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QUESTIONS AND ANSWERS
The words “security of supply” or “energy security” linger on lips across the energy and decarbonisation sector. They echo around the corridors of power as policies and actions to maintain a reliable and low-carbon power market are increasingly a vote-winner.
Yet, whichever way you look at energy security, difficult questions are raised: How can we ensure the lights stay on? How do we physically secure our low-carbon generators, grids, power markets and buildings? How do we avoid or shield ourselves against the weaponisation of energy infrastructure (page 40)? How do we secure our supply chains (page 14) so the tools to decarbonise remain at our disposal?
The past few years have thrust energy security into the spotlight on a scale seen very few times in history, if ever. The complex backdrop of tragic human conflict and catastrophic weather events is forcing lawmakers to face the issue of security of supply today. It’s impossible to fully explore the questions before action is necessary. Many of the articles in these pages of our latest special issue use the Ukrainian conflict as a microcosm for the global debate over the security of supply.
Beyond the more blatant, headline-making threats to energy security—those of war and hurricanes—other events can damage energy security: floods, hail storms, extreme heat. Developers, utilities and even insurance companies (page 66) are working on making renewable energy more resilient to these threats (page 22).
The energy transition would be practically impossible without the 21st-century digital revolution. But this carries threats. With a stable Wi-Fi connection, malicious actors—state-sponsored and otherwise— can access building controls (page 32), servers with personal data and even wind turbines (page 58).
However, for every complex issue the energy transition creates, there are a greater number of equally-complex solutions.
As the name suggests, distributed renewables generation (page 50), such as wind and solar, are much more dispersed. Taking out one turbine or one array will have less of an impact on supply when compared to a thermal generation project being damaged. Increasing renewables capacity also means countries can take ownership of where their power comes from.
Greater cross-border interconnectivity and synchronisation (page 6) provide grid stability and flexibility—there is safety in numbers. And the digital age offers artificial intelligence to spot anomalies, automate processes and form protective barriers.
In our 19th issue of FORESIGHT magazine, we want to tell the story of how energy security needs to be addressed now. And that by implementing some of the solutions to these energy risks, we can also accelerate the energy transition to a decarbonised economy.
Any action taken now needs to have at least one eye on its impact on the future decarbonised energy system.
David Weston EDITOR-IN-CHIEF
SECURITY
THROUGH SYNCHRONISATION
Russia’s invasion of Ukraine has sparked vital changes in Europe’s electricity networks, breaking the previous cycle of inaction
PAGE 6
RISKS AND REWARDS COLOUR CHINA’S ROLE IN THE TRANSITION
China is vital to the decarbonisation of energy systems, and its ongoing role will be crucial
PAGE 14
MAKING RENEWABLES RESILIENT
The renewable energy sector must adapt to the new normal of hail, floods, and extreme heat
PAGE 22
HOME INVASION
Vulnerabilities surround us
PAGE 30
SMART BUILDINGS ARE ON THE RISE. SO ARE CYBERATTACKS
Data-driven smart buildings reduce energy consumption. However, digitalisation also heightens the risk of cyber threats
PAGE 32
BORDER PROTECTION
Cross-border infrastructure faces innumerable risks but is crucial for a resilient energy transition
PAGE 40
ARMADA
While distributed renewable energy sources present challenges for system operators, they enhance flexibility and security against adversity
PAGE 50
THE GROWING THREAT OF CYBERSECURITY
Cybersecurity is emerging as a major risk to energy infrastructure and renewable projects. Proactive measures are essential to protect these vital initiatives
PAGE 58
INSURING THE TRANSITION
The insurance sector wants to help secure the energy transition
PAGE 66
Meet the entire wind industry in Copenhagen in 2025!
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SYNCHRONISA SECURITY THROUGH
Homeland security Ukraine has focused on improving its energy security in response to Russian aggression
TEXT SAM MORGAN
Geopolitics and energy policy are inextricably linked. Russia’s invasion of Ukraine has triggered action where previously there was only inertia, as recent developments in Europe’s electricity networks demonstrate
TION
iscussions about energy security often revolve around molecules rather than electrons. But as a handful of countries on the frontline of Russia’s aggression are showing, there are also some concerns around electricity grids. When the Kremlin launched its invasion of Ukraine in February 2022, it became immediately clear that Russian President Vladimir Putin would readily use energy as a weapon to gain a tactical advantage.
In June of that same year, Russia’s former leader, Dmitry Medvedev, said that Europeans would be “freezing in their homes” after governments decided to back Ukraine against the invading power. “The cold is coming soon,” he added, in what was a clear threat, given Europe’s reliance on Russian gas imports for household heating.
Two months later, Russia halted gas shipments through the Nord Stream 1 pipeline, ostensibly to carry out repairs. This caused gas prices in Europe to spike, but thankfully its political leaders had at that time managed to replace nearly 80% of Russian pipeline gas with alternative supplies.
Putin’s decision to invade has dramatically and perhaps irrevocably reduced Russia’s role in Europe’s energy markets. In 2021, 45% of the European Union’s gas imports came from Russia. Last year, it was just 15% and work is continuing to slash that figure to zero.
POWER GAMES
The writing is very much on the wall. Russia’s influence on all things energy is on the wane. A handful of countries in Europe’s east inherited electricity networks that were built during the Soviet Union period and have remained reliant on Russia for grid balancing and other network services.
When the Ukraine invasion was launched, limiting Russia’s potential to influence electricity flows was a top priority and Europe’s transmission system operators quickly leapt into action and triggered an emergency synchronisation of both Ukraine and Moldova’s grids with continental Europe’s.
Synchronisation involves maintaining the grid at 50 hertz by balancing energy supply and demand within the covered area. This preserves grid stability and prevents power failures and outages. Connections are normally made using alternating current cables. Plans had been in motion since 2017 to synchronise those grids with Europe’s but both Ukraine and Moldova still had to implement a number of reforms and improve transmission infrastructure before the link could be established.
A fault with either the Ukrainian or Moldovan system could have had significant consequences for the rest of the connected European grid, so caution was very much the priority for regulators.
PRACTISE CAUTION
In late 2021, new studies identified a number of risks that still needed to be addressed, so 2023 was estimated as the best possible date for project completion. But in the end, what was predicted to take at least an additional 12 months was actually completed within just three weeks, thanks to the impact of the Russian invasion.
Moldovan energy minister Victor Parlicov called it the most important moment for his country’s energy sector and its energy security, while State Secretary for Decarbonisation Carolina
Over-exposed Moldova is considered one of the most energy insecure countries but is making moves to bolster its security
Novac says it was “history in the making” and a “paramount change”.
“After all the political pressure, it was fantastic to see how this happened and how this process was achieved within less than a month instead of three years. You can be really fast and decisive in times of crisis,” she insists.
Moldova is considered to be one of the most energy insecure countries in the world because of its almost total dependence on energy imports. This is quickly changing though and at the end of 2024, the government will launch its first ever renewable energy auction, as part of efforts to boost domestic electricity production.
Synchronisation means more cross-border connections with Romania can be built, opening up more commercial opportunities for power trades and improving the chances of extra investment in more clean energy capacity. “I hope that the lesson learned here for security purposes and strategic projects is for governments to be more speedy, more decisive and more pushy for what really matters to people,” says Novac.
NO REGRETS
In March, the European Commission commemorated the two-year anniversary of the synchronisation project. Energy chief Kadri Simson pointed out that the initiative has helped Ukraine mitigate much of the damage done to its power infrastructure by the Russian military.
“The synchronisation of the grids two years ago was not only a very important achievement for securing energy supplies for both Ukraine and Moldova. It was also a strong political symbol of our support, and that remains the case today,” Simson stated.
“Moldova is considered to be one of the most energy insecure countries in the world because of its almost total dependence on energy imports.”
For Ukraine it is a case of job done, as it has fulfilled all of the criteria asked of it to make the synchronisation a permanent fixture of its energy system. Moldova, meanwhile, expects to complete all of its steps in 2025. Carolina Novac wants Europe’s transmission system operators to do more. Currently, most of the power allocation for the Moldovan-Ukraine network is allocated for Ukraine to help it meet demand and mitigate Russia’s attacks on its energy infrastructure.
However, Moldova relies on a power plant in the Russian-controlled breakaway region of Transnistria for most of its electricity needs. “In the winter especially, in a scenario where we do not have electricity supply from Transnistria, we would have to rely solely on imports. The 255 megawatts (MW) allocated to Moldova would not be enough, it would have to be increased,” she warns.
Network opportunities
Moldovan and Ukrainian grids are synchronising with Europe's for greater interconnectivity
Technical negotiations are ongoing with the European Network of Transmission System Operators (ENTSO-E) about increasing capacity.
Moldova is an ENTSO-E observer, while Ukraine has been a full member since January 2024.
AVERTING BLACKMAIL
Three other European countries are seeking to follow in Ukraine and Moldova’s footsteps and successfully synchronise with the main continental grid. Estonia, Latvia and Lithuania hope to cut Russia off in February 2025. In July, the transmission system operators of all three countries announced that the Baltic grid would disconnect from the Russian system on February 8th, 2025, a day after an existing agreement between the two parties expires.
The grid will then operate in isolation for 24 hours while tests are carried out. If no issues are detected, then synchronisation with Europe’s grid will take place on February 9th.
Work could then begin on removing and dismantling all the physical connections that link the three countries with Russia and Belarus, which are also part of the same network. Electricity trades between the Baltic states and Russia have been suspended since 2022, and there are no plans to revive them or any kind of diplomatic ties anytime soon.
Synchronisation could have occurred sooner, as the February date is a compromise. Lithuania had pushed for the project to be completed this year, but Estonia resisted, urging patience and calling for more time to test and ensure there will not be blackouts.
LONG TIME COMING
The Baltic project has been in the works longer than the Ukrainian-Moldovan initiative. As far back as 2007, the governments of the three countries decided to cut network dependency on Russia. Progress since then has been gradual at best, and billions of euros have been allocated to the works.
Mindaugas Ivanavičius, who leads the synchronisation programme for the Lithuanian grid operator LitGrid, reveals that the project has taken so long to reach the finish line primarily because of its sheer scale and complexity.
“This is a megaproject: four countries, different controlling authorities, dozens of different
types of projects with even more contractors and subcontractors,” he explains, referencing Poland as the fourth project participant.
“In the process, we faced not only the usual challenges of planning, financing, procurement and implementation but also the global pandemic, the impact of Russia’s aggression against Ukraine, and disruptions in the global supply chain. During the implementation of infrastructure projects, we have encountered extremely rapid price growth and their decrease,” Ivanavičius adds.
Susanne Nies with the Helmholtz Centre Berlin, a research institute, has followed the synchronisation project since its inception and points out there is another driving force behind it. “It has always been seen as an important symbol for participation in the European project,” she explains, adding that Turkey synchronised its grid back in 2015 for much the same reason. Ukraine and Moldova were recently granted EU candidate status, so there is also a west-leaning geopolitical element to their grid manoeuvres.
COMMON APPROACH
It was only at the end of 2015 that the Baltic grid was even physically connected to the main European grid by a transmission line linking Lithuania with Poland. The LitPol link is an alternating-current cable that has a capacity of 500 MW. In 2021, final works were carried out to enable it to act as a grid-balancing bridge when synchronisation is triggered.
Other pre-existing links between Estonia and Finland, as well as Latvia and Sweden, connect the Baltics with the adjacent Nordic grid. These are not designed to provide synchronisation services and are direct-current cables. Nies explains that synchronising with the Nordic grid was, at one point, an option that was explored but never implemented.
Estonia favoured the proposal because of its closer geographical and cultural ties with Finland, while Lithuania advocated for the Polish link because of its historical relationship. Ultimately, the three countries agreed to pursue a common approach, rather than going ahead with their separate initiatives, to accelerate the timeline for the completion of the project.
“Maybe in the future separate synchronisation could happen, and I think it would be fantastic for security of supply,” Nies adds, suggesting
that various synchronised links could be advantageous rather than just relying on Poland.
ACHILLES HEEL
Further integration with the main European grid is on the cards. The planned Harmony Link, a 700 MW interconnector again between Lithuania and Poland, will complement the LitPol link and offer extra power trading opportunities for the Baltic states. It will, however, be a high-voltage direct current link rather than alternating current, so grid balancing will still have to rely solely on LitPol, which Nies warns makes it an Achilles heel of the initiative.
