct espionage as they establish a covert presence on a sensitive network. Unfortunately, experts are saying that cyber fraud is anticipated to spread across the country as more utilities deploy smart grid technology.
In April there was a report showing the effects of a series of hacks aimed against so-called “smart meter” installations occurring over the past several years that cost a single U.S. electric utility hundreds of millions of dollars annually. The FBI stated in a cyber-intelligence bulletin obtained by KrebsOnSecurity, that this is the first known report of criminals compromising the hi-tech meters but the FBI also agrees that there is a rise in this type of fraud. Utility companies are reporting that more often now they have these types of discussions with their “large campus” or “mission critical” customers. What guidance are utility companies giving their customers on how to best protect themselves from such attacks?
Many are saying that it doesn’t happen and it is not something they have ever had to contend with but these instances are going unreported because there is no mandate stating instances be tracked However in late 2011, there was a publicized criminal conviction of a former security guard at a Dallas hospital for corrupting the hospital’s industrial control systems. That former security guard hacked the hospital computers and wound up shutting down the air conditioning system. In this incident, it was the air conditioning system, which isn’t typically cyber secured. For someone in the hospital experiencing hot weather in Dallas - sweltering conditions could have severe implications on a patient’s health. Cutting electrical power to the air conditioners in the ER certainly can have life threatening consequences.
Hospitals that must ensure the safety of their patients, museums that must preserve their collections, military installations that must be fully operational at all times, and even manufacturers that can’t afford to lose productivity - grapple with these challenges. Many corporations have begun to investigate solutions to protect themselves and they are starting to demand more from their utility companies - wanting higher comfort levels and assurances that reliable power is available to them on demand. At the same time, these critical power customers who manage their own infrastructure are exposed to internally and externally generated cyber and physical threats to the operational security of their power networks.
For instance, all of Tenet Healthcare Corporation’s Texas and Florida medical facilities, including Dallas, are being equipped with the packaged command and control systems from Blue Pillar to physically and cyber-secure Tenet’s on-site energy assets. FuelCell Energy Inc. believes the answer for utilities lies with distributed generation. Rather than build a costly transmission system to provide power to remote or congested areas, utility companies can use distributed generation to supply customers in those areas with a constant supply of power using stationary fuel cell power plants. Stationary fuel cells can be scaled to provide up to 50 megawatts (MW) or more of high-quality electric power while simultaneously generating negligible amounts of harmful emissions such as nitrogen oxides (NOx), sulfur oxides (SOx) and particulate matter
Industry analysts are anticipating that utility companies will look to innovative approaches to energy asset management as suitable solutions for multi-site owners of critical power infrastructures. For instance Summit Energy consultants manage more than $20 billion in annualized energy spend for more than 650 companies and thousands of facilities worldwide. Energy Gateway, an energy management services firm, saw quickly the new opportunities created by the convergence of two mega-trends: B2B e-commerce and electricity deregulation and the need to take the complexity out of energy management. This trend is opening up lots of opportunities and currently there is a collaborative approach shaping how utilities may work with technologies companies in the future. For instance, Kevin Kushman, Blue Pillar CEO says, “we welcome the opportunity to partner with utilities that are actively pursuing the enablement of customer premise energy assets as a means to efficiently balance their service territory supply and demand equation. We believe insight into dense load customers is important for utilities, in deed that “managing the node” will become the highest-return function of the smart grid.”
The U.S. energy sector has never fully recovered from the well-publicized debacles of several years ago, when the state of California was racked by power shortages after corrupt energy traders such as Enron Corp. manipulated the markets. Much of the energy business has come unmoored in the deluge of deregulation and today electric utilities are grappling with the usual array of problems that include meeting growth in demand while also minimizing environmental impact, keeping rates competitive, and protecting workers in occupations that can be inherently dangerous. And what seems to be top of mind among utilities is how to ensure that grids remain stable while around them instability becomes more and more common.
Federal Energy Regulatory Commission (FERC) encouraged the sale of transmission lines to independent companies, which many U.S. utilities have done in the past two decades. FERC's agenda is to foster competition in the transmission of electricity, but the many utility commissions report that they care mainly about price and reliability, and are not convinced that unbundling transmission from generation will help the FERC’s objectives. Rather DR seems to have more market growth drivers in providing a competitive edge among utilities and for businesses.
There are a number of significant DR market growth drivers. Pike Research forecasts that the DR market, which is driven by the growing demand for electricity and increasing energy costs, will expand to comprise 62,500 MW under management by 2015. Asset management technology providers (AMTP) and energy service companies (ESCOs) are well positioned to penetrate vertical markets including the larger, more predictable loads in the commercial market.
ESCOs are naturally attracted to DR because it is an energy efficiency measure they can provide in their turnkey building efficiency plan. The realization of the commercial DR market potential will be driven by economies of scale, which will make larger projects more attractive. Pike Research notes that ultimately DR will be seen as an application or a portion of a service portfolio offering. Long term, this application-oriented approach will make DR less of a standalone business, and more comprised as part of an energy service companies' end-to-end energy efficiency solution.