Utilities getting serious about cyber security, study reveals

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Quick Take: Rather than the dollar amounts cited in the story below, the real revelation of this Pike Research forecast is it points out that utility cyber security investments will grow at a steady rate over the next several years. We think that means utilities are gradually realizing they need to pump real money into security for today and tomorrow – and can't continue to do what they've always done before. - By Jesse Berst

A new report by Pike Research forecasts that utilities will invest $4.1 billion in cyber security for industrial control systems (ICS) between now and 2018. The cleantech market intelligence firm also expects those investments to grow at a steady rate, from $309 million in 2011 to $692 million annually by 2018.

The report, Industrial Control Systems Security, analyzes and forecasts the ICS security market for smart grids and includes a detailed assessment of the primary risks those smart grid systems face.

"The smart grid changes everything, but when it comes to cyber security issues, much of the story remains the same," said Bob Lockhart, Pike senior analyst. "Integrating information technology into a power grid presents enormous potential to deliver energy more efficiently and profitably, but also brings inherent risks in terms of security vulnerabilities." He added that the discovery of the Stuxnet worm in 2010 illustrated how fragile industrial control systems like SCADA really are, and has created a sense of urgency among security vendors and utility management.

Security initiatives will include investments in control consoles and systems, telecommunications security, human-machine interfaces and sensors and collectors – and will support major grid applications such as distribution automation, substation automation and transmission upgrades.

Jesse Berst is the founder and chief analyst of Smart Grid News.com. He consults to smart grid companies seeking market entry advice and M&A advisory. A frequent keynoter at industry events in the US and abroad, he also serves on the Advisory Council of Pacific Northwest National Laboratory's Energy & Environment directorate.

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