Work on the Harmony project has also been delayed, yet another fallout from Russia’s invasion. The original plan was for a subsea cable. However, a recent spate of maritime infrastructure incidents, including the Nord Stream pipeline explosions and a damaged telecommunications cable, prompted a rethink.
Financing has also become problematic. In 2023, Lithuanian energy minister Dainius Kreivys revealed, “The cost of the offshore project almost tripled to €1.7 billion, from almost €800 million, which was an unacceptable cost.” Instead, the cable will be co-located next to a high-speed rail link currently being built between Poland and
Estonia. The project costs have, as a result, been slashed by a factor of three and are now near the original estimates for the offshore link.
Harmony was originally meant to come online next year, but the new project timeline means it will not be commissioned until 2030. Nies warns that this extra five years is “too long to wait in my view” and undermines the Baltics’ energy security.
RUSSIAN REVENGE
Could the Baltic states face retribution for severing their connection with the Russian power grid? Francesco Sassi, an energy geopolitics researcher at Italy’s Ricerche Industriali ed Energetiche, believes it may be possible. “I won't be shocked to see some sort of retribution by Russia in the future. Grid interconnections, especially with Finland and Sweden across the Baltic Sea, where gas pipelines and telecom cables have already been sabotaged in the recent past, could be primary targets,” he warns.
“However, since these events occurred, all [coastal] states are way more cautious. Military forces have been called on to strengthen security measures related to critical infrastructures,” Sassi adds.
Another issue is the Russian exclave of Kaliningrad, sandwiched between Poland and
PHOTO KAROLIS
Lithuania on the Baltic Sea coast. Synchronisation will effectively cut Kaliningrad off from the outside world, at least as far as electricity is concerned. From a technical standpoint, this is expected to pose no immediate problems for the exclave, as a successful so-called “island mode” test was carried out in September. Previous annual tests have also shown that Kaliningrad can balance its grid without issues.
Susanne Nies is concerned that Russia will still nonetheless crank up its propaganda machine in time for February 2025, when synchronisation is due to occur. “Next year, it’s quite predictable that Russia will push the Kaliningrad issue, claiming that people there will be cut off from their power supply and that intervention is necessary,” she warns.
Carolina Novac reveals that Moldova had planned to test disconnecting from the Russian grid on February 24th 2022, the very same day that the Kremlin then chose to invade Ukraine. “It was not solely a coincidence that Russia launched its invasion then,” she says. History, therefore, suggests that the Baltics and their allies will have to be on full alert in February 2025.
TROUBLE AT HOME
largely to cover the extra costs of balancing services no longer provided by Moscow—will be to develop more homegrown clean energy generation capacity.
Once synchronisation is completed and Russia cut off, there could be teething problems at home as household bills in all three countries are expected to increase slightly in order to pay for the project. Russian propaganda has already waded into the issue, with many state-run media reporting that the initiative will make energy unaffordable for Estonians, Latvians and Lithuanians to undermine the project’s support.
According to an analysis by Lithuania’s grid operator, bills will only increase by an average of just €0.50 per month. For Estonia, the average increase will be €0.60, and Latvian consumers will have to budget an additional €1. Lithuanian energy minister Dainius Kreivys has repeatedly stated that the best cure for this price increase—
Synchronising with Europe’s grid will hopefully create a virtuous circle because the project will increase energy security and unlock more renewable power opportunities. “Newly installed power lines, substations and synchronous condensers will increase the ability of transmission grids to support a higher share of renewable sources in overall electricity generation,” LitGrid’s Ivanavičius explains.
“Lithuania aims to generate all of the electricity it needs from renewable sources in the next few years and synchronisation projects are a big step in that direction,” he adds.
Energy security does not come for free, even in the electricity sector. However, investments being made now appear to be on track to pay off in a big way soon. •
PHOTO VLAD LIHACEANU
On the look out
Former soviet states are seeking new forms of low-carbon generation to improve their energy security
RISKS AND REWARDS COLOUR
CHINA'S ROLE IN THE TRANSITION
The decarbonisation of energy systems so far has been largely dependent on China. The country has a central role to play in future of the transition to a decarbonised economy but the rest of the world should act with caution
TEXT JASON DEIGN · ILLUSTRATION BERNARDO FRANÇA
orkers at the Ebro car factory in Barcelona, Spain, have good reason to thank the Chinese. Until 2021, they worked for Nissan. Then, the Japanese carmaker moved its European operations to France, leaving 3000 Spanish labourers out of work. The outlook for the factory hands looked bleak until Chery, a state-controlled car manufacturer from China, struck a deal with Ebro, a brand previously owned by Nissan but abandoned alongside Nissan’s other Spanish assets.
The companies agreed to restart production at the Ebro facility in 2024. But then, in September, Chery delayed plans to make its Omoda petrol and electric
sports utility vehicles at the Ebro plant. The year-long delay was prompted by duties from the European Union (EU) on Chinese cars. While production at the plant has restarted anyway, it is initially focussing on little-known Ebro combustion engine vehicles instead of the Omada brand that Chery has exported worldwide.
The whole affair illustrates the difficulty of relying on China as a business partner for the energy transition.
EU TARIFFS
China’s industrial might makes it a powerful ally in decarbonisation. Still, that power has worried lawmakers in Europe and elsewhere—prompting protectionist measures that threaten to slow progress towards a cleaner energy system. Vehicle electrification is a good example. The EU tariffs slapped on carmakers such as Chery come as Chinese electric vehicles (EVs) flood European roads, stealing market share from EUbased automotive leaders.
The levies are intended to level the playing field between these European companies and fast-growing Chinese rivals such as BYD and MG, a former British brand now owned by the Shanghai Automotive Industry Corporation. However, by cutting off a source of low-cost products, the tariffs are also likely to slow the adoption of EVs in general, putting EU climate goals at risk. And it is unclear whether European carmakers can deliver competitively priced EVs without relying on China.
VITAL MATERIALS
According to ACEA, the European Automobile Manufacturers’ Association, China dominates the production and processing of the materials used in EV batteries and electric motors. The association—which has had an office in Beijing for almost two decades— says it is important to maintain robust industrial and institutional relationships with China.
High-profile ACEA members, including BMW, Mercedes and Volkswagen, have spoken out against imposing trade barriers on China. The advantages of having access to China’s supply chain are even greater in the solar industry. Overproduction by Chinese module suppliers has led panel costs to fall by 50% in the last year, says Dries Acke of the solar industry association SolarPower Europe.
From an energy security point of view, “It is incredibly good news for the European economy that solar costs are at that level,” Acke says. “Solar has played an incredible role in saving European consumers from the worst of the energy crisis.”
"China currently
owns a very dominant position in all the key segments of the global supply chain of clean technologies"
Made in China
China dominates the supply chain of many key transition technologies
UNCERTAIN ALLY
The counterargument is that China is a problematic country to do business. As the world’s largest economy by gross domestic product based on purchasing power parity, it can afford to subsidise its industries more than any other region. Companies in China are not subject to the kinds of environmental controls typically seen in the West, denting the cleanliness of the clean technologies that the world buys from Chinese manufacturers.
The one-party state also has a poor record on democracy and human rights, with the treatment of ethnic Uyghurs in the northeast Xinjiang autonomous region being a particular focus for concern in the last decade. In fairness, though, it is not democracy, human rights or the environment that worries Western politicians. After all, most countries in the West are happy to do business with petrostates, such as Saudi Arabia, which also have chequered records.
Instead, the big concern about China is that it controls so much of the clean energy supply chain that
there might be nowhere else to turn to for equipment supplies. “China currently owns a very dominant position in all the key segments of the global supply chain of clean technologies,” said Roberta Pierfederici of Imperial College London's Grantham Research Institute during a March 2024 interview for FORESIGHT’s The Jolt podcast.
SUPPLY DOMINANCE
China’s dominance is particularly marked in three critical segments: solar photovoltaics, batteries and electric vehicles. “China plays a global leading role from the start to the end of the supply chain of those technologies,” Pierfederici said.
Its control over these supply chains gives it growing geopolitical leverage as the world moves to cut carbon emissions. Chinese President Xi Jinping has made no secret of his desire for global expansion, notably towards Taiwan. There are parallels between China and Vladimir Putin’s Russia, which was initially able to invade Ukraine with relative impunity, partly
thanks to Europe’s reliance on Russian fossil fuels.
Yet Acke of SolarPower Europe believes there’s “an important difference” between the two countries. “The comparison—we were dependent on Russian gas [and] now we’re depending on Chinese solar—we’re very unhappy about that,” he says. “Russia was able to close the tap, and the gas flow stopped. It’s different for solar. Once the solar panel is here, it’s here, and it generates electricity reliably for 30 years.”
NOT RUSSIA
The implication is that Europe could cut ties with China without putting domestic energy production in danger, as was the case with Russia. However, disengaging with Chinese supply chains would almost certainly wipe out any hopes of meeting Europe’s climate goals—and not just for lack of solar panels and EVs.
China also leads the world in providing basic commodities such as copper, which the analyst firm Wood Mackenzie notes is a crucial component in electrifi-
cation. Since 2000, it says, China has accounted for 75% of global copper smelter capacity growth. The country currently controls 97% of global smelting and refining capacity. Meanwhile, there are no plans for new smelting capacity in Europe or North America.
"While copper supply risks can be mitigated and some rebalancing has begun in various countries, the scale of China's dominance in the supply chain means complete replacement is unfeasible," says Nick Pickens of Wood Mackenzie.
SECURITY CHALLENGE
Europe’s dependence on Chinese supply chains puts European energy policy at odds with security. In common with other Western markets, the bloc is keen to find a way out of the dilemma. One popular strategy recognises that Europe will not be able to beat China in terms of producing established technologies but could take the lead in developing new clean technology concepts.
These could include advances in battery technology, electrolytic steel, next-generation solar, direct
"For the EU and other regions, prioritising innovation could be more effective than attempting to match China’s manufacturing capabilities"
air capture and hydrogen production systems, says Lars Nitter Havro of research company Rystad Energy. “For the EU and other regions, prioritising innovation could be more effective than attempting to match China’s manufacturing capabilities, especially considering the substantial head start China has accrued over the past ten to 15 years,” he says.
This thinking is based on historical precedent. Key energy transition technologies, including photovoltaics and lithium-ion batteries, were developed in the West before being mass-produced in China. However, this was before China developed its own significant research and development (R&D) capabilities.
R&D GROWTH
More recently, “China’s rise in R&D investment is shaping a new global dynamic in the technological and industrial sectors, particularly within clean energy,” says Paul Wilczek of the European electricity industry body Eurelectric.
From 2015 to 2023, he says, China's public investment in energy R&D grew by 124%, from $7.8 billion
to $17.5 billion, significantly outpacing the growth seen in the EU and North America. Over the same period, the EU's spending increased 52% to $13.5 billion, while North American investment grew by 44% to $12.4 billion.
“These figures starkly illustrate the aggressive acceleration of China's R&D funding, highlighting its strategic commitment to leading in clean energy technologies,” Wilczek says.
As well as increasing its R&D spending at a higher rate than global rivals, China allocates a larger share of the money—about 80%—towards applied research and experimental development, says Wilczek. “This focus is designed to support rapid industrialisation and integration of new technologies into the market, aligning closely with national economic strategies and policy objectives,” he says.
DOMESTIC DOUBTS
Meanwhile, the West’s ability to innovate competitively is increasingly in question. Take Northvolt, a Swedish battery developer long viewed as Europe’s
Clear the way
Carmakers BMW, Mercedes and Volkswagen are against trade barriers to China
answer to Chinese lithium-ion technology giants such as CATL and BYD. In November 2023, Northvolt was reported to have developed a sodium-ion battery chemistry that dispensed with the need for lithium, cobalt and nickel.
The innovation was hailed as potentially freeing Europe from dependence on China for battery materials. But less than a year later, Northvolt was struggling to secure further funds for growth and was looking to sell off some divisions despite raising more cash than any other company in Europe, a massive $15 billion in equity, debt, and government handouts.
“Northvolt’s sub-Arctic battery factory in northern Sweden was meant to symbolise Europe’s green fightback against China and the US,” said the Financial Times newspaper in September 2024. “Instead, the startup is in danger of turning into an emblem of the continent’s failure to stay in the race.”
