Smart grid security measures – How worried should we be?… and other outsourcing insights

If you ask any energy & utilities (E&U) industry expert on the most transformational technology to hit the industry in the past five years, the resonating answer would be the smart grid. Companies and policy-makers are working round the clock to roll-out this technology on a global scale. Benefits of the smart gird are aplenty, the most important being the information extracted from each meter providing valuable insights on domestic and commercial energy consumption patterns. A long-term analysis of this data will help save power and reduce energy loads for consumers and industries alike. However, over the past couple of years, a less unsavory aspect of the grid has emerged – potential gaps in the grid for commercial hacking of the grid to disrupt the grid and steal personal information.

Our recently released report on outsourcing in the utilities space predicted a “data deluge” of sorts with the amount of information generated from smart meters attached to every home. All this information will be sent along the grid to the utility for analysis and billing purposes. To prevent misuse of this data, utilities service providers, meter/grid component manufacturers and the utility companies are collaborating with regulators such as the US Federal Energy Regulatory Commission (FERC) and UK’s Ofgem to address security concerns and strengthen the smart grid itself through more effective security solutions.

From the consumer’s point of view, security means that the data collected from each home does not get leaked or hacked along the way and the only destination is the utility. This data has to traverse through multiple data nodes on its journey from home to the utility, thus posing many points for potential hacking. Industry experts and outsourcing solution providers are working hard to increase levels of security and improve privacy control standards as the roll-out is happening on a global scale. A recent news item pointed to the fact that a European engineering firm detected minor attacks targeting grids in the region and some others may actually have gone undetected.

What can we expect in the future for the industry and outsourcing in this space? We believe that cyber-security threats will increase, which will act as a driver for more investment and research focusing on reliability and threat assessment solutions. Smart meter usage will start to peak in 2012, resulting in a huge demand for analytics solutions from the industry.

- Sameer Murdeshwar, Analyst, ValueNotes Sourcing Practice

Last 5 posts by Sameer