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My name is Kurt Meyer, Chief Risk Officer at Swissgrid, the Swiss electricity transmission system operator, which manages one of Europe’s most stable electricity networks. My company transmits power at 380 and 220 kilovolts through 122 substations across an electricity grid more than 6,700 kilometers long.

In the highly monopolistic days of the past, national energy providers both generated and distributed power. The liberalization and deregulation of the European electricity market separated these roles. Transmission System Operators (TSOs), like Swissgrid, operate the high-voltage electricity lines that are the arteries of the grid.

Distribution System Operators (DSOs), like Zurich-based EWZ, and near-Lausanne-based Romande Energie, operate the capillaries. They step down the voltage received from us to deliver electricity to individual homes, offices, and factories. They also are the ones that negotiate prices on energy exchanges with the power generators. Swissgrid, however, does supply high-voltage electricity directly to the Swiss National Railways, SBB.

Electric utilities used to be able to forecast revenues quite accurately 10, 20, or even 50 years ahead. With deregulation, it is difficult to predict prices even two months ahead. Our revenues are regulated and enable us to recover our operating expenses, pay for ancillary energy purchases that enable us to maintain a stable grid, and have a profit component based on the value of our asset base and cost of capital.

The average Swiss household pays approximately 45 Swiss francs per year to cover the cost of the transmission grid and the ancillary services. Swiss businesses benefit from the competition among power generators by choosing those offering the lowest prices, or the type of energy they prefer, such as renewable, nuclear, or traditional. Outside of Switzerland, the EU allows every single household to choose its own electricity provider from anywhere.

Swissgrid, with 41 connections to other European networks, is the most interconnected grid in the world. The grid must be constantly available to facilitate the flow of power from multiple generators to all distributors and end-use customers, as well as to transmit energy from Northern Europe to Italy.

If things go wrong in our operations, the consequences can be extremely severe. Our line repair and maintenance workers face health and safety hazards every day. A prolonged and widespread power outage – a scenario that I and my crisis management colleagues continually assess – would shut down public transportation. Train stations and airports could not operate. Every car journey, without functioning traffic lights, would be a risk. Homes, offices, and schools could not be heated or cooled.

Water supply and sewage systems would be disrupted, and firefighting would be limited. An outage lasting several days would cause emergency power generators to run out of fuel, causing severe disruptions to hospitals, the food processing industry, and all commercial food warehouses. Electric equipment-intensive farms would become animal graveyards, potentially spreading disease from the countryside into towns. As people lost confidence in authorities and governments to function, established norms of social life might disappear followed by antisocial behaviors.

In Europe, these concerns were triggered initially by the Italian blackout in 2003 and another one in Germany in 2006. In the first case, a cascade of failures among interdependent networks caused power outages that affected 56 million people for up to 12 hours. The second case was also caused by breakdowns in collaboration and communication among operators. Due to a human error, a key transmission line in Germany was switched off earlier than planned without prior warning to neighboring TSOs.

Transmission lines became overburdened, which triggered automatic shutdowns. 15 million people across Europe suddenly found themselves without power and it took 1½ hours to reestablish operations.

Cyberterrorists or hackers could launch an attack to bring down or take over the command and control of the power grid. The wake-up call for us was the summer 2017 cyberattack on Ukrainian organizations, including metro systems, ministries, and the radiation monitoring system at the former Chornobyl Nuclear Plant.

The same computer virus, Petya, affected Maersk, the world’s biggest container shipper, taking out its IT systems for 10 days. Maersk spent about $250 million dollars to overhaul its entire IT infrastructure and went public with the experience as a cautionary tale for others. Its key learning was that it was not enough to just be “average” in cybersecurity. Weak links should expect to be attacked.

The electricity industry also harbors opportunities. European governments are heavily subsidizing renewable energy production, and households are becoming mini-power plants, capable of producing and storing electricity and then supplying it to the grid.

Linking decentralized power plants together could create new, virtual power plants, as demonstrated by a November 2017 pilot project in Germany, which allowed households, with renewable energy generation, to earn money by participating in energy markets. Such virtual power plants distribute production and smooth peaks by allowing absorption or discharge of excess power into the grid.

With increased decentralization of production, the continuing evolution of the energy mix, and ongoing digitalization, a TSO like Swissgrid must be smoothly integrated with the electricity system and market to ensure a sustainable and stable power grid.

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