COMPETITIVE ADVANTAGE
This does not mean Europe’s battle for innovation against China is lost, but it does imply the bloc may have to pick its fights carefully. “With increased decarbonisation and electrification, a new geopolitical energy order will emerge,” says Wilczek at Eurelectric.
“While traditional petrostates like Saudi Arabia and Russia will lose out, a new 'electro-state' will emerge to dominate the global power system,” he says.
The electro-state is China, and to compete, “The EU must step up where it has a competitive advantage still,” Wilczek says. “This is mainly in high-end complex and innovative components such as solar PV inverters or cutting-edge wind energy technologies such as floating offshore and related grid transformer stations.”
EUROPEAN LEGISLATION
While these areas may offer the potential for technology leadership, it would be naïve to assume Europe’s industrial rivals, including China, are not planning to invest in them, too.
In a bid to keep Europe in the game, in June 2024, the EU adopted the Net-Zero Industry Act that aims to increase the level of local production of 19 net-zero technologies, covering sectors such as wind, solar and batteries.
Designed to ensure around 40% of these technologies are produced within Europe by 2030, the Act mandates EU member states to include several non-price criteria in their public procurement procedures. Bids will not qualify unless they meet minimum standards for responsible business conduct,
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cyber and data security, and the ability to deliver projects on time, for example.
There will also be pre-qualification or awards based on sustainability and resilience. “The resilience criterion requires public buyers to diversify supply sources in cases of high dependency,” says the EU.
AUCTION BOOST
In laymen’s terms, around a third of the public auction capacity for technologies, where China has more than a 50% market share, will have to be awarded to non-Chinese—and presumably mostly European— technology providers. These criteria only apply to public auctions, so independent power producers and other private entities will still be able to source their equipment from whichever vendor they want.
And there is some leeway on how member states can interpret the rules, which will not be implemented until March 2025. Acke of SolarPower Europe says this is a good thing, given the need to scale up European solar manufacturing. “There is certainly a conversation about ‘when is it European enough?’,” he says. “And to what extent can you develop a system of bonus points with additional premiums, depending on the depth of the resilience?”
Europe’s wind industry also hopes the Net Zero Industry Act will give it the cover it needs to continue benefiting from Chinese supply chains while safeguarding local manufacturing. EU-based wind manufacturers are in a much stronger position than their solar peers, with companies like Vestas, Siemens and Nordex dominating the European market and holding leading positions worldwide.
WIND CONCERNS
However, they still rely on China for critical materials, including rare-earth elements and fibreglass. And their dominance in Europe is threatened by Chinese rivals booming on the back of China’s massive domestic wind market. While European firms can make 32 gigawatts (GW) of turbines a year, “They have, we think, 140 GW of manufacturing capacity in China, and they’re building 70 GW every year,” says Giles Dickson of the European industry body WindEurope.
tion for Economic Co-operation and Development. Hence, Dickson says, “Everybody in the wind energy industry, across the whole value chain, wants a level playing field. All the developers agree there has to be fair competition between European and non-European manufacturers.”
CYBER THREAT
The Net Zero Industry Act could help achieve this not only thanks to its resilience criteria but also through its emphasis on cyber and data security. “We have lots of sensors on a wind turbine placed by the manufacturers,” Dickson says. “That’s not just giving you data—it’s giving you the power to control the wind turbines. Hence the nervousness about data going outside Europe.”
Given the differences in strength between European wind and solar manufacturing, it is also good news that the Net Zero Industry Act’s resilience criteria will be different for each technology. “There’s going to be a distinguished approach between wind and solar because the two industries are in a completely different place,” Dickson says.
Critically, part of this difference is that Europe’s wind industry can still just about claim technology leadership over China. Although Chinese manufacturers have recently announced some of the biggest offshore wind turbines in the world, “There is a distinction to be drawn between announcements and the turbines they’ve actually put in the sea,” says Dickson.
GLOBAL EFFORT
In another example of European innovation delivering a competitive advantage, European turbines have capabilities such as providing inertia or frequency control. “It’s not clear to us whether the Chinese are as advanced in those areas,” Dickson says.
Data breach Western wind companies are nervous of sending data outside of the bloc, according to WindEurope's Dickson
“They have industrial over-capacity, and they are trying to export to Europe. They’re offering lower prices than what the European turbine manufacturers offer and very generous financing terms, with things like three years deferred payment,” he says.
Original equipment manufacturers in Europe do not have the cash to defer payment for three years. Even if they did, says Dickson, they would not be allowed to do so under the rules set by the Organisa-
If measures like the Net Zero Industry Act can help preserve Europe’s flair for innovation, they could pay dividends regarding energy security and industrial growth. However, they will need to strike a delicate balance since being overly protective could derail moves to address climate change, which is a global security problem, not a national or regional one.
“I think the way forward is to focus on our capabilities and what we can add to the energy transition as a global effort,” says Thomas Boermans of the German energy company E.ON. “The energy transition is such a big endeavour that I do not see we can jeopardise this by getting into micro activities. We need global cooperation. And if we have global cooperation, we had better have something to offer.” •
MAKING RENEWABLES RESILIENT
The renewable energy sector needs to adapt to the changing climate as hail, floods and high temperatures become the norm
TEXT CATHERINE EARLY ILLUSTRATION BERNARDO FRANÇA
Inside a building in the US state of Rhode Island, hail cannons shoot whisky-ball size globes of ice at 85 miles an hour at solar panels.
In another room, lithium-ion batteries are being set on fire. This is no Hollywood movie set but an insurance company research campus.
“It’s amazing what we do to try to understand the fundamentals of risk,” says Doug Patterson from FM Global, a US-based mutual insurance company specialising in loss prevention services.
The firm’s dramatic-sounding research aims to identify what size hail stone will break certain types of panels, he explains. Given this knowledge, manufacturers can make their products more hail-resistant and developers can make more informed choices on which panels to buy.
Damage and destruction of solar panels from hail storms is the current number one preoccupation of the renewable energy sector in terms of extreme weather as losses have mounted. A series of catastrophic insurance claims have brought the issue dramatically to the fore—in the summer of 2022, hailstorms in the US state of Texas inflicted more than $300 million in damages.
Hail storms are less frequent than other types of extreme weather but are particularly costly. One claim to a solar farm cited by insurance firm GCube between 2018 and 2023 totalled more than $75 million. GCube has gone so far as to call the issue “a major threat to the viability of new projects”. The company warns that these losses are escalating—more than 70% of losses suffered by the sector occurred after 2017.
SEVERAL FACTORS HAVE combined to cause a surge in risk in recent years. Recent changes to solar PV technology have significantly increased the solar sector’s vulnerabilities to hail. As the industry has laboured for the lowest Levelised Cost of Energy (LCoE), it has enlarged solar panels from 300 Watts to 400500 Watts, or even higher, and made panel glass thinner, from 3.2 millimetres thick to just 2 millimetres.
It has also increasingly built solar farms in areas more prone to hailstorms, such as east of the Rocky Mountains in the US. Developers are also increasing the size of projects, resulting in miles and miles of land covered in glass panels—a bigger target to be hit in one go.
At the same time, scientists expect climate change to boost the ferocity of hailstorms in most regions, with stones large enough to damage solar panels becoming more common. Storms are also predicted to happen more often in Australia and Europe. However, the frequency might fall in East Asia and the US, according to a 2021 study published by science journal Nature.
INSURANCE COMPANIES are shielding themselves by increasing premiums for solar farms or even withdrawing coverage. Insurers have become stricter about setting maximum limits for natural disasters, and the coverage limits for events such as severe convective storms have been reduced significantly compared to overall project values, according
Cost benefit
Thicker glass makes solar panels more expensive, cutting
to a report by GCube. This is causing delays and cancellations of projects.
Deductibles—or the excess the insured party pays before insurance coverage kicks in—have also changed, with insurers introducing specific deductibles for severe convective storms and other natural disasters have become the norm, the firm also noted.
These changes in policies and price hikes have had a significant impact on lenders and lender consultants and are causing uncertainty about the future of projects, it states.
“The more of these events occur, the more it will have an impact on the industry generally, and terms and conditions are going to become more and more challenging,” says Mohammed Zeeshan Junedi at GCube. “It’s not our intention to punish our clients, but we are looking to protect our bottom line.”
THE RENEWABLE ENERGY sector has moved to adapt to extreme weather threats, such as choosing development sites more carefully, elevating them, improving drainage to reduce flood risk, and picking technology more cautiously, according to Junedi.
Hail risk is, however, trickier to mitigate. Solar is a particularly competitive industry, where bidding processes for projects result in tiny margins, and he says that competition between solar panel manufacturers means the glass is thinner than it could be. Thicker
would mean a drop in efficiency, in turn affecting the LCoE.
In September 2024, assurance provider DNV launched a service in the US to provide solar developers in North America with verified assessments of large hail risk. It has partnered with climate risk analysts Jupiter Intelligence to provide the probability of a hail event for a specific location, as well as the probability of the size of the hail itself.
Crucially, the data covers both current risk and that expected throughout project lifetimes up to 30 years in the future. By providing precise, forward-looking data, the firm hopes to empower solar developers and project owners to make informed decisions that protect their investments and ensure long-term viability.
Technology developments show potential for the solar sector to mitigate the risk of hail. One idea in development is for a net over each panel to catch hail before it strikes the glass. It could be installed on single-axis tracked plants that can tilt their solar panels at around 50-75 degrees—the net would be activated only when there is a threat of hail, so there would be no disruption to power generation in normal times.
IT IS NOT JUST THE GLASS panels on solar farms that are vulnerable to increasingly extreme weather. At SMA, a German solar energy equipment supplier, inverters for solar installations are put through rigorous testing, including temperatures down to -20°C to +50°C.
The company has received an increasing number of requests from customers in countries including Spain and Portugal for equipment that deals with higher temperatures, so much so that a very tailored cooling system it originally designed for locations such as Texas has become standard on all its products, according to SMA’s Eric Quiring.
Other renewable technologies are also facing challenges from extreme weather. “We’ve seen an increasing impact on renewable energy installations, particularly in the US. We’re seeing flooding and hailstorms, wind storms—not just tornadoes—in regions where we haven’t seen them before, such as the Middle East,” says Junedi. Incurred losses from natural disasters have jumped significantly, from around 1015% to 30-40%, depending on the year, he adds.
A PROJECT’S CONSTRUCTION phase is also vulnerable to extreme weather and accounts for the greatest proportion of claims for onshore wind and solar farms, incurring 48% of losses by severity, according to GCube’s data. The size and bulky nature of wind turbine technologies mean they are relatively robust when extreme weather hits, Junedi notes.
However, the industry has also learnt to adapt to some extreme weather threats.
Over the years, technological developments include the introduction of lightning conductors and turbine blades specially adapted to cold, ice buildup and extreme wind speeds of over 88 kilometres per hour. Turbine manufacturers Vestas, Siemens Gamesa, Enercon and Goldwind have all developed products to withstand higher wind speeds without limiting the operation of the turbines.
This was demonstrated recently when super typhoon Yagi—the world’s second most powerful tropical cyclone this year with wind speeds recorded at 245 kilometres per hour—swept through Asia. At least five wind turbines were destroyed on a wind farm in Hainan, China. The wind farm was being upgraded, and the turbines were not operating then.
However, other nearby wind farms withstood the challenge. Chinese turbine manufacturer Mingyang Smart Energy trumpeted the robustness of its turbines, which had been specially designed to withstand typhoons, on social media, as did competitor Goldwind.
WORK IS ALSO UNDERWAY to update technical standards for renewable energy components. The European Committee for Standardisation (CEN) and the European Committee for Electrotechnical Standardisation (CENELEC) have established a committee to promote the integration of climate change aspects into existing standards.
Traditionally, standardisation has relied heavily on historical data, but given the uncertainties associated with climate change, future projects need to be integrated into standards. The committee will collaborate with climate science specialists and data providers to ensure that standards reflect the most current understanding of climate trends and variability.
according to Paul Raats at DNV. “There should be more pressure on the standards community to revise and modify the standards as soon as possible because then everything will become easier for stakeholders. When banks ask how climate change is being anticipated by developers, it will already be standard,” he says.
