Modernizing Cybersecurity in Utilities

Electricity, water and gas companies are under greater pressure than ever to modernize their infrastructure, while protecting their business and customers from external and internal threats to their systems. We look at the challenges now facing the utilities sector, highlighting the need for strategies that merge digital transformation with resilient cyber defenses.

The quest for sustainable energy, new regulations and growing data volumes are all forcing utilities to overhaul aging IT and operational technology (OT) networks and systems. But at the very time that organizations are modernizing their infrastructures, cyber-attacks are on the rise as criminals target security gaps in essential services. The situation is exacerbated when organizations layer advanced digital capabilities onto decades-old operational technology systems that often lack modern protections.

The result is a fragile patchwork of legacy and next-generation tools that were not designed to work together. In the absence of a well-executed integration pathway, interconnected systems can broaden the attack surface and create more targets for malicious actors to exploit.

AI’s Growing Role in Cybersecurity Technology

There is some good news in the growing role of artificial intelligence (AI) tools that strengthen defenses against cyber-attacks. A good example of this is the expanded use of AI capabilities being integrated into existing IT and OT cybersecurity tools supporting identify, protect, detect, and respond NIST function  

These AI integrations help identify subtle patterns and deviations that could indicate malicious activity, so that organizations no longer rely solely on standard anomaly detections and continuous monitoring methods.   Furthermore, AI helps filter out irrelevant alerts so that operators spend less time manually disabling these notifications after investigation.

But AI is no silver bullet. There is a growing tendency to treat AI-enhanced tools as a replacement for human judgment, rather than complementing it. This risks creating a false sense of security, leading organizations to reduce staff, streamline processes, or bypass human oversight, assuming AI has it all under control.

New Regulatory Compliance Standards

The regulatory landscape is also evolving rapidly. Updates to Critical Infrastructure Protection (CIP) standards such as NERC CIP-013-3 and CIP-015-1 are reshaping cybersecurity governance. While these two standards are pending approval and a final vote, it is best to start reviewing the standards early and formulate a plan to address them due to the large changes being introduced. 

CIP-013-3 introduces stricter controls on vendor remote access, further protecting a main vector of cyber threats. Where previously a vendor might have had unfettered access to a utility’s infrastructure for updates or maintenance, the new standard treats that access as a critical risk factor. It mandates tighter integration with supply chain risk management processes.

CIP-015-1, a wholly new CIP standard, goes a step further by requiring that electronic and physical perimeters – such as card readers and firewalls – be incorporated into internal security monitoring systems. Together, these updates underscore the need for a more integrated, end-to-end view of the utility’s digital and physical infrastructure.

Many utilities, however, are still relying on manual compliance processes that are not fit for purpose. As compliance becomes more demanding and complex, organizations that fail to invest in automation and centralized monitoring risk falling behind. These gaps do not just impact audit readiness, they affect real-time situational awareness and increase the window of vulnerability during an attack.

Shifting from Perimeter-Based Security to Zero Trust

This is where the Zero Trust model comes in. Every request, whether from inside or outside the network, must be authenticated, authorized, and continuously validated. But for utilities, implementing zero trust means more than securing corporate networks.

Organizations must extend identity-based access controls and device compliance checks into the field, often to ruggedized equipment that is difficult to update or monitor in real time. It also means accounting for insider threats, which remain a significant risk in the sector. By embedding continuous analytics and confidence scoring into authentication workflows, utilities can identify suspicious behaviors and respond before they escalate into incidents.

Transitioning to zero trust also requires careful planning. It starts with establishing visibility: mapping data flows, assets, and user behavior across both IT and OT environments. From there, utilities should implement policy enforcement points and segment networks to limit lateral movement. Piloting zero trust architectures in high-risk areas, such as remote substations or control centers, can help teams identify challenges before scaling up.

Looking ahead, the convergence of IT and OT security is set to accelerate. As smart grid technologies and real-time analytics become standard, the line between IT and OT will blur and cybersecurity teams must adapt. In the next three to five years, we can expect to see integrated security operations centers that handle both IT and OT threats, centralized compliance dashboards, and a greater emphasis on cross-functional collaboration. Cybersecurity roles will require a deep understanding of industrial processes and regulatory expectations, not just technical expertise.

Built-In Cyber Resilience for a Secure Future

For utility CISOs and CIOs, the challenge is to build cybersecurity strategies that are both resilient and adaptable. That starts with breaking down silos, internally across departments, and externally with trusted partners. No utility can address this challenge in isolation; the threat landscape is too dynamic, and the regulatory demands too complex.

AI-embedded technologies, major Regulatory Compliance Standards, and Zero Trust models are quickly approaching our Utilities-space, are you ready for what’s going to come?

Capco brings a rare combination of deep utilities expertise and decades of cybersecurity experience from highly regulated sectors such as financial services. We understand the technical, operational, and regulatory nuances of securing critical infrastructure and help utilities design, implement, and sustain cybersecurity strategies that are both compliant and future ready.