Government Report on Hostile Nation States Malicious Activity Against Infrastructure Supply Chains

The DHS Office of Intelligence and Analysis (I&A) has published an (U//FOUO) Intelligence in View product to provide awareness of how hostile nation states are attempting to weaponize supply chains associated with various critical infrastructure sectors. Utilities can help mitigate the risk of supply chain shocks by understanding their supplier dependencies and planning for disruptions.

According to I&A, “some China-based firms are using People’s Republic of China (PRC) state support to quickly and cheaply enter the emerging US utility battery energy storage (hereafter referred to as utility storage) industry and create supply chain dependencies on China, which will likely hinder the development of a secure US utility storage supply chain.” Utility storage systems are an important aspect in U.S. government efforts to modernize the power grid and expand renewable energy sources. The I&A report notes utility storage systems use high-capacity batteries to support the power grid by storing surplus energy production when energy demand is low and prices are cheaper, and discharging energy when demand is high, and prices are higher.

The U.S. Intelligence Community’s “Annual Threat Assessment” from 2023, states “China uses access to its vast market and control over critical supply chains as tools to force foreign companies and to coerce foreign countries to allow the transfer of technologies and intellectual property.” According to I&A, Beijing seeks to “tighten the dependence of the international industrial supply chain” on the PRC for new energy technologies, including battery energy storage, as directed by President Xi Jinping. Moreover, in a speech in April 2020, Xi noted his intentions to increase global supply chain dependencies on China, with an aim of controlling key supply chains and being able to use those supply chain dependencies to threaten and cut off foreign countries during a crisis. Access the full report below.

For more information on building supply chain resilience please review the DHS report – Building Supply Chain Resilience in an Age of Uncertainty. Utilities can also access this previous WaterISAC piece for mitigation recommendations.