FORECASTING ALSO HELPS the industry to adapt to extreme weather. The UK’s Met Office, a forecaster, has supported energy operators for many years with forecasting services. Regarding renewable energy, additional risks include ice building up on turbine blades, the impacts of harsh waves on offshore export cables, and high winds and flooding on solar farms.
It also considers the safety of maintenance crews operating in harsh conditions, explains Dr Emily Wallace from the Met Office. “Extreme weather can compound risks—lots of rain and wind over the same season means that even moderate conditions can have a big impact,” she says. She adds that some large renewable energy installations, such as offshore wind farms, have meteorologists embedded on location for a month at a time to forecast risks to those assets.
For example, a Met Office forecaster worked with offshore construction company Saipem during the final stint of installation of the Neart na Gaoithe offshore wind farm off the east coast of Scotland. Continued monitoring of wave heights, wind strengths and directions and the extent and severity of rain, cloud and thunderstorm risk, as well as satellite data monitoring aimed to minimise the impacts of the weather on the day-to-day operations and keep its crew safe.
Wallace says the Met Office also supports grid operators with infrastructure design. For example, there are standards for transmission lines that consider how much ice can accumulate on a cable, but they Signal problems
Updating standards is typically a lengthy process,
“As temperature increases at different rates across the globe, we often see large-scale patterns behave differently than in the past”
are based on old data. Providing more detailed and up-to-date information has reduced the tendency of grid operators overengineering cables at a greater cost and carbon impact, she says.
USING
UP-TO-DATE CLIMATE
data rather than historical trends is imperative, according to Dr Angelika Werner at FM Global. “Climate change is not just simply translating to an increasing frequency and severity of extreme events. As temperature increases at different rates across the globe, we often see large-scale patterns behave differently than in the past, which impacts the nature, duration and location of extremes,” she said.
“We train data from environmental parameters on historic observations of weather to better understand which large-scale and local conditions lead to certain weather phenomena.
“This knowledge is crucial to translate today’s understanding into future climate risk and prepare for loss events,” she added.
NEW TECHNOLOGIES ARE being put to use in tandem with forecasting. After witnessing the Camp Fire wildfire in California—caused by a poorly maintained electrical transmission line—entrepreneur Abhishek Vinod Singh and AI expert Nitin Das teamed up to launch extreme weather prediction company AiDash. The start-up uses artificial intelligence and satellite imagery to reduce the likelihood of wildfires caused by vegetation interfering with the safe operation of assets.
“The same AI technology used for asset inspection can be used to monitor the condition of vegetation and impose that data with weather data such as ground surface temperature, wind speed and path of the storm to make predictions of where the damages can happen,” Singh explains.
It can also identify the most effective locations for preventative firebreaks during wildfires by providing continuous, near real-time data of large areas, regardless of weather, time, or terrain. Though it cannot predict every shift in extreme weather events, the technology can help identify risks, predict when and where events will occur and how they will spread, advise on mitigation and speed up recovery and restoration.
AiDash recently raised over $50 million to scale its technology with investors, including Lightrock and Duke Energy. It has signed up some of the world’s biggest utilities, such as National Grid, Avista, Entergy and Xcel Energy.
Singh believes governments could do more to incentivise greater use of such technologies through regulation and investment, such as the US Infra-
structure Investment and Jobs Act. “An environment where strict regulations and financial incentives for industries to use new technologies to mitigate climate that would be a great boost for everyone,” he says.
THE UK IS ANOTHER country where the bitter experience of extreme weather is spurring research and innovation. The 2023-2024 season was one of the most active on record, with twelve named storms causing widespread disruption and power interruptions.
Grid operator Northern Powergrid will use an £8 million grant awarded by UK energy regulator Ofgem in September 2024 to assess how to roll out an innovative project originally trialled in a remote village in Northumberland to improve the reliability and robustness of the power grid.
The village comprises just 50 homes, many of which generate their own electricity. The community experiences frequent power cuts due to weather conditions, its remote location, and the characteristics of the local power network.
Northern Powergrid’s technology notifies residents when they are connected to the grid and when they are in “island mode”. When connected to the grid, the electricity customers generate can be used in their homes or exported back to the grid.
In island mode, the power they generate can be fed into the community’s energy storage battery and used to support the energy needs of the local community during prolonged power interruptions.
Northern Powergrid will now look at how to deploy the concept across various rural locations. It hopes to create a blueprint for the deployment of community microgrids across the country, to protect customer power supplies including from extreme weather conditions.
THOUGH MUCH PROGRESS IS being made and research underway, commentators see potential for renewable energy developers to be more proactive in building in consideration of extreme weather right at the outset of a project.
DNV’s Paul Raats has witnessed delays to the construction of renewable energy projects due to concerns about extreme weather. Financiers are increasingly asking for more due diligence and distinct requirements in terms of climate change risk assessments, particularly from institutional lenders such as the World Bank and European Bank of Reconstruction and Development.
Sometimes developers are initially reluctant to ask consultants to perform these assessments unless specifically asked, he says.
Similarly, developers and grid operators tend to
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consider insurance far too late in the development process, typically when the project is due to go live, and financing agreements need to be signed, Junedi says. He believes developers should tweak their processes so that insurance companies become a party at the table on every project.
one, at the planning and design stage. We have data spanning a long period of time for different regions. If there are any adverse weather conditions that we can advise on, things that don’t get picked up in traditional models, we’re more than happy to share that data with our clients.
“Extreme weather is getting worse, and that trend is not going away anytime soon. It’s imperative as an industry that we come together,” he concludes. • Be proactive Early assessments to understand risks can avoid delays to projects
“Insurance tends to be a final thought and a line item in the budget,” he says. “But developers and grid operators should look to engage insurers from day
HOME INVASION
Vulnerabilities surround us. The twin hurricanes of Helene and Milton, which battered the southeast United States in September and October 2024, brought the joint issues of energy security and climate change crashing into the homes of millions. Increasingly, ever-more violent extreme weather events threaten the infrastructure, energy sources and buildings we rely on. There are also the more direct human-led threats. Creating a society with distributed renewables, with greater interconnectedness—in every sense of the word—will create a low-carbon, secure, more predictable and more equitable energy environment for us all. So that, when we fall, we can get back up again. •
TEXT SEAN CARROLL · ILLUSTRATION BERNARDO FRANÇA
SMART BUILDINGS ARE ON THE RISE .
SO ARE CYBERATTACKS
The increase in data-driven smart buildings is expected to make the global building stock more efficient and less energy-consuming. However, as with any internet-connected technology, greater digitalisation comes with risks, making buildings more vulnerable to cyberattacks
nter a new office building and you may notice smooth white boxes and shiny black orbs affixed to the ceiling. These seemingly innocuous devices are sensors, silently generating data about the usage of the building they’re stationed in. Sensors may detect movement, allowing them to identify the number of people in a room at a given time, or they may monitor an array of other factors, such as air quality, humidity, or noise levels.
Beyond bespoke devices, software can also be installed to track the number of times lift doors open and close, the frequency employee badges are swiped, or how often different devices access the WiFi network.
Taken together, this data can provide a complete picture of a building’s operations, which would be challenging to generate manually. It can reveal everything from water consumption and power usage, to the ebb and flow of occupancy rates.
ENERGY EFFICIENCY
The idea behind this data generation is to empower building managers to make processes, including heating and cooling, ventilation and lighting more efficient. An online Building Management System (BMS) portal processes the data, acting as the building’s control centre.
Increasingly, machine learning algorithms are deployed to draw lessons from the data collected. Artificial intelligence (AI) is then used to optimise the building—reducing air conditioning in sparsely occupied rooms, dimming or turning off lights when meeting rooms are typically empty, and so on.
This overview of the data collected by the building sensors enables managers to determine if further adjustments should be made or if physical maintenance is needed. The technology also allows a single building manager to act as a caretaker for multiple buildings.
ADVANCE ANALYTICS
More sophisticated systems can even prompt building owners to reduce energy consumption further, accurately informing them of the benefits if, for example, solar panels were installed or electric vehicle chargers were made available to staff. This new tech-optimised approach to building management is captured under the Silicon Valleyesque-term “smart buildings”.
Major technology companies are investing heavily in making buildings more digital, marketing AI and machine learning tools for building managers to cut costs, manage buildings more efficiently and meet legally mandated environmental targets.
The European Union is also on board with the smart buildings revolution, legislatively requiring
Widely connected smart buildings increases the vulnerability to cyberattacks
Easy access
member states to promote digital technologies in buildings to reduce energy consumption.
Around 40% of energy globally is used in the built environment, meaning that even seemingly small efficiency gains in an individual building, such as a 5% drop in energy consumption, can significantly alter total emissions when replicated at scale.
NEW RISKS
The promise that smart buildings can offer granular insights into how buildings are used is not just reserved for new, cutting-edge constructions—sensors can be installed in existing properties of all kinds, even historic churches.
However, while proponents highlight the many benefits of digitisation, allowing internet-connected machines to collect and share data online comes with new risks. Security threats are a major issue facing smart building operators, as online systems are inherently open to cyberattacks.
“These complex cyberphysical systems expose the building and occupants to new risks and threats that in the past required physical access to realise negative consequences,” says John Sheehy of IOActive, a cybersecurity firm based in the United States.
According to the US Department of Energy, some 40% of building management system servers have been targeted by attacks including malware and ransomware. Harry Ostaffe of Veridify, a cybersecurity
company focused on buildings, says that increasing the number of internet-enabled devices on a building’s network also increases the possibility of a successful cyberattack.
“There’s a lot of benefit of having those devices: you get more intelligence about the building, you can provide a better occupant experience, you can have better operational efficiencies and save energy. But the more devices that connect to the internet to give you that benefit, the larger the risk,” Ostaffe says.
CYBERATTACK
Experts warn that the consequences of a cyberattack can be devastating, both financially and physically. Hackers can render buildings unliveable by intentionally manipulating the temperature and altering humidity and air quality, says Sheehy. Emergency systems designed to protect buildings could also be rendered useless.
“Power, fire suppression, and other high impact building services could be made inoperable or used to cause physical damage to the building,” he says.
Hackers may also gain access to the internal camera systems of a building, allowing them to watch occupants—a particular issue for organisations where employees carry out sensitive work, such as government agencies.
MALICIOUS INTENT
One of the most common attacks is to introduce socalled “ransomware” into the system, encrypting data which is vital for the building’s normal functioning. Hackers then demand a payment, often through un-
regulated online currencies such as Bitcoin, to unencrypt the data and restore access.
In Austria, a four-star hotel was repeatedly targeted by hackers, with the hotel’s electronic door locks taken over remotely. The hotel was forced to pay a ransom of about €1600 via Bitcoin to regain control.
While many hackers target buildings for money, others can do so to steal valuable information. In a bizarre case from 2017, hackers targeted a casino in Las Vegas by breaking into a WiFi connected fish tank, which used smart monitors to regulate the tank’s temperature and cleanliness. Through the fish tank, hackers could access the casino’s wider network, stealing around ten gigabytes of internal data, which was sent to a server in Finland.
“Sometimes there’s ransomware and the demand for money, other times it’s just trying to get data. The data has value,” says Veridify’s Ostaffe. “Once somebody steals data, you can’t really believe they’re going to just give it to you back and delete it. Once they have the data, they have the data - they could copy it and sell it anywhere,” he adds.
In addition to hacking, devices procured by building managers may have inherent risks, such as intentionally built-in flaws that make them easy to manipulate. IOActive’s Sheehy uses the example of the recent attack by Israeli military intelligence against the Lebanese militant group Hezbollah, in which pagers bought by members of the organisation were remotely detonated, resulting in 42 deaths.
This, he argues, shows “how even organisations with mature counterintelligence capabilities can fall victim to a supply chain interdiction”.
Building managers should only buy from “trusted suppliers and countries”, he says, warning that hardware developed in “unfriendly or adversarial” countries leaves the door open for tampering.
" ONCE SOMEBODY STEALS DATA, YOU CAN’T REALLY BELIEVE THEY’RE GOING TO JUST GIVE IT TO YOU BACK AND DELETE IT. ONCE THEY HAVE THE DATA, THEY HAVE THE DATA - THEY COULD COPY IT AND SELL IT ANYWHERE "
GREATER CONNECTION POINTS
Smart buildings tend to be virtually connected to a broader network, allowing building managers to review data from a number of buildings at once. While convenient, this can allow hackers to target weak points in an individual building to gain deeper access.
