The renewable energy sector has continued to lag in the current year, with high interest rates and a weaker global economy acting as headwinds for clean energy equities. The iShares Global Clean Energy ETF (NASDAQ:ICLN) is deeply in the red, with a -18.2% return in the year-to-date, compared to a 6.6% gain by its fossil-fuel equivalent, the Energy Select Sector SPDR Fund (NYSEARCA:XLE) and 12.1% return by the S&P 500. Still, the clean energy sector continues to be a money magnet: last month, the International Energy Association (IEA) reported that global spending on clean energy technology infrastructure is on track to hit $2 trillion in 2024, double the amount going into fossil fuels.
The energy transition is a fast-moving domino that has companies across a wide spectrum scrambling to maintain the same momentum with constant technology and infrastructure upgrades. But security is the outlier.
According to DNV’s Cyber Priority research, 89% of 601 energy professionals surveyed believe that cyber security is a top priority for the energy transformation. A particularly urgent challenge is securing operational technology (OT), the control systems that manage, monitor, automate, and control industrial operations. This vulnerability was laid bare after the Russian invasion of Ukraine, which highlighted the vulnerabilities of such infrastructure.
And now the Biden administration is moving to guard clean energy networks from cyberattacks. According to the White House, the convergence of network-based information technology (IT) and physical process management operational technology (OT) is elevating the centrality of software to this transition.
The administration has highlighted five cyber-enabled technologies it will work on to help safeguard clean energy infrastructure from possible cyberattacks, namely:
- Batteries & Battery Management Systems–properly architected and secured software, both firmware and cloud-based, batteries will enable an ambitious energy future less constrained by the time or geography of electricity generation.
- Inverter Controls & Power Conversion Equipment--modern smart inverters equipped with advanced computing and networking capabilities and paired with robust cybersecurity will support more sophisticated grid services while promoting greater resilience and lower operating costs across the diverse energy assets.
- Distributed Control Systems--secure-by-design management software will enable greater operation and coordination of hundreds of thousands of distributed energy control systems including virtual power plants, community microgrids, and other innovative energy systems, while integrating advanced cybersecurity control technologies
- Building Energy Management Systems--advanced building energy management systems using software-defined resource management including the Internet of Things and computer-based facility controls
- Electric Vehicles (EVs) & Electric Vehicle Supply Equipment (EVSE)--design electric vehicles and associated grid-integrated charging equipment (EVSE) powered by secure and sophisticated distributed energy control systems. These will enable smart charging, where utilities or consumers can manage the charging schedules of EVs to optimize grid load, reduce energy costs, or maximize alignment with clean energy sources.
Securing US. energy systems against cyberattacks seems like a no-brainer. Back in 2021, the Colonial Pipeline, the largest pipeline system for refined oil products in the country, was forced to shut down for five days after a massive ransomware attack . The shutdown led to gasoline shortages, gridlocked traffic outside of gas stations and higher prices at the pump. The Department of Homeland Security has also warned about cyber threats posed by the People’s Republic of China (PRC). In a guidance document it published in June, the department said it’s making this a top priority for protecting critical infrastructure through 2025, noting that a PRC-sponsored cyber group Volt Typhoon has “compromised the IT environments of multiple critical infrastructure organizations” including energy and transportation systems.
The Biden administration has been hailed as the most pro-renewables in U.S. history thanks to landmark legislation including the trillion-dollar Infrastructure Investment and Jobs Act (IIJA), signed in November 2021, and the Inflation Reduction Act (IRA) of August 2022. Last November, President Joe Biden announced the locations of seven regional hydrogen hubs that will receive $7 billion from the government as part of the bipartisan infrastructure law. The IRA allocated up to $7B to launch the Regional Clean Hydrogen Hubs program, which will help fund 6-10 regional clean hydrogen hubs across the country.
Interestingly, the administration is also actively supporting nuclear power: the Federal government will provide a $1.5 billion loan to Holtec International, a privately-held supplier of equipment and systems for the energy industry, to restart a nuclear power plant in southwestern Michigan.
Previously, the plant was marked for decommissioning, but will now become the first ever nuclear plant in the U.S. to be revived after abandonment. In January, the DoE issued a request for proposals (RFP) for uranium enrichment services to help establish a reliable domestic supply of fuels using HALEU (High Assay Low-Enriched Uranium).
The Inflation Reduction Act (IRA) will provide up to $500 million for HALEU enrichment contracts selected through this RFP. A couple of years ago, the U.S. Nuclear Regulatory Commission (NRC) approved Centrus Energy Corp.’s (NYSE:LEU) request to make HALEU at its enrichment facility in Piketon, Ohio, becoming the first company in the western world outside Russia to do so.
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By Alex Kimani for Oilprice.com
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