Shootings at two North Carolina substations expose the vulnerability of our electricity network, and the difficulty of maintaining reliable and equitable power supply.
America’s energy infrastructure is threatened by sabotage, climate change and cyber weapons.

By Liam Denning

We don’t yet know who attacked an electricity substation in North Carolina, blacking out 45,000 customers, or why they did it. Whatever their motivation, they shot a few holes in the very idea of the grid.

Our electricity grids are founded on two basic principles. First, networks provide resiliency because if one part hits trouble, other parts can pick up the slack — up to a point. Second, grids reduce and socialize costs: The remote village gets reliable light at a reasonable price because it is supplied by the same grid serving many thousands of customers grouped densely in cities and suburbs.

That “up to a point” on the first principle is important, because networks also carry inherent vulnerabilities. Knock out a critical hub in a network — be it a busy airport, a major internet router or an electricity substation — and the nodes dependent on that hub get disconnected. Indeed, on a power grid, this can lead to cascading effects, where the loss of some part of the network can push heavier loads onto other parts, causing those to break down and so on (such as caused widespread blackouts in the western US in 1996 and southern California in 2011).

This weekend’s attack didn’t lead to blackouts on that scale but demonstrated the vulnerability all too well. Based on reports so far, suspected intentional rifle fire against several substations caused damage to equipment that is “beyond repair in some areas,” according to Duke Energy Corp., the regional utility operator.

In any case, more than 35,000 customers were still without power on Tuesday morning. Some face days of outages in the middle of winter — and seemingly all because of some well-aimed shots at the kind of (often unmanned) facility that dots the US. The attack recalled one in 2013, when a sniper attacked a California substation. There will now be renewed calls for making such facilities secure: better cameras and sensors to detect saboteurs and a hardening of equipment, or replacing chain fences with solid walls, for example. Maybe we will see renewed calls for keeping spare, emergency transformers stockpiled in order to shorten replacement schedules.

The truth is, it is nigh on impossible to make the entire network impregnable. There are more than 55,000 transmission substations, the grid’s exit ramps where high-voltage power is stepped down for local circuits heading into homes and businesses. Transformers, which convert those voltages, can be disabled by simply blowing a leak in their cooling systems, since they will shut off if overheated. That is what happened in the 2013 attack. Replacing a single transformer costs millions of dollars and can take upward of 18 months. And unlike hurricanes or tornadoes, a sniper can show up anywhere in the US.

These incidents are part of a wider set of threats to our energy infrastructure that have been made all too apparent in recent years. Besides gunfire, we face weather events such as Texas’ freeze in 2021, Florida’s hurricanes and California’s repeated wildfires. Plus, as demonstrated by last year’s cyber attack on the Colonial Pipeline, which cut off gasoline supply to much of the East Coast, whatever is connected can be infected. It is not doom-mongering to say the risks posed by all these threats are rising in an environment marked by domestic strife, geopolitical confrontation, climate change and ever smarter infrastructure.

Besides trying to harden infrastructure, networks use redundancy for resilience: Extra capacity in the form of wires, pipes, storage or whatever to deal with contingencies. But redundancy — or, put another way, assets that sit around idle most of the time — also costs money. As it is, utilities are investing at record levels: $155 billion this year, according to the Edison Electric Institute, up from $90 billion a decade ago. And unlike the past decade, there is no $2 natural gas price or zero interest rates to offset that.

One upshot of this cuts against that second principle of the grid: lower, socialized costs. Faced with rising risks to reliability, some consumers are choosing to buy their own redundancy in the form of backup generators or rooftop solar power and batteries. Beyond the individual level, reliability also factors into decisions to build community solar or microgrid systems that can island from the main grid when necessary. (Disclosure: My wife runs a company that develops software to manage distributed energy assets). Even as the cost of those renewable technologies has fallen, they don’t come cheap, with a typical residential solar system alone costing $15,000 to $20,000.

The uncomfortable truth is that, unless grid operators find cost-effective ways to meet the emerging confluence of threats — sabotage, climate change, cyber weapons — the societal compact that undergirds those grids will fray. If wealthier consumers feel compelled to invest in their own forms of individual resilience, that can shift more of the cost burden onto remaining customers less able to afford it.

This is not to say distributed generation and microgrids are inherently only for the rich. Rather, that making the grid fit for the sort of risks it faces likely means incorporating those technologies in a more co-ordinated way. Even California, deep into its project to decarbonize, struggles mightily in balancing that objective with reliability and affordability. Next week, state regulators convene to debate controversial reforms to rooftop-solar incentives that revolve around the question of who pays and who benefits (see this). Ideally, the incorporation of distributed energy resources occurs in a systematic, rather than atomized, fashion; prioritizing community resilience over individual autarky. As with the huge cost of building the grid in the first place, the cost of preserving it must be borne across the network as equitably as possible.

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Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal’s Heard on the Street column and wrote for the Financial Times’ Lex column. He was also an investment banker. Energiesnet.com does not necessarily share these views.

Editor’s Note: This article was originally published by Bloomberg on December 07 , 2022. EnergiesNet.com reproduces this article in the interest of our readers. All comments posted and published on EnergiesNet.com, do not reflect either for or against the opinion expressed in the comment as an endorsement of EnergiesNet.com or Petroleumworld.

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EnergiesNet.com 12 07 2022