“Before every single building system would have their own network. So if I hacked into one network, the other one remains intact because I can’t tap into it. But now they’re becoming more integrated,” explains Freya Yang of WiredScore, a company that certifies buildings’ digital infrastructure. “It’s like this giant web, and if I have one entry, I pretty much have central entry to other points. That is a huge risk,” she adds.
The amount of data generated by building sensors also raises privacy questions. Kelby Green of VergeSense, a company that manufacturers sensors for buildings, says that it is important that occupants of smart buildings are informed about privacy policies: what data is collected, how it is used, and who has access.
Privacy-minded building managers should opt for sensors that are incapable of capturing information which could personally identify occupants, she says. The sensors manufactured by VergeSense “only detect and count the anonymous shapes of people and common objects”, according to Green. “Data captured is destroyed at the edge on devices within seconds and is not stored or accessible post-processing,” she adds.
Lock down
Ransomware can render a building's entire digital infrastructure useless
EDUCATION STATION
CYBER PROTECTION
Experts agree that there are several steps building managers can take to counter threats from malicious actors. A multi-pronged approach is most effective, according to Ostaffe.
“It’s sort of like an onion—there are layers to protection, there’s not one particular thing to do,” he says.
WiredScore’s Yang argues that building managers should consistently invest in cybersecurity, as the alternative could be the financial blow of a large ransom demand. “Under a ransom attack, suddenly [building owners] have to put together all this money and they don’t know what to do. It’s an absolute shock,” she says. “The best practice is actually to make sure that people are continuously investing in precautions.”
In addition to regularly updating software and ensuring that any vulnerabilities are patched, educating staff about cybersecurity is extremely important— from basic steps, such as using complex passwords, to more in-depth measures, such as avoiding phishing and manipulation attempts.
It’s important that “everyone, from top to bottom, knows what’s the best practice”, says Yang. “Are your employees doing the right thing, or are they just writing passwords and sticking it on the fridge?”
In addition to contacting employees to glean information surreptitiously, hackers can use surprisingly simple methods to access the computer network. “There is a classic example where there’s a thumb drive in the parking lot, and somebody picks it up and puts it in their laptop and now their laptop is infected,” says Ostaffe. “That laptop plugs into your building network and now that’s infected, and [the hackers] start to pull data.”
Hacktivity Hackers can use simple methods to access buildings networks
"ARE YOUR EMPLOYEES DOING THE RIGHT THING, OR ARE THEY JUST WRITING PASSWORDS AND STICKING IT ON THE FRIDGE? "
LACK OF AWARENESS
Despite the high profile of some cyberattacks, “a large portion of building managers are just really unaware of cybersecurity risks,” says Ostaffe. However, if building managers do wish to hire a professional to manage their cybersecurity, they may face a challenge. “The biggest problem facing the industry right
now is a lack of talent… If you go looking for smart building cybersecurity experts, there are not that many out there,” says Yang.
A recurring issue is that while many IT experts know how to protect software from online attacks, the burgeoning market of smart devices needs to be better understood.
“IT cybersecurity experts need to be upskilled to understand the [operational technology] side. One thing is corporate networks, laptops, all that stuff, the other is heating, ventilation, and air conditioning—it is very, very different,” adds Yang.
A DETERRENT?
As the number of news articles on cyberattacks grows and awareness slowly spreads of potential risks, some building owners are being put off from adopting smart building technology. The Austrian hotel that suffered multiple cyberattacks, for example, returned to traditional metal door locks.
A recent survey of building managers in the US found that around half were deterred from embracing digital technologies due to security concerns, while in Canada cybersecurity topped the list of concerns among CEOs
A survey by Deloitte among real estate owners and investors revealed that companies identified cyber risks as the second most important trend that could impact their financial performance, behind interest rates and ahead of changes in tax policy. A survey by Honeywell, the American conglomerate, put the share of facility managers concerned about cybersecurity at 71%.
Despite the elevated risks that come from connecting processes to the internet, there are better solutions than shunning smart buildings altogether, argues Yang.
“Would I say that you should still stick with the system that was built in the eighties? Probably not… I do think this risk is present in non-smart buildings. Every building needs some kind of digital services,” she says. “Whatever building, smart or not smart, they all have digital systems inside, they all have cybersecurity risks,” she adds.
Ostaffe similarly says that buildings will continue to become more connected in the future, so the best option is to invest in adequate protection. “The trend for smart buildings is growing so it’s hard to see where that would slow down,” he says. “There may be some corner cases where people decide the risks are too great, but otherwise it’s a matter of adding and using multiple layers of protection and putting in the right controls so that you can get the benefit of the smart building technologies with these protections.” •
BORDER PROTEC
Critical cross-border infrastructure remains exposed and vulnerable to damage, whether by accident, malicious intent or natural causes. Europe’s leaders and operators are making moves to fortify this grid capacity, which has knock-on effects on the energy transition
TEXT KIRA TAYLOR
TION
Laying
ver the last few years, Europe has witnessed a series of attacks on its energy, telecommunications, and transport infrastructure, revealing the vulnerability of its systems amid an increasingly unstable geopolitical landscape. Europe’s gas pipelines, subsea cables, and onshore infrastructure have all been targeted, with this often linked, or suspected to be linked, to Russian actors.
As Europe looks to fully phase out Russian gas, the threat of attacks will potentially increase. Meanwhile, instability in the Middle East could have spillover effects. These geopolitical challenges border Europe as it undergoes a major economic transformation, phasing out fossil fuels and switching to clean and digitalised technologies. While this will inevitably boost future energy security, it will create more vulnerability in the near term.
“We are completely transforming our energy system, so we are vulnerable already now because you switch off coal—that's good for the climate—but at the same time, you bring additional intermittent power in,” says Andris Piebalgs, a former European energy commissioner and professor at the Florence School of Regulation.
“All these systems will be more digital, so could be more affected by cyberattacks. We will have more clever infrastructure, but it definitely brings new vulnerabilities,” he adds.
INCREASING DESTRUCTION
Over the past decade or so, as tensions grew with Russia, Europe witnessed an increasing number of attacks. Even before the invasion of Ukraine, there were concerns about Russia’s actions, including Russian naval vessels disrupting the construction of a subsea interconnector between Sweden and Lithuania in 2015.
The run-up to Russia’s full-scale invasion of Ukraine
saw it shoot down an old Soviet satellite in a direct-ascent anti-satellite missile test, a Russian-flagged ship was accused of cutting a cable to a key satellite uplink station in Norway, and a major cyberattack occurred the day it invaded Ukraine that had repercussions on Europe’s energy system.
“Across Europe, we have seen a number of phases of Russia's shadow war, if we want to call it that, against energy and critical infrastructure. This is something that we would have seen more in the World War Two era or the Cold War era,” says Benjamin Schmitt at the University of Pennsylvania and the Democratic Resilience programme at the Centre for European Policy Analysis.
“As of the early 2000s, folks believed that the threats were largely moving over to the cyber realm almost exclusively, and therefore, the focus was on cyber-defences. Certainly, it was and continues to be the predominant threat vector for energy and critical infrastructure. However, Russia was already building up capabilities to do subsea and onshore infrastructure attacks in the 2010s,” he adds.
MAJOR DISRUPTION
Since the invasion, there have been major disruptions to Europe’s energy system, notably to its gas supplies. Europe had relied on Russia for almost half of its gas imports. The sudden drop in supply caused price shocks and fears of shortages that ricocheted onto energy bills and industrial competition.
The cut-off from Russia was further exacerbated in September 2022 when the Nord Stream One pipeline—which brought Russian gas to Germany, and the never-used Nord Stream Two pipeline—were destroyed by a purposeful act. The perpetrator remains unknown, but it is hard to miss the connection to the war in Ukraine.
In 2023, this was followed by damage to the Balticconnector gas pipeline that connects Finland and Estonia. The pipeline was shut down and telecommunication cables were also disrupted after a Chinese-flagged ship dragged its anchor across the link.
Prime target Ukraine generation infrastructure has become an object for Russian aggression
“Across Europe, we have seen a number of phases of Russia's shadow war, if we want to call it that, against energy and critical infrastructure”
Europe’s offshore pipelines are particularly vulnerable, says Piebalgs. “I think this is where the biggest challenge is. I would also look at the Mediterranean pipeline because supplies from Algeria are important. Our electricity system is still very much dependent on gas. As soon as there are gas [price] spikes, there are electricity [price] spikes,” he adds.
There is also an equal risk onshore, says Schmitt, pointing to damaged infrastructure and the sabotage of sites supporting Ukrainian defence. This includes damage to a pipeline linking a floating regasification unit to Germany. Russian nationals and non-Russian nationals have been ar-
rested for some of these incidents, and it is clear that Russia has a well-established playbook for hiring non-Russian nationals, explains Schmitt.
However, offshore attacks are still appealing to malicious actors because their remoteness makes it difficult to catch perpetrators in the act, and it is harder to attribute blame, Schmitt says. “The Russians oftentimes get away with this through non-attribution or unwillingness to attribute if there is enough evidence or if there's simply not. In some of the cases, how do you fully prove that that Russian-flagged fishing vessel was operated by the Russian government?” he explains.
“Do whatever you need to do for security right now. If you don't do that, you will undermine the public's trust"
LEARNING FROM DESTRUCTION
With attacks on the rise, it is important to learn what went wrong and how this can be avoided in future. In cases like the destruction of the Nord Stream pipelines, there is still little information available to the public. “What worries me is that we still have not gone through what went wrong, how [the gas pipelines were] destroyed, and what measures we have now in place so that it doesn't [happen] again,” says Piebalgs.
Learning from the previous incidents is particularly important as Europe builds more offshore infrastructure, including electricity transmission and potentially carbon dioxide transportation, adds Piebalgs. The war in Ukraine, however, provides a grim case study into system vulnerabilities as Russian forces have targeted energy infrastructure since the beginning of the war.
“It's true that Ukraine's electricity system is different,
so they have different transformers [for example], but we could look at what type of infrastructure was destroyed and what impact it immediately made because some made less impact, some made more impact,” says Piebalgs, adding that this knowledge can inform new investments.
The invasion of Ukraine also highlights the benefits of renewables. At the beginning of the war, Russia focused its attacks on transmission lines, but recently it switched to large attacks on Ukraine’s coal power generation. Because this generation capacity is so concentrated, one attack can do a significant amount of damage. Meanwhile, more distributed renewables capacity is harder to destroy in one go. The addition of batteries means that systems can run even when parts of the grid are down.
“We say that a future power system will be decarbonised, decentralised and digitalised. Increased decentralisation seems to be a better system. Because if you just knock out a wind turbine or solar, you can be back up and
running in a day, so this kind of increased decentralisation with batteries seems to make a lot of sense. That's one major takeaway from the war,” says Cillian O'Donoghue from electricity industry body Eurelectric.
MORE CAPACITY
Renewables also require more flexible and dispersed grids that can manage variability. This will also help if a part of the system goes down either by accident or purposeful sabotage. “The more renewables we put in, the more transmission links we put in. If you go back ten years, we were much more vulnerable because then it was maybe one link. Now, we’re starting to have several offshore wind farms with several connections within the countries,” says Andreas Berthou from Hitachi, an engineering firm.
“We're building a system that is prepared for outages, either [caused] by the weather or by other reasons,” he adds. However, while renewables are dispersed, there are still often pinch points, including the export cables from
offshore wind projects to shore and the substations connecting to the grid. “You have those single points of failure: cables and things like this. So it's not a panacea, but it certainly is an improvement over pipelines and other cables that are monolithic,” says Schmitt.
BETTER MONITORING
Neighbourhood watch
Closer monitoring of offshore infrastructure is required in the face of growing threats
The digitalisation of grids also allows operators to find faults more quickly. While the level of digitalisation varies from country to country in Europe, measures include digital twins of the grid so that operators can fix issues from the control room and pinpoint faults before sending an engineer to repair them.
However, digitalising grids also leads to more security risks. “We're seeing an increase in cyberattacks across the system generally, and it's something that's becoming a high-
er threat,” says Savannah Altvater, also from Eurelectric.
“You don't have to be physically present. You don't have to coordinate with anybody on how you actually go about doing the attack. You don't have to procure weapons—all you need is a laptop… and you can harm the energy system that way, so it's something that we're keeping an eye on,” she adds.
