Utilities pivot from power plants to grid work for profits
RALEIGH, N.C. — Electric utilities are pouring billions of dollars into a race to prevent terrorists or enemy governments from shutting down the power grid and everything that depends on electricity in America’s hyper-connected society.
The U.S. Department of Homeland Security detailed last month how Russian hackers have targeted the nation’s energy grid. Officials said they could have caused major blackouts, but instead, the hackers appeared more focused on reconnaissance.
The concern over cyberthreats comes as power companies shift focus to pursue extensive upgrades in software, switches and wires to enable a much more flexible distribution of electricity.
That means the likelihood of rate increases for consumers. Utilities have long based their business on building power plants and selling the juice to customers, adding a regulatorapproved profit margin to pay for it all. But the need for big generation projects has fallen after decades of energy conservation, fewer factories and the swapping of coal-fired power plants for cheaper and cleanerburning natural gas.
So electricity companies are telling Wall Street they’re shifting their business plans. Now they’re having customers pay to replace aging equipment, block malicious hackers, minimize outages, accommodate the upsurge of wind and solar power and allow consumers more control over when and how much power they use.
The investment research firm SSR projects that increased investment in the distribution grid will be the primary source of growth for most utilities over the next five to 10 years. Those investments mean a stream of new revenue that could last decades.
“This infrastructure will provide significant benefits to our customers, including improved customer control and convenience, and cyber and physical security enhancements while creating thousands of jobs and supporting the state’s economy,” Duke Energy CEO Lynn Good told Wall Street analysts this month. Her spokesman declined an interview request.
The message that big spending is needed is amplified by U.S. government warnings of dire consequences if the grid isn’t refashioned to make it tougher to blackout and easier to restore. The Department of Energy’s latest cybersecurity plan, a National Academy of Sciences report last year and advocacy groups like Protect Our Power are among the voices calling for sustained federal support for grid improvements.