The Economics of Cybersecurity for the Energy Sector: Towards Energy Regulation 4.0

On Friday 4th May, the Florence School of Regulation hosted a policy workshop on The Economics of Cybersecurity for the Energy Sector: Towards Energy Regulation 4.0.

The event, directed by Alberto Pototschnig (ACER Director and FSR Senior Advisor), gathered renowned academics, delegates from FSR donor companies, national regulators, ACER and representatives of the European Commission, to develop a shared view on possible regulatory paths which can help the energy sector entering easily in the ‘Industry 4.0’ era.

Listen to the podcast: “A Regulatory Framework for Cybersecurity in Energy – the US Experience”

The first session reviewed the current state of thinking on the economics of cybersecurity for the energy sector and attempted to identify how cybersecurity investments should be evaluated. The difficulty of identifying effective metrics was largely recognised as one of the main challenges, as pinpointing metrics which are easy to measure is a good starting point but can be highly misleading. Indeed, functional and useful metrics should factor in the “economics” of continuous evolution of technology and cyber-threats as well as who carries out a cyberattack.

Despite the uncertainties, investing in cybersecurity remains essential to prevent and lower the probability of cyber-attacks and the damages they may inflict on both the energy system and the companies working within it. Preventive education of employees and information sharing among the various energy system actors are both crucial to reduce risks and their related costs. However, for several energy enterprises, especially the smaller ones, investing in cybersecurity may be economically and technically demanding. It should be responsibility of national regulators and policy-makers to provide an appropriate framework and ease access to financing, in order to ensure that cybersecurity standards are up-to-date among all energy stakeholders.

At the European level, current initiatives aim to develop specific guidance for the energy sector to ensure the implementation of the NIS Directive and enable information sharing and coordination among Member States.

Listen to the podcast: “Digitalisation of energy and the challenges of cybersecurity”

The second session of the workshop shifted the focus on the current approach to the economic regulation of the energy sector, to assess whether it is suitable for addressing cybersecurity and its costs, or whether a new regulatory paradigm is necessary. A comparison with the regulation of service quality took place, highlighting the similarities and the differences that regulators and regulated companies may have to deal with. Examples and experiences were considered both from Europe and the US.

The workshop’s concluding discussion showed how crucial additional theoretical analysis and practical experimentation on cybersecurity are. Participants agreed on the importance of sharing best practices and information on cyber-threats and solutions. Enhanced cooperation, not competition, should occur between regulatory authorities and energy companies (both regulated and not): given the strong interdependence and externalities of cybersecurity, it is essential that none is left behind.

Don’t miss the next workshop! 

Browse all FSR Energy events


More on Energy & Climate

A variety of market designs for electricity across the globe
A variety of market designs for electricity across the globe

Thirty years of electricity markets Many countries and jurisdictions worldwide have introduced open markets in their electricity industries over the…

Creating electricity markets is not so obvious
Creating electricity markets is not so obvious

Thirty years of electricity markets After 30 years of open electricity markets, an assessment of their achievements and current challenges…

We need systemic innovation to enable higher shares of renewables for the energy transition
We need systemic innovation to enable higher shares of renewables for the energy transition

Innovation is the engine powering the global energy transformation. Renewables are becoming the go-to option for many countries in their…

Join our community

To meet, discuss and learn in the channel that suits you best.

scroll

top