IN-BUILT SECURITY
There are solutions to increase the physical security of energy systems. For offshore, this includes burying cables that had previously run along the seabed. This avoids accidental damage, for instance, from anchors, and makes purposeful attacks harder, says Hitachi’s Berthou.
Hitachi is looking at ways to also increase onshore security, particularly following shootings at substations and transformers in the United States. This includes avoiding using ozone-depleting SF6 gas in circuit breaks to prevent environmental repercussions if they are damaged and switching to silica rubber for insulators to avoid explosions that may contain porcelain shards. Transformers are also encased in thick walls to avoid damage from bullets and, in extreme cases, the whole substation can be built indoors.
Meanwhile, some operators have agreements with software providers like Google Maps to prevent physical assets from appearing on web searches. Schmitt says that increased monitoring, including on the ground and with drones and satellites, can also help quickly attribute attacks and deter actors, even when infrastructure stretches thousands of kilometres.
you're going to find that the fire station has more cars than they usually use because then, when something happens, in critical situations, you need to have overcapacity,” he says. “In the worst of cases, if you don't have overcapacity, you might be out of capacity when you really need it,”
Grid points Secure grid infrastructure keeps the lights on
This approach requires messaging campaigns and a policy framework that recognises energy security is not free as many of these projects are not commercially motivated, says Schmitt. While it risks leading to stranded assets, like gas infrastructure as Europe phases out fossil fuels, he argues it has a key role in the short term. This was seen with infrastructure for regasification units used to bring in international supplies following Russian cut-offs, he says.
“It was imperative that that took place simply because it would respond to Russia's cut-offs in near real-time—not exactly, but within weeks and months versus years. So the idea was that you need to swap resource for resource... because physically you can't build out the capacity needed for power generation from renewable energy sources that fast,” he explains.
Europe also complimented this with measures to build up renewables, which Schmitt sees as the right approach. “Do whatever you need to do for security right now. If you don't do that, you will undermine the public's trust in the energy transition, because you will result in outages, in-
“In the worst of cases, if you don't have overcapacity, you might be out of capacity when you really need it"
ROLE FOR REDUNDANCY
Building more physical infrastructure than is needed on a day-to-day basis provides alternatives in case part of the system goes down. “In my opinion, it is better to overdo than underdo. So if the war in Ukraine is going on, everybody is still expecting a lot of Russian aggression, even including towards NATO states, so that means that you need to be protected as much as possible,” says Piebalgs, adding that this may lead to spending more than is necessary but needed for security.
Former Finnish MEP Nils Torvalds agrees. If a connection goes down, there needs to be another solution, he says. “If you go to a fire station anywhere in Europe, then
termittency, and energy poverty. Then you also start to sunset some of these hydrocarbon infrastructure in the process because that's needed for the energy transition but only when you have the new renewables in place.”
HARMONISED RESPONSE
EU and NATO countries need to work together to protect infrastructure. For example, Schmitt wants more open data and better harmonisation of the knowledge spread across system operators, military, and local law enforcement. This could help overcome communication barriers between countries with different structures, like Sweden’s coast guard and Denmark’s Copenhagen police, which have different capabilities and monitoring abilities.
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Countries also need a certain level of transparency to avoid creating an information vacuum, as happened with the Nord Stream attacks, Schmitt adds. He also wants NATO countries—with incidents linked to Russia—to launch a consultative mechanism process to show that the alliance is taking steps to counter and deter future attacks.
Transmission system operators should also play a part in protecting infrastructure and should be encouraged to do this, particularly as Europe looks at building more offshore technology, like wind generation, says Piebalgs. “Transmission system operators should be remunerated when they do some events to protect and really try to get some more innovation. Because I don't believe that navy ships should be busy doing this—even I don't know how strongly we can really expect that they can protect [this],” he explains.
Because of the interconnectedness of its market, European Union countries need to work together to prevent damage. A European Commission spokesperson said that while this task primarily rests with member states, the Commission is supporting resilience measures and responding to hybrid threats. “Incidents of sabotage and hostile monitoring in the last years have made it clear that we cannot take the resilience of EU critical infrastructure for granted,” the spokesperson explains.
SECURITY UNION
In 2020, the European Commission adopted an EU Security Union Strategy running up to 2025. This looks at the
Pipeline capacity Growing the number of connections across borders improves flexibility but adds security risks
protection and resilience of key infrastructure and tackling evolving threats. In 2024, many EU countries also completed resilience stress tests for the energy sector across more than 200 operators, and the European Commission is now following up about increasing preparedness.
EU countries are also implementing the Resilience of Critical Entities Directive, which set up a new group to bring together authorities in charge of critical infrastructure resilience from EU countries, Norway and Iceland. It also requires EU countries to carry out risk assessments of their critical sectors.
The European Commission has given recommendations on the security of submarine cables, aiming to coordinate governance and funding. Coordination on cross-border infrastructure should also be improved following EU countries adopting a Critical Infrastructure Blueprint in June 2024.
However, Piebalgs wants to see more work on the security of supply and the impact this has on energy prices. For example, stress testing what would happen if there was a drop in power supply from Norway.
There is also a need to review the directives on the security of supply for gas and electricity as they are based on an outdated system and fail to reflect increased electrification or geopolitical tensions, adds Eurelectric’s O’Donoghue. “The whole architecture needs to be improved. In terms of the institutions, coordination, and planning, we probably need to look at that as well as Europe to have better system planning,” he says, saying this could potentially create a new agency or give a new mandate to an existing one.
With increasing geopolitical insecurity, there is still a considerable amount of work to prepare and protect the energy system from physical attacks and improve communication and cooperation to make it happen. •
An arsenal of distributed renewable energy generation sources enhances the resiliency of the network. Although they present challenges for system operators, they also contribute to the flexibility and security of the network in the face of adversity
TEXT HEATHER O’BRIAN
ARMADA
THE CONCEPT OF ENERGY SECURITY
has been taken to an extreme in Ukraine, where the energy ministry and executives of local energy companies regularly appeal to allies for help in strengthening air defence systems to protect power facilities that have increasingly been the target of Russian attacks.
Russian missile and drone attacks on Ukrainian energy infrastructure have been a feature of the war since it began in 2022, but they intensified in 2024. “Even before an unprecedented wave of attacks in late August, more than two-thirds of Ukraine’s pre-war power generation capacity was not available because it was destroyed, damaged or under occupation,” the International Energy Agency (IEA) noted as it unveiled a ten-point energy action plan for Ukraine to safeguard an essential level of energy services this winter.
Small-scale renewable and storage systems have a key role to play in that plan. “Large energy assets are more vulnerable to attack, so decentralisation brings clear security benefits,” the IEA said. “Accelerating deployment of smaller-scale gas-fired combined heat and power plants, and solar photovoltaic (PV) and wind systems complemented by batteries and other storage technologies is crucial to increase the resilience of supply,” it added.
Since the start of the conflict, the Ukrainian government has prioritised deploying decentralised energy sources, including rooftop solar with storage, in administrative buildings, hospitals, schools, households and businesses. Consumer-installed PV has continued to grow during the war, reaching nearly 1500 megawatts (MW) by the start of 2024.
Energy security has also become an in-
creasingly important topic in Europe, as governments scrambled to find alternatives to Russian natural gas after the conflict erupted in February 2022 and electricity and gas prices shot up.
“There has been a push to move away from fossil fuel imports for many reasons, including energy security and climate,” says Carlos Diaz of research and energy intelligence firm Rystad Energy. “Germany has been leading the way and a lot of the new renewable capacity that is coming online there is rooftop solar, which is reducing fossil fuel consumption and increasing energy security,” Diaz adds.
With companies in Europe paying much higher energy prices than their competitors, energy security has also become intertwined with industrial security issues, notes Vincent Petit of Schneider Electric, an energy management firm.
RESILIENCE IN A STORM
“Energy security isn’t only about buying gas from the United States instead of Russia,” says Naomi Chevillard of the trade association SolarPower Europe. “It’s changing technology, producing locally and integrating batteries.”
The importance of security has come into the spotlight not only due to conflicts that have altered flows of energy but also because of disruptive weather events. Between 2011 and 2021, the average annual number of weather-related power outages in the US in-
Cost of war
The aftermath of missile attack on Ukrainian power infrastructure
creased by about 78% compared to the previous decade.
When Hurricane Milton struck Florida in October 2024, some three million households were left without electricity. One exception was the Hunters Point “net zero” community in Cortez, 80 kilometres south of Tampa,
where, thanks to a combination of rooftop solar and battery storage, the lights were kept on while neighbouring homes suffered blackouts.
HUGE POTENTIAL
Solar power generation in the European Union increased by 27% to 263 gigawatts (GW) in 2023, as capacity additions continue to be dominated by rooftop applications. The European Union has technical installed capacity potential for additional photovoltaic installations on rooftops, roadsides and reservoirs of over 1000 GW that could generate electricity equivalent to nearly half of the bloc’s consumption in 2022, researchers at the European Commission’s Joint Research Centre in
Three Musketeers
The grid, flexibility and electrification are central to the energy transition, says SolarPower Europe's Naomi Chevillard
Ispra, Italy, recently estimated.
They found that this capacity could “reduce the competition for land resources and contribute to local energy production and decentralisation while reducing transmission losses and enhancing energy resilience”.
Schneider Electric estimated in a 2022 report that the power generation potential from customer-sited PV plants now stands at about
7500 terawatt-hours (TWh), equivalent to about one-third of worldwide electricity generation. About 80% of this potential is found in individual households. By 2050, this could reach 25,000 TWh due to increased building stock and improvements in solar technology and building design.
The study limited itself to rooftop potential and didn’t consider building-integrated PV or
Solar cooperation
Not everyone has a roof. Siemens' Michael Weinhold wants to see more opportunities for joint development
“anything related to parking lots and distributed areas, where there is a lot that could be done”, explains Petit of Schneider Electric. “The potential is much larger than we think it is.”
As Europeans seek to build their energy self-sufficiency, investments in home batteries for PV systems have also grown. As generation from solar power rises across the continent, the possibility of curtailment has also increased, providing another incentive for storage.
Europe installed over 17.2 gigawatt-hours (GWh) of new battery energy storage systems in 2023, bringing the total to 35.9 GWh and marking the third consecutive year the market doubled, analysis from SolarPower Europe shows. The residential segment accounted for 63% of this total.
MANAGING COMPLEXITY
Rooftop solar and behind-the-meter battery storage are just two examples of distributed energy resources (DER). The US Department of Energy defines DER as: “Equipment located in or near the site of end-use that can provide electricity demand flexibility, electricity generation, storage, or other energy services at a small-scale (sub-utility scale) and are typically connected to the lower-voltage distribution grid.” Other examples of DER include electric vehicle (EV) chargers, smart water heaters and smart thermostats, and flexible commercial and industrial loads.
While distributed resources can contribute significantly to decarbonisation efforts, their growth is also complicating the efforts of electricity system operators to balance demand with supply, which can be volatile. The electrification of heating and transport will also change power consumption patterns.
“The grid used to be a one-way street from power generation to customers,” explains Kristian Ruby of Eurelectric, a trade association. Now that power generation is increasingly decentralised, electricity flows in two directions. “This is presenting challenges for the grid,” he adds.
Germany has 93 GW in solar PV capacity across over three million individual power plants, and these numbers are growing. “This alone represents one level of complexity. [But] there’s already a lot you can do in the set-up to manage this complexity, such as shifting loads or using battery or thermal storage,” says Michael Weinhold of Siemens Smart Infrastructure.
On the technical side, there are challenges that come with the spread of DERs, “But there are also lots of solutions,” says Petit of Schneider Electric. “We have new software capabilities to help DSOs, and there are lots of utilities adopting much more sophisticated control systems,” he notes.
GRID INVESTMENTS
There is a consensus that grids in Europe and beyond must be modernised to keep up with the growth of distributed resources. Digitalisation is part of the picture, coordinating the interaction of DER devices with the grid and providing better visibility on distributed assets.
Ruby says the priority is to “establish a common understanding across all levels of society that the energy system is changing, and the infrastructure needs to be reinforced to match a very different type of energy system. That requires investments and those investments need to be accommodated for.”
