Saturday, August 15, 2015

Chinese giant State Grid Corporation chasing Australian State of NSW poles and wires wants to build 'global energy internet'

Chinese behemoth State Grid Corporation wants to buy TransGrid. Photo: Bloomberg

The Chinese behemoth in the race to buy TransGrid, the backbone of the national electricity market, is marching towards a "global energy internet".

Depending on your perspective, State Grid Corporation's ambition to scoop up ageing electricity grids, sold off by cash-strapped governments around the world, is either a ray of hope for renewable energy – or a clear cyber security threat. 


Its chairman, Liu Zhenya (who met Premier Mike Baird in Beijing last September), has spoken at United Nations forums and APEC meetings about building the Internet of Energy.

Clean energy would be distributed globally using the ultra-high voltage transmission lines State Grid is creating. Smart grids, connecting billions of household smart meters to the internet, are key.

Chinese tech giant Huawei is another supporter of the Internet of Energy. Huawei provides technology for  State Grid Corporation's smart grid.

The global expansion of the world's biggest public sector enterprise took off in 2010, when State Grid Corp became the first Chinese company to acquire complete control of a foreign electricity grid – Brazil's.  

It has 40 per cent of the Philippine national grid, and paid a 40 per cent market premium to buy a quarter of Portugal's grid. Last year, State Grid won a third of the Italian grid. It is shortlisted for Greece's.

State Grid met twice with the NSW government before the state election had even given Baird a mandate to privatise the poles and wires. The company is reportedly bidding, in a consortium, for 100 per cent of the high voltage network TransGrid.

It already controls 19 per cent of Victorian transmission company SP Ausnet, and 60 per cent of Jemena, deals approved by the Abbott government in late 2013.

But since then, several reports have warned the US Congress that smart grids open a greater threat of cyber terrorism and infiltration by foreign intelligence services. One report listed China as among the potential threats to the US electrical grid.

ASIO advice has previously barred Huawei technology from the National Broadband Network, on national security grounds.

So does the same national security risk apply to a Chinese government company whose ambition is to build a "global energy internet?"

Visiting professor at the Australian Defence Force Academy's Australian Centre for Cyber Security, Gregory Austin, is the author of a book on China and cyber policy.

"The federal government should be very concerned about Chinese ownership, indeed any foreign ownership, of the most critical element of our nation's infrastructure," says Austin. "There is no internet without electricity, so the two are inseparable.

State Grid's international expansion is purely about economic growth, Austin says, "but with a view to enhancing China's overall national power."

"I see no evidence of Chinese military threat at this time to our security, but we should not allow foreign control of our electricity grid," he says.

China security expert at the Lowy Institute, Bonnie Glaser, says State Grid is the largest energy provider in the world. "It has expanded overseas and appears to have a great ambition of building an international smart grid. Apart from profit, it could have other motives, but without more information this is difficult to assess."

Kirsty Needham  State Politics Editor, The Sun-Herald

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