Billions to be spent on smart-grid cybersecurity

Utilities to invest $21 billion over the next five years to protect the smart grid against everything from terrorist attacks to natural disasters, according to a Pike Research report.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
2 min read

Utility companies around the world will spend $21 billion by 2015 to improve cybersecurity for the world's electrical smart grid, according to a report released Thursday by Pike Research.

As the industry has increasingly built up smart grids to better control and regulate electrical power, the threat of cyberattacks has become a greater concern. Dangers ranging from terrorist attacks to hackers to accidents to natural disasters could cause substantial damage.

To better safeguard the grid, utilities will spend a total of $21 billion over the next five years. The business segment that services this market will likely see revenue grow to $3.7 billion annually by 2015, compared with $1.2 billion last year, according to the report.

"No utility wants to be the weak link in the chain," said Pike Research managing director Clint Wheelock in a statement. "The concern over grid vulnerability is driving utility technologists to work closely with systems integrators, infrastructure suppliers, and standards bodies to develop a robust framework for smart-grid cybersecurity across multiple domains."

Concerns have been raised for years about the vulnerability of electrical power facilities and systems. As utilities have modernized and moved their equipment and services to the smart grid, those concerns have intensified. Last year, cybersecurity for the smart grid hit the headlines as news surfaced that different groups had tried to hack past the security of the U.S. power grid.

According to an earlier Pike report, it is estimated that $200 billion will be invested overall in the smart grid by 2015.

But challenges remain. To improve communications, utilities have been deploying smart meters that use two-way networks, making them a more vulnerable target for hackers. Networks have also become more integrated, again increasing their vulnerability to a cyberattack.

With many companies involved in the smart grid, there's also a lack of interoperable standards for cybersecurity, noted Pike. To strengthen security, utilities and other players will need end-to-end security technologies that can work across different geographic areas. In response, the U.S. government has called upon the National Institute of Standards and Technology (NIST) to develop interoperable standards for smart-grid companies to adopt.

Over the next five years, security spending will probably be heaviest on equipment protection and management. But money will also need to be invested in better securing distribution automation and smart meters.