Eurelectric estimates that investments in modernising the distribution grid in Europe should increase from an average of €33 billion in 2025 to €67 billion in 2050 to “enable massive electrification of transport, heating and industry, integrate renewables and withstand more frequent extreme weather and cyber threats”. About 70% of future renewable generation and electricity storage will be connected to the distribution grid, while distributed renewable capacity in Europe is seen growing six-fold from 2020 to 2050.
Ruby stresses the importance of a long-
term grid strategy. “Most planning is for three to five years in Europe. That was fine in the past, but now we are in a different mode—an electric mode—and we can’t rip up the streets every three years.”
He also underlines the importance of better managing the large queues already formed in some European countries for grid connections, including for some DERs. “We need to filter the connection requests better and prioritise the access with some societal parameters in mind”, such as whether a project will help cover demand in a given area or contribute to economic growth. “It might mean over time you might say no to some projects,” he says.
Another option is to offer flexible grid connection agreements, which are now being done in the Netherlands due to limited grid capacity. “There must be some careful thinking behind these practices because there’s also a market for flexibility services, but I think these two things can co-exist,” says Ruby.
THREE MUSKETEERS
The grid, flexibility and electrification are “the three musketeers of the energy transition”, says Chevillard of SolarPower Europe. In a 2022 report on DER potential, the IEA noted, “Some DERs are technically capable of mitigating the challenges they themselves or other resources create,”. For example, batteries can store the electricity from a rooftop solar system when there is excess renewable energy generation, either for self-consumption when the sun is not shining or to feed into the grid at times of peak demand. The timing of electric vehicle (EV) charging can be shifted to take advantage of off-peak tariffs when renewable generation is likely to be higher.
SolarPower Europe calculated that in a scenario where solar power is combined with electrification and increased deployment of other flexibility resources like cross-border electricity interconnection capacity and storage, the solar energy lost through curtailment would decrease by 66% in 2030 and 49% in 2040 compared to a “solar-as-usual” scenario. The business case for solar also improves, as a result.
In a flexible, electrified energy system the trade association estimates the European Un-
“ NOW THAT POWER GENERATION IS INCREASINGLY DECENTRALISED,
ELECTRICITY FLOWS IN TWO DIRECTIONS ”
ion could reach 1.2 terawatts (TW) of solar by 2030, much higher than the 750 GW EU Solar Strategy goal. By 2040, solar capacity could rise to 2.4 TW and satisfy 39% of the bloc’s growing power demand. “We need more electrification and flexibility to drive the growth of solar power,” says Chevillard, noting that signs of momentum behind electrification slowing are worrisome. According to Eurelectric, the electrification rate of final energy use has stagnated at about 22-25% in the last five years but needs to reach 35% by 2030 and 61% by 2050.
TAPPING INTO BENEFITS
As they seek to incorporate a growing share of clean energy into their grids, transmission
Plan ahead Eurelectric's Kristian Ruby stresses the importance of a long-term grid strategy
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system operators (TSOs) have shown an interest in tapping into flexibility resources available at the distribution grid level. One example of this is the Equigy blockchain platform, which was launched at the end of 2020 and is backed by German, Dutch, Swiss, Austrian, and Italian TSOs. It aims to facilitate aggregators' involvement in the services market with small-scale flexibility resources like household batteries and electric vehicles.
According to a United States Department of Energy report, deploying 80-160 GW of virtual power plants (VPPs) by 2030 to help address national peak capacity power needs could save some $10 billion dollars in annual grid costs. VPPs, which aggregate DERs and can function as a single resource like a conventional power plant, represent a cheaper alternative than utility-scale batteries and natural gas peakers for meeting peak demand.
“Equally as important as their financial benefits, VPPs in various forms can increase resilience, reduce greenhouse gas emissions and air pollution, reduce T&D (transmission & distribution) congestion, empower communities, and be adapted to meet evolving grid needs,” the DOE added.
AFFORDABLE ELECTRICITY
Depending on the country, the levelised cost of electricity (LCOE) of distributed PV has fallen by 40-70% since 2010. It can now provide more affordable electricity than from the grid in many places, according to the IEA.
As the costs of solar panels have come down, this has “made them more affordable even in regions like Africa”, states Diaz of Rystad Energy. “But when you talk about an integrated system with batteries, it’s still challenging” from an economic point of view.
While battery technology has been evolving quickly and costs are coming down, it remains expensive, says Diaz. So it’s no coincidence that a large share of PV systems has been paired with batteries in high-income countries like Australia, the US and Germany, he adds.
Weinhold of Siemens Smart Infrastructure highlights the importance of the right ruleset and incentives to encourage the adoption of rooftop solar and technologies like heat pumps. “You can do a lot to enable very small-
scale PV and help ramp it up, for example, but simplifying and streamlining the connection process,” he says. He also believes that it is important to create opportunities for the joint development of renewables, such as cooperatives. “Not everyone has a roof” to install a PV system, he says.
Net metering—in which consumers export solar power they do not consume on-site to the grid and are credited for this in their electricity bills—has helped to drive the growth in rooftop solar in many parts of the world. However, its usefulness is increasingly being questioned, particularly as the energy system becomes more complex and equipment like batteries, EV charging management systems, and heat pumps become more ubiquitous.
Time-of-use or locational tariffs are seen as providing a better incentive for using electricity in a flexible way, encouraging greater consumption when renewable generation is high, prices are lower, and there is a lack of grid constraints.
OFF-GRID
While distributed resources can provide valuable services to the grid, they can also enable a supply of energy in areas where there is no grid, or the grid is severely strained.
To serve customers in remote parts of the Western Australian power grid, operator Western Power plans to roll out up to 4000 off-grid stand-alone power stations running on solar power and batteries in the next decade. In the process, it will progressively decommission about 15,000 kilometres of overhead powerlines.
In South Africa, frequent blackouts helped drive a 163% surge in rooftop solar capacity in 2023. In war-torn Ukraine, off-grid and mini-grid solutions are also part of the IEA’s toolkit for surviving the winter.
Diaz of Rystad Energy notes that DER can also supply energy to those without it. “So it’s not only a matter of energy security but also providing energy for basic needs.” A case in point is Kenya, where off-grid rooftop solar satisfies the energy needs of a significant portion of the population. Energy access will continue to be an important issue, as the IEA estimates that some 750 million people worldwide still lack electricity. •
GROWING THREAT CYBERSECURITY THE OF
THE DIGITAL AGE BRINGS NEW THREATS TO CLEAN ENERGY GENERATORS.
WHILE MINIMAL DAMAGE HAS BEEN DONE TO DATE, IT’S BECOMING CLEAR WHAT THE BIGGEST THREAT TO ENERGY INFRASTRUCTURE AND RENEWABLES PROJECTS
COULD BE WHEN IT COMES TO CYBERSECURITY: HUMAN ERROR
As the clean energy industry modernises, digitises and expands, so does the potential for cyberattacks on renewable energy projects and grids. “With federal and local legislature(s) advocating for renewable energies, the industry will expand to keep pace, providing more opportunities and targets for malicious cyber actors,” wrote the US Federal Bureau of Investigation in July 2024. Cyberattackers do not, however, particularly target solar and wind projects or other clean energy facilities or companies, says Danish Saleem at the US Renewable Energy National Laboratory’s (NREL) security and resilience centre. “There’s little to no evidence that adversaries target clean energy especially,” he says.
However, more complex technology and more complex grids do increase susceptibility. “The flip side of increasing digitisation is a potential increase [of grids’] vulnerability to cyberattacks,” notes Kristian Ruby of Eurelectric, the European electricity industry association.
Over recent years, there have been a few high-profile incidents involving renewable energy facilities, companies, and the smart grid. Some involve ransomware or malicious software that blocks access to a computer system by encrypting data until a ransom is paid, often in cryptocurrency.
In 2019, developer Norsk Hydro in Norway was hit by the ransomware LockerGoga. The company lost all information technology (IT) infrastructure and its operational technology (OT) was impacted, according to a 2022 report on European cyber breaches by EnergiCERT, the European energy sector’s cybersecurity centre. The hydro generation part of the company maintained supply through manual processes.
A year later, Energias de Portugal (EDP), a utility and one of the world’s largest wind operators, was hit by RagnarLocker ransomware. The attackers stole ten terabytes of data and asked for $10 million in ransom, although the attack did not affect the OT network, said EnergiCERT.
In the same year, Elexon, responsible for balancing Great Britain’s power grid, was hit by REvil ransomware. Internal IT systems and laptops were encrypted, and sensitive data was stolen.
The variability of wind and solar can initially mask a cyberattack that takes an asset offline or impairs its operation, cautions Sujeet Shenoi at the University of Tulsa, who has become a “cyber cop”, of sorts, for the renewables industry. While, as Saleem suggests, renewables genFirst defence Simple security measures can reduce the risk of a cyberattack
"WITH A $500 PRODUCT — OR CHEAPER IF WE DESIGN OUR CIRCUIT BOARD — WE CAN STOP A $3 MILLION TURBINE"
SUJEET SHENOI, UNIVERSITY OF TULSA
erators are only sometimes targeted, companies across the wind sector have encountered cyberattacks in recent years. Turbine maker Vestas was hit by Lockbit 2.0 ransomware in 2021. Its OT systems were unaffected, but Vestas closed its IT systems across many business units and locations. Personal data was disseminated. Vestas shares decreased by 3% the Monday following the cyberattack, which also led to production delays and extra costs, concluded a report on cyber threats to offshore wind by the UKbased Alan Turing Institute’s CETaS and Data-Centric Engineering programme.
In February 2022, just as Russia invaded Ukraine, a satellite network operated by US-based internet and communications provider Viasat was hit by the AcidRain malware, thought to have been unleashed by Russian state-sponsored criminals. The malware destroys modems and routers. The Viasat attack undermined the operation of 5800 Enercon wind turbines totalling 11 gigawatts—as collateral damage— when 50,000 satellite terminals were compromised. The main target was Ukraine.
As a result, Enercon’s turbines could no longer communicate with the company’s Supervisory Control and Data Acquisition (SCADA) system and server, so they could no longer be controlled. According to a report from US-based Boise State University, some of the turbines took two months to come back online.
Fellow German wind turbine maker Nordex was also hit in 2022. Conti ransomware affected turbines in Germany, Mexico, the US, China, Spain and India. EnergiCERT said all IT systems were closed down, and remote access to all turbines was interrupted.
Elsewhere, turbine maintenance firm Deutsche Windtechnik’s remote monitoring of wind turbines was down for two days after it was attacked in 2022 with BlackBasta ransomware, also attributed to Conti. The Alan Turing Institute said this resulted in the disabling of remote connectivity. Some 2000 out of 7500 Deutsche Windtechnik-managed wind turbines in Germany were turned off as remote data monitoring connections were halted.
While most of these attacks affected onshore turbines, offshore wind turbines are even more vulnerable and potentially higher-value targets in many ways. Ethical cyber experts should closely monitor offshore wind facilities because of their size. If a large offshore wind farm becomes compromised, it could destabilise the grid, says Auke Huistra at DNV, an advisory
firm, despite physical access being harder for an offshore wind project. The smaller capacity of onshore wind projects means they are less likely to destabilise the grid if generation is disrupted. In contrast, larger offshore wind projects are often appointed as critical infrastructure.
Experts say wind power has not been more affected than solar despite the number of reported wind incidents. According to the FBI, an unnamed private solar company in the US in 2019 “lost visibility”—or was unable to monitor— around 500 megawatts of its wind and photovoltaic sites in California, Utah and Wyoming. This came after a result of a denial-of-service (DoS) attack that exploited an unpatched firewall, essentially outdated software. A DoS attack is a malicious attempt to make a website or network inaccessible to legitimate users by flooding it with requests or data.
The FBI has also pointed to a variant of the Mirai malware that has been used to hack devices by exploiting a vulnerability in SolarView, a solar power monitoring software. The malware infects smart devices that use ARC processors, a type of central processing unit. Mirai turns the devices into a network of remotely controlled bots, also known as a botnet, which can be used to launch distributed DoS attacks. The FBI said it disrupted a Mirai-variant botnet that attacked more than 260,000 devices worldwide.
In May 2024, media in Japan reported that hackers hijacked about 800 SolarView Compact remote monitoring devices manufactured by the industrial control electronics manufacturer Contec at solar generation facilities. They wanted bank account information, reported CSO Online, a news outlet. The brazen assailants even posted a video on YouTube of their attack.
