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Report Examines Cybersecurity Spending for Smart Grid

August 15, 2017
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Electric power systems around the globe are undergoing a radical evolution during the 21st century and are increasingly embracing transformative concepts like decentralization, automation, and digitization. This paradigm shift has led to the deployment of billions of networked sensing devices and a continued expansion of communications networking outwards to the grid edge. While this transition has led to unprecedented visibility and control for utility operators, it has also greatly expanded the potential surface area for cyber attack. Additionally, the exponential growth in the number of attacks and threat actors is shaping a business environment in which the question utilities now face is when an incident will occur -- not if.

Cybersecurity threats pose a unique challenge for utilities due to their lack of predictability. Unlike outage events related to weather or asset depreciation, which can be predicted by utilizing historical data or advanced management and forecasting systems, utilities cannot foresee cyber attacks with any level of accuracy. While large-scale attacks have been limited to date, the hack on the Ukrainian power grid in December 2015 and the more recent WannaCry ransomware attack are motivating utilities to expand beyond traditional, compliance-based management practices and begin actively addressing cybersecurity.

The potential effects of a well-coordinated cyber attack on utility operations could be particularly devastating for the frequently targeted energy sector-due to cascading failures and the nature of IT and industrial control system (ICS) networks. The smart grid cybersecurity landscape is constantly evolving, and staying up-to-date in terms of awareness, recognition, enterprisewide planning, and implementation is more important than ever in an environment beholden to reliability, efficiency, and customer experience.

Defense measures are slow moving and often trail the more innovative methods of attack. Effective response strategies to these attacks have been hindered by factors such as low levels of information sharing, lack of sufficient IT resources, and insufficient regulation, among others.

While barriers remain, utilities are increasingly looking toward the bigger picture and are realizing the need for more comprehensive cybersecurity strategies. Moving beyond oneoff, point-to-point solutions and toward more integrated, harmonious solutions is where the market is headed. Looking forward, the market for cybersecurity solutions is expected to show healthy growth as the related markets for automation, communications, and smart devices continue to mature.

Key Technologies for Smart Grid Cybersecurity

The ongoing digitization of utility operations is largely a function of smart grid technology deployments; these provide the basis for this study and accompanying market forecasts. This report assesses the threats and vulnerabilities that accompany smart grid technologies, resulting in a list of most likely cybersecurity investments:
  • Antivirus software Application whitelisting
  • Business continuity planning (BCP) Change management
  • Compliance assurance Cyber forensics
  • Data diodes Defense-in-depth security
  • Device-to-device authentication Embedded device security
  • Identity and access management Multifactor authentication
  • Network and device resilience
  • One-way data communication technologies
  • Perimeter security devices, such as firewalls and intrusion detection or prevention
  • Redundant or backup communications routing, using different physical layers
  • Restricted use of removable media Role-based access control (RBAC)
  • Ruggedized devices
  • Security event logging and correlation
  • Security incident response
  • Security overlays on legacy systems, sometimes called bump-in-the-wire
  • Situational awareness
  • Software patch management, especially for control networks
  • Unidirectional security gateways (USGs)
  • Virtual local area networks (VLANs)
  • Virtual private networks (VPNs)
Market Forecast

Navigant Research expects the market for smart grid cybersecurity spending to show robust growth over the forecast period as grid operators respond to increasing security threats with new waves of investment. Navigant Research expects overall revenue to grow from approximately $1.8 billion in 2017 to nearly $3.2 billion in 2026 at a compound annual growth rate (CAGR) of 6.6%.

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