The global energy landscape is responding to the unforeseen changes of 2022, and energy sector professionals find themselves pressed to deliver on all three elements of the Energy Trilemma: sustainability, affordability, and security. As progress on the first two comes to a stalemate, security will take center stage for energy sector priorities in 2023.
The energy sector is facing some interesting changes as we head into the spring of 2023. Geopolitical changes in 2022 have led to a slowdown in Oil and Gas decarbonization, and energy companies across the sector are struggling to find funding. Permitting and government support (or lack thereof) are foreseeable obstacles to achieving clean energy goals at the rate they were once hoped, and much hangs in the balance as power providers strive to honor the complete Energy Trilemma – to provide affordable, sustainable, and secure energy across the board.
Here’s a quick view of the landscape and some security best practices that can help energy companies grow nearer to accomplishing that goal.
Energy Dilemmas 2023
Taken largely from Det Norske Veritas (DNV) research (analyzing 1,300 senior energy professional surveys between December 2022 and January 2023), the following are notable challenges and trends facing oil, gas, renewables, and the grid in 2023.
- Decarbonization goals are hitting a slowdown. Once the hottest topic of 2022, changing political tensions have caused a shift in focus from sustainability to security. Ditlev Engel, CEO of Energy Systems at DNV, says, ‘stay the course’:“Russia’s invasion of Ukraine has reminded the world how fragile energy security can be; coal plants are being fired up while renewables projects come under pressure… In a complex and difficult year for the energy industry, we see the trilemma leading to competing priorities. But in a decarbonized energy system, energy sustainability, affordability, and security actually all pull in the same direction.”
- Oil and Gas are hunkering down and raising profit expectations. In light of recent changes, half of the Oil and Gas participants (53%) plan to increase gas investment in 2023 (up eight percentage points from last year), and 43% plan to increase investment in oil (up nine percentage points). They are also redefining their view of acceptable profits after a record-high year: Whereas 52% of Oil and Gas companies defined USD $40 – $50 per barrel as an acceptable rate last year, this year, only 39% hold to that same view.
- General investment in renewables is still growing – albeit slowly. When asked, half of all energy sector participants (52%) are expected to invest in low-carbon hydrogen/ammonia, 49% anticipated upping investment in wind, and 46% planned to increase funding towards solar. Looking to future-proof availability, 60% reported that their organization is increasing investment in energy efficiency and digitalization, and half are putting resources towards energy storage.
- Several things stand in the way of ongoing sustainability efforts. Supply chain issues, policy support, and permitting are three barriers that present significant challenges to the accomplishment of renewability objectives. Roughly 75% blame supply chain issues and less than half feel confident that those issues will get resolved in the coming year. Four in ten global energy companies are struggling to find ‘reasonably priced finance’ for projects, and lack of both government support and timely licensing is slowing the change. An overwhelming 88% state that shorter licensing and permit timelines are critical to meeting climate change goals.
- The grid needs work it may not receive. Per the research, there is a strong sense across the industry that more significant investment needs to be put into the grid. As it stands, just 20% of renewables executives believe that its current capacity is enough to handle the future needs of sustainable infrastructure.
In addition to these challenges, energy sector professionals face the ongoing risks of cyber threats.
Energy and Cyber Risk
2022 was a landmark year for energy-centered cyber incidents. Per an update of S&P Global Energy Security Sentinel, 13 such incidents occurred within the year, making it the highest-ranking annum in the past seven years. Five attacks occurred in the third quarter alone, hitting the power, gas, and nuclear sectors. Of all energy sector targets since 2017, oil assets and infrastructure have received a third of all attacks, followed by electricity networks and trailed moderately by gas and shipping.
One possible explanation is put forth candidly by George Patterson, director of Oxford-based cyber security recruitment specialist Arrowforth. He states, “Energy is seen as a rather unethical industry to younger generations (most cyber hackers are young), and cynically, they know they have money and are likely to pay out to continue operations.”
Added to the list of aggrieved domestic hackers is now the lengthening list of nation-state actors, and the sheer projected growth of the sector is enough to draw increased cybercriminal attention. As the World Economic Forum states,
“Sustainable energy infrastructure has profited from IT/OT convergence, reaping operational and financial benefits albeit increasing the vulnerability surface. Such risks will grow exponentially as renewables are predicted to generate 60% of global energy by 2035. The disinvestment from fossil fuels requires greater levels of cybersecurity: green transition must go hand-in-hand with cyber resilience.”
In response, both the public and private sectors are stepping up to bolster cybersecurity measures within the energy community.
Security to Take Center Stage for Energy Companies in 2023
While still pushing towards increased affordability and ongoing sustainability, energy companies understand that security is the foundation that underpins them all. To this effect, the DNV states,
“Energy security concerns outweigh clean and affordable energy on the list of priorities for energy companies globally, as the industry says the energy system will not resolve the energy trilemma in the next decade…Energy security will take center stage for oil & gas and power sectors in the year ahead.”
Global consulting firm McKinsey suggests that leading energy firms are futureproofing by doing the following:
- Radically simplifying ops alignment
- Organizing for agility
- Digitizing where it makes sense
These same three principles can be applied in a security context. With increased (and increasingly complex) cybersecurity threats, energy companies that still bear legacy architecture, are still maturing their security stack, or are in the process of discovering how to align new cloud-based security with traditional or hybrid technology need to do more than throw single-fix issues at the problem. The real answer comes in security alignment, and that comes from a top-down strategy.
As NIST and other public and private entities work towards improving global energy security standards, energy companies need a dedicated guide to help them take in the full scope of the changing security landscape. From staying abreast of the most recent industry standard changes to understanding how can be implemented within the context of their specific environment, power providers can navigate the first objective of the Energy Trilemma – security – with a guide in hand.
ITEGRITI has deep experience across critical infrastructure cybersecurity programs, compliance, risk, and audit. Contact us today to learn how we can leverage this experience to help you accomplish your cybersecurity goals.
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