In Europe, the atmosphere for cyberattacks has become more heated since Russia invaded Ukraine in February 2022. For three Christmases in a row, Russian “spear phishing” has targeted the Ukrainian grid. Generators have been pushed offline although there was no equipment damage, says the University of Tulsa’s Shenoi. Spear phishing sees fraudulent emails sent supposedly from a known or trusted sender to try and get targeted individuals to reveal credentials or passwords, adds NREL’s Saleem.
Yet despite the Russian war-time attacks, Europe’s electricity grid has remained stable, says Ruby of Eu-
relectric. Generally, in cyberattacks, Shenoi says that perpetrators are trying to steal proprietary or customer information, make money through ransomware or damage a competitor if they are state-sponsored actors. Shenoi says, however, there is essentially a “détente” amongst state-sponsored actors outside war zones because of the likelihood of a reciprocal attack.
State-sponsored actors tend to come from Russia, North Korea, Iran, or China, according to Edward Oughton, who studies risk analysis at George Washington University in Virginia.
Ruby cites examples of cyber espionage in which Chinese manufacturers of exported solar panels were legally required to share information from operations with Beijing and of a US utility phasing out using Chi-
Hidden figures
Cyber threats can come from anyone, any where
nese drones to monitor operations again because they transmitted information back to Beijing. In another incident, some Chinese surveillance cameras for utility facilities included a digital backdoor so the utility could be spied upon.
One way of testing a renewable energy facility is with “white hat” ethical hacking or penetration testing. DNV offers clients ethical hacking to detect vulnerabilities, while Shenoi and his students have physically entered wind farms in the US Midwest.
They then picked the lock of a wind turbine tower door in under a minute, opened a server closet, unplugged an ethernet cable and attached one or two cheap off-the-shelf Raspberry Pi mini-computers
with Wi-Fi capability. They attached another cable to an open port in the programmable automation controller.
Then, they could halt the turbine using a laptop from a vehicle parked a few hundred metres away. In some cases, they could halt the entire project if the turbines are linked via a private network. “With a $500 product—or cheaper if we design our circuit board— we can stop a $3 million turbine,” Shenoi says.
Shenoi says that physical access to the asset should be limited. Even offshore turbines, protected by the ocean, tend to have CCTV. If a breach is detected, security personnel can be deployed rapidly, even for a remote project.
NREL's Saleem says there are many ways to ward off cyberattacks. Basic cyber “hygiene”, such as not using a default password for an inverter, ensuring a secure connection between a cloud and gateway, and logging attempts at access, is often cited by experts.
Software and patches must be promptly updated, although that would not have helped in the widely publicised CrowdStrike outage in July 2024. This outage impacted airlines and other companies because the security company issued a flawed software update—a difficult risk to predict.
Intrusion detection software should also be used, though experts stress that cyber attackers may enter and lurk and not act for many months. Network segmentation is important, with one-directional gate-
Service denial Ransomware attacks can hold businesses hostage
ways in some instances. Remote access to an offshore wind site should be strictly controlled, says DNV’s Huistra. External devices such as memory sticks, laptops or phone chargers should never be attached to the networks. Individuals must be validated before they can access a system.
A company should have a good “incident response capability” so employees can quickly detect what is happening and know how to react and respond. George Washington University’s Oughton says owners and OEMs should also have cyber and brand reputation insurance.
He adds that user authentication for computer ports should be required so an unauthorised device cannot function. A software firewall between each wind turbine should be constructed, and anomaly-detection or behavioural analytics software should be used. Shenoi recommends placing VPN tunnels or encrypted links between turbines and their control centres and employing recommended international standards for project operators.
“The human is the weakest link,” Oughton adds. “An organisation is only as good as its weakest link.” DNV’s Huistra agrees but also says, “The user is often one of the weakest links, but with training, they can become one of the strongest.” Well-trained employees can spot anomalies, he adds. Overall, companies should take cyber security as seriously as they do physical safety, recommends DNV. “But it is a continuous effort since there is no 100% security in our world,” concludes Huistra. •
Broaden your perspective on energy.
INSURING TRANSITION
FEW SECTORS ARE AS KEEN ON REDUCING RISK AS THE INSURANCE INDUSTRY AND INSURERS HAVE A VESTED INTEREST IN THE ENERGY TRANSITION AS EXTREME WEATHER EVENTS HIT THEIR PROFITS
TEXT JASON DEIGN · ILLUSTRATION BERNARDO FRANÇA
In October 2009, oil company Shell noticed something amiss at its Egmond aan Zee offshore wind farm, which it managed alongside Dutch utility Nuon. The grout affixing the wind farm’s turbines to their foundations began to break. Grout was used to cement the connection between an offshore wind turbine foundation and the transition piece above it. It was a design feature adapted from the oil and gas industry and signed off by standards bodies such as DNV.
But wind turbines rock back and forth much more than oil rigs, and the grout used at Egmond aan Zee was not able to take the strain. Soon, the problem started to emerge at other wind farms that used the same design. By 2010, the analyst firm Emerging Energy Research, now part of S&P Global, had found grouting was dissolving on 60% of Europe’s offshore wind turbine foundations.
Correspondence obtained from the UK’s government’s energy ministry at the time showed Britain’s RenewableUK industry body thought most of Britain’s 336 offshore wind turbines could develop the fault, costing £160,000 apiece in repairs.
“We are experiencing the issue at some of our Danish wind farms,” said a representative of DONG Energy—now known as Ørsted. “It is a nuisance to experience this issue in a very busy period for our wind organisation,” they added, “but it also illustrates some of the technical uncertainties we’re exposed to in the offshore wind industry.”
CLAIMS DELUGE
Offshore wind’s grout issues were largely resolved through the application of updated design standards, and the problem is now a barely remembered footnote in the industry’s early annals. Other issues followed, including failures with gearboxes, cable protection systems, and more, to the dismay of companies that had insured offshore wind projects and found themselves facing a deluge of claims.
To the uninitiated, this might not seem a big deal. After all, the insurance industry is there to provide cover for the unexpected, and occasional big payouts are part of the business model.
However, the insurance industry’s relationship with the energy transition is more nuanced than it might look. For insurers, decarbonisation is not just about securing sustainable energy supplies—it’s about the viability of the global economy.
The insurance industry has a vested interest in ensuring the energy transition succeeds because, with-
sition companies. These include offerings such as political risk cover, which mitigates policy uncertainty, or performance guarantee insurance, which protects renewable energy project owners from losing money on underperforming projects.
Unusually, such products aim to reduce the risks associated with renewable energy revenues rather than simply providing property or casualty cover for an asset. Revenue protection is important in helping investors feel comfortable with backing projects in what is still often seen as an emerging industry.
In practice, this often involves structuring insurance to help utilities, investors, asset managers and independent power producers maximise returns on capital for every electron that makes it through to an end user, says Jatin Sharma of broker Nardac. “‘Security’ means how do we avoid disruption in supply from what we’re producing and enhance and improve resilience and mitigate against potential downtime, whether is in our control or force majeure,” says Sharma.
ENABLING FINANCE
Typically, securing energy supplies involves safeguarding the operation of an asset once it is up and running. But insurance products can also help smooth the passage of projects while they are still at the finance or contracts stage. In one example, an investor was unsure about an American asset owner’s decision to manage the operations and maintenance of a wind farm in-house rather than relying on the turbine manufacturer.
“The company was, like, ‘Hang on a minute,’” says Sharma. “‘So, you’re a co-owner in this, but you’re also going to sign the cheques for the service agreement? What if service costs doubled—how do we mitigate that legal conflict-of-interest risk?’”
The project’s broker solved the problem by underwriting a non-damage policy to cover the cost of operations and maintenance running over an agreed cap. Using insurance to address different risk appetites in this way is likely to become more important as the energy transition progresses, says Sharma.
“The silver bullets we’re looking for, like hydrogen deals, electrolysers [and] interconnectors, need more parties at the table,” he says. “You have to have some flexibility around what their appetite is because it’s not always going to be aligned.”
INVESTOR CONCERNS
More widely, the judicious use of insurance in clean energy project development can reduce investor concerns and attract more capital, Sharma says. “Wheth-
“Some of those [insurance industry] policies, well intentioned when they were crafted, have become fairly blunt tools”
er it’s resource risk, technology risk, climate risk—we can probably give you six broad categories—insurance can help with all those things,” he says.
“If you wanted to have almost a bond-like return, you should probably buy as much protection as possible,” Sharma adds.
Nardac’s ability to provide insurance-based support to a given project or deal relies on in-depth knowledge of the insurance industry and the energy transition. Knowledge is something the insurance in-
Support packages Insurance can help smooth the development passage for renewables projects
bon energy sources such as green hydrogen. “In some cases, decarbonisation will only happen by virtue of the revenues from existing business,” says Barnes. “So, some of those [insurance industry] policies, well-intentioned when they were crafted, have become fairly blunt tools.”
More generally, it is hoped that the insurance industry’s efforts to have a more active role in the energy transition could lead to greater clarity about where to allocate project and technology risk. After all, not all types of risk are insurable. In September 2024, Marsh McLennan published a risk landscape that segments energy transition risks under five headings—strategic, financial, operating, geopolitical, and liability and reputation—along with their impact over the lifecycle of a project.
The aim was to show that while insurance can play a role in mitigating certain risks, such as contractors failing to deliver on a project, there are many that need to be handled by other stakeholders. “Insurance fits really well for hazard risks,” Barnes says, referring to the operating heading. “Insurance can extend into other risk areas but typically you buy equities to take the strategic risk.”
SHARING RESPONSIBILITY
In many cases, the risks of the energy transition need to be covered by various actors. For instance, a country may hope to minimise revenue risk for developers by introducing subsidies or Contracts for Difference schemes. However, as experience has shown in places such as Spain and elsewhere, support schemes can be whipped away at the cast of a ballot or a slip in the economy. This danger can be mitigated with political risk insurance.
Similarly, banks will often look to take out credit insurance to make sure they will not lose money being lent to renewable energy project developers, particularly in developing markets. Clearly, it would help energy transition companies to have a better view of just what insurance can and cannot do for them—not least because there are physical limits to the capacity insurers can offer.
GROWING COMMITMENTS
In 2024, broker Howden and the Boston Consulting Group (BCG) sounded the alarm regarding a mismatch between the money required for the global energy transition and the insurance capacity available to underwrite it. Already, $19 trillion has been committed to the energy transition through 2030, they said. Of this, up to $10 trillion could require additional insurance coverage.
But premiums for physical risks and natural catastrophes could go up 50% by 2030, hitting $250 billion globally due to climate-related losses, greater exposures, climate risk disclosures, and governments handing public liabilities to private markets.
This last point is important. Governments have done a lot of heavy lifting in the energy transition, for example, by introducing subsidies and guaranteeing project revenues through Contracts for Difference regimes. However, the amount of support that governments can provide is limited. Private markets will increasingly pay for the energy transition.
To do so with confidence, they will want insurance. “There is no guarantee that the market will meet this demand at the speed, scale and scope required,” wrote Howden and BCG. “Without insurance, businesses will be unable to reach their net zero transition goals or become resilient in the face of the changing climate,” they added.
CAPACITY CRUNCH
Glenn O’Halloran of Howden says the expected reallocation of capital from carbon-intensive to clean technologies means “We’re at a fairly unprecedented point in history.”
The insurance market has got “incredibly broad” shoulders, he adds, “but certain sectors are going to need to scale to match demand. We think there is going to be a capacity crunch unless insurers start making preparations now.”
To do this, he suggests a recipe that the rest of the insurance industry is already buying into, based on greater engagement with the energy transition. This will not only help companies access insurance—and the cash reserves it can unlock—in a more efficient and effective manner but also give insurers better insights into how they can scale their business in a sustainable way.
The challenge is particularly acute with clean technologies such as hydrogen electrolysis or floating offshore wind power, which look set to play important roles in the energy transition but for which there is only limited operating experience. “The insurance market prices risk on a backwards-looking basis, and we’re now making educated assumptions based on pilot data,” O’Halloran says. “We just don’t know how those insurance programmes are going to perform.”
It says a lot about the insurance market that bosses are worried rather than ecstatic about the prospect of being vital for the future of a multi-trillion-dollar market.
But this is an industry that is devoted to understanding risk, so if insurers perceive a danger ahead then the rest of the world should take heed. •
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