Navigating the Future of Energy: A Balancing Act of Innovation and Security

[TLDR: Something written earlier in the year and posted here for the Article Archive and future reference]

Following the Australian Energy Regulator's (AER) release of its final advice on the National Energy Customer Framework to Energy Ministers in December 2023, the conversation surrounding Consumer Energy Resources (CER) has never been more timely or crucial. This advice forms part of the response to the dynamic interplay of emerging technologies and consumer protection in Australia's energy market, and sets the stage for a vital discussion on the future of our energy landscape – a future that is already unfolding in ways we may not yet be considering.

In the evolving domain of CER, we are witnessing a technological revolution. Rooftop solar panels are transforming how we harness the sun's power. Batteries provide innovative ways to store and reuse energy for our homes and power electric vehicles. Additionally, the Internet of Things (IoT) devices are making our daily appliances smarter by connecting them to control centres. Together, these technologies are not just reshaping our energy landscape; they are also revolutionising the conveniences of our daily life.

Simultaneously, another significant shift is taking place: the integration of Generative Artificial Intelligence and, soon, Artificial General Intelligence (AGI) is bringing enhanced controllability and optimisation. Together, these developments are transforming interactions within the Australian National Electricity Market (NEM) and the broader energy ecosystem.

Imagine each CER component as part of a larger puzzle. A rooftop solar panel, a residential battery, a grid-connected EV, an IoT device—each is vital, as they are now connected to the power system and controllable. Together, they form a robust network, with their collective impact on system security far outweighing their individual contributions. Yet, it’s easy for owners to overlook their broader significance. Collectively, CERs are now the largest generator on the NEM.

As Australia’s energy landscape becomes more digitised, the rise of Consumer Energy Resources (CER) adds complexity to cyber security. While the Australian Energy Market Commission (AEMC) is formalising AEMO’s role in managing cyber threats as of September 2024, key issues like governance and standards for CER remain unresolved. Initiatives like the National Consumer Energy Resources Roadmap and other government efforts aim to address these challenges, but with standards only expected by 2027, the path forward demands immediate attention to ensure the security and resilience of our energy system.

This democratisation and central control of CER present both opportunities and challenges. The interplay of solar panels, batteries, EVs, and IoT devices, managed by AGI, suggests a future of sustainable and interconnected energy. Yet, when managed autonomously by AI systems, the complexity can introduce real risks. Computer errors known as "hallucinations" (when AI generates incorrect or misleading information as if it were factual), zero-day vulnerabilities, emergent capabilities, and potential for malicious control loom as threats that could destabilise the market and cause power outages.

Mustafa Suleyman , co-founder of DeepMind, now at Microsoft, aptly writes about AGI implications in his September 2023 book, The Coming Wave: "We might not be able to control the final endpoints of our work or its long-term effects, but that is no reason to abdicate responsibility." We must navigate the push for a sustainable energy future with a vigilant eye on these vulnerabilities to maintain a secure and reliable power grid.

AI presents marvellous opportunities for network optimisation and efficiencies, but as with the integration of any new technology, the potential for failure or compromise must be addressed. Nowhere is this more crucial than in the critical infrastructure underpinning all other infrastructure. The risks are new concepts we must wrap our minds around. As experts like Mustafa Suleyman warn, "We don’t know what failure modes are being introduced and how deep they could extend," highlighting the vulnerabilities and unknowns in a system increasingly reliant on AI, where, as Suleyman cautions, "We cannot know how quickly an AI might self-improve."

Delegating CER operation to Virtual Power Plants (VPPs) addresses consumer engagement issues but can also introduce potential risks through the aggregation of resources that could impact the security of the national power system. This necessitates implementing robust security measures, required functional via an alternate mechanism that does not share a common mode of failure, and a decentralised approach within VPPs to distribute risk and prevent disruptions.

Advancements in AI containment and CER security will have associated costs. Investments in AI systems, cybersecurity, and infrastructure are essential for maintaining the security of our national electricity system. It’s crucial to manage these costs effectively to make the benefits of CER accessible to all, not just a select few. Innovative funding models and government incentives could be the answer.

Leadership from our Market Bodies and industry groups in advocating for the balanced integration of AI in and around CER, and indeed the broader power system, is essential to ensure a sustainable, equitable, and secure path forward.

As we navigate the confluence of decentralisation and recentralisation in CERs, our collective responsibility intensifies. Yet will we be educated and motivated enough to care? The task ahead involves balancing innovation with security, managing risks, and ensuring both accessibility and reliability. Let’s embrace this journey, fully acknowledging the challenges whilst seizing the immense opportunities it offers.