Ghost in the machine? Rogue communication equipment found in Chinese inverters

Sarah McFarlane

LONDON (Reuters) – U.S. energy officials are reassessing the risks of Chinese-made equipment that plays a key role in renewable energy infrastructure after some of them find unexplained communication devices.

The main electric power inverters produced worldwide are mainly produced in China, connecting solar panels and wind turbines to the power grid. They can also be found in batteries, heat pumps, and electric vehicle chargers.

While building inverters allows remote access to updates and maintenance, utilities that use them usually install firewalls to prevent direct communication with China.

However, the two said that American experts found rogue communication devices not listed in product documents in some Chinese solar inverters.

One said that over the past nine months, undocumented communication devices, including cellular radios, have also been found in some batteries from multiple Chinese suppliers.

Reuters cannot determine how many solar inverters and batteries they have seen.

The rogue component provides other undocumented communication channels that can allow firewalls to bypass remotely with potentially disastrous consequences, the pair said.

Both declined to be named because they did not have permission to talk to the media.

“We know that China believes it is valuable to put at least some of the elements of our core infrastructure at risk of damage or damage,” said Mike Rogers, a former director of the NSA. “I think the widespread use of inverters in part hopes the West limits the choice that the West has to deal with security.”

A spokesman for the Chinese Embassy in Washington said: “We oppose generalizations of the concept of national security, distorting and discrediting China's infrastructure achievements.”

Experts say that using Rogue communications devices to bypass the firewall and remotely shut down the inverter or change its settings could damage the grid, damage the energy infrastructure and trigger widespread power outages.

“This effectively means there is an inherent way to destroy the grid,” one of the people said.

The two refused to name the inverter and battery manufacturers in China, and did not say how many people they found in total.

The existence of the rogue device has not been reported before. The U.S. government has not publicly acknowledged the findings.

Asked for comments, the U.S. Department of Energy (DOE) said it continually assesses risks associated with emerging technologies and that manufacturers’ disclosure and record capabilities face significant challenges.

“While this feature may not have malicious intentions, it is crucial for those who purchase fully understand the ability to receive the product,” a spokesperson said.

The spokesman said work is underway to address all disclosure gaps that pass the Software Materials Act or list of all components that make up the software application and other contractual requirements.

Trusted equipment

Two former administration officials said that as tensions in the United States and others escalate, the United States and others have reassessed China's role in strategic infrastructure.

In February, two U.S. senators introduced the decoupling from foreign counter-battery dependency laws, prohibiting the Department of Homeland Security from purchasing batteries from certain Chinese entities starting in October 2027 due to national security concerns.

The bill was forwarded to the Senate Homeland Security and Government Affairs Committee on March 11 and has not yet been enacted.

Its purpose is to prevent the Department of Homeland Security from buying batteries from six Chinese companies, and Washington says it is closely related to the Chinese Communist Party: Contemporary Ampere Technology Company (CATL), BYD, Envision Energy, Eve Energy Company, Eve Energy Company, Hithium Sovely Storage Technology Company and Gotion Gotion Hightech Company.

None of the companies responded to requests for comment.

Three people familiar with the matter say utilities are now preparing for a similar ban from Chinese inverter manufacturers.

Some utilities, including Florida Electric Power, the largest power supplier in Florida, tried to minimize the use of Chinese inverters by purchasing equipment from elsewhere, according to two people familiar with the matter. FPL did not respond to a request for comment.

“As more domestic manufacturing continues, the U.S. Department of Energy is strengthening supply chains across the federal government, providing more opportunities to integrate trusted equipment into the power grid,” a U.S. Department of Energy spokesperson said.

“Caturational Meaning”

According to consulting firm Wood Mackenzie, Huawei is the world's largest inverter supplier, accounting for 29% of global shipments in 2022, followed by Chinese counterparts Sungrow and Ginlong Solis.

German solar developer 1Komma5 said it avoided Huawei inverters due to the brand's association with security risks.

“Ten years ago, if you shut down the Chinese inverter, it wouldn't have caused drama to happen to the European power grid, but now the key quality is much greater.”

“China's dominance is becoming a bigger problem because the renewable energy capacity of the Western grid continues to grow and the possibility of a long and severe confrontation between China and the West is increasing,” he said.

Since 2019, the United States has restricted Huawei's access to U.S. technology, accusing the company of violating national security that Huawei denies.

Experts say the law requires Chinese companies to cooperate with Chinese intelligence agencies, thus giving the government potential control of Chinese inverters associated with foreign power grids.

Despite Huawei's decision to leave the U.S. inverter market in 2019 (the year when its 5G telecom equipment was banned), it remains a major supplier elsewhere.

Huawei declined to comment.

Experts say that in Europe, controlling only 3 to 4 GW of energy could lead to widespread damage to the power supply.

The European Solar Manufacturing Commission estimates that more than 200 gw of European solar capacity are related to inverters made in China – equivalent to more than 200 nuclear power plants.

According to data from the European Industry Association, at the end of last year, Europe had 338 GW of solar power.

“If you remotely control enough home solar inverters and do something evil right away, this can have a catastrophic impact on the grid,” said Uri Sadot, director of cybersecurity programs at Israeli Interter Manufacter Solaredge.

Strategic dependency

Other countries, such as Lithuania and Estonia, recognize threats to energy security. In November, the Lithuanian government passed a law that blocked Chinese access to solar, wind and battery installations, limiting the use of Chinese inverters by default.

Energy Minister Zygimantas Vaiciunas said this could be extended to smaller rooftop solar installations.

Kaupo Rosin, director-general of Estonia's Foreign Intelligence Agency, said that if Chinese technology is not prohibited in key parts of the economy, such as the Sun Inverter, the country could be at risk of Chinese blackmail.

When asked whether to take any action, Estonia's Ministry of Defense and Climate declined to comment.

In the UK, the government's review of China's renewable energy technology in the energy system – which will end in the next few months – includes looking at the inverter, a person familiar with the matter said.

Three familiar with the matter said that in November, a commercial dispute between two inverter suppliers – Salk and Deye – led to solar inverters in the United States and elsewhere, highlighting the risks of foreign impact on local power supply and attracting the attention of government officials.

Reuters cannot determine how many inverters are turned off or how much damage the grid is destroyed. The Department of Energy declined to comment on the incident.

Salk and Dee did not respond to requests for comment.

The energy sector is lagging behind other industries such as telecommunications and semiconductors, introducing regulations in Europe and the United States to ease China's dominance.

This is partly because the decision about whether to ensure an energy infrastructure depends primarily on the size of any installation, security analysts say.

Home solar or battery storage systems are often below thresholds for safety requirements to start normally, they say, although a lot of power is now contributed on many western grids.

NATO, a 32-national security alliance, said China's efforts to control critical infrastructure, including inverters, are intensifying.

“We must identify strategic dependencies and take steps to reduce them,” a NATO official said.

(Other reports by Andrius Sytas in Vilnius; edited by David Clarke)