*

Rogue communication devices found in Chinese solar

inverters

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Undocumented cellular radios also found in Chinese

batteries

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U.S. says continually assesses risk with emerging

technology

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U.S. working to integrate 'trusted equipment' into the

grid

(Adds comment from member of Committee on Homeland Security in

paragraphs 19-20)

By Sarah McFarlane

LONDON, May 14 (Reuters) - U.S. energy officials are

reassessing the risk posed by Chinese-made devices that play a

critical role in renewable energy infrastructure after

unexplained communication equipment was found inside some of

them, two people familiar with the matter said.

Power inverters, which are predominantly produced in China,

are used throughout the world to connect solar panels and wind

turbines to electricity grids. They are also found in batteries,

heat pumps and electric vehicle chargers.

While inverters are built to allow remote access for updates

and maintenance, the utility companies that use them typically

install firewalls to prevent direct communication back to China.

However, rogue communication devices not listed in

product documents have been found in some Chinese solar power

inverters by U.S experts who strip down equipment hooked up to

grids to check for security issues, the two people said.

Over the past nine months, undocumented communication

devices, including cellular radios, have also been found in some

batteries from multiple Chinese suppliers, one of them said.

Reuters was unable to determine how many solar power

inverters and batteries they have looked at.

The rogue components provide additional, undocumented

communication channels that could allow firewalls to be

circumvented remotely, with potentially catastrophic

consequences, the two people said.

Both declined to be named because they did not have

permission to speak to the media.

"We know that China believes there is value in placing at

least some elements of our core infrastructure at risk of

destruction or disruption," said Mike Rogers, a former director

of the U.S. National Security Agency. "I think that the Chinese

are, in part, hoping that the widespread use of inverters limits

the options that the West has to deal with the security issue."

A spokesperson for the Chinese embassy in Washington said:

"We oppose the generalisation of the concept of national

security, distorting and smearing China's infrastructure

achievements."

Using the rogue communication devices to skirt firewalls and

switch off inverters remotely, or change their settings, could

destabilise power grids, damage energy infrastructure, and

trigger widespread blackouts, experts said.

"That effectively means there is a built-in way to

physically destroy the grid," one of the people said,

The two people declined to name the Chinese manufacturers of

the inverters and batteries with extra communication devices,

nor say how many they had found in total.

The existence of the rogue devices has not previously been

reported. The U.S. government has not publicly acknowledged the

discoveries.

Asked for comment, the U.S. Department of Energy (DOE)

said it continually assesses risk associated with emerging

technologies and that there were significant challenges with

manufacturers disclosing and documenting functionalities.

"While this functionality may not have malicious intent, it

is critical for those procuring to have a full understanding of

the capabilities of the products received," a spokesperson said.

Work is ongoing to address any gaps in disclosures through

"Software Bill of Materials" - or inventories of all the

components that make up a software application - and other

contractual requirements, the spokesperson said.

TRUSTED EQUIPMENT

As U.S.-China tensions escalate, the U.S. and others are

reassessing China's role in strategic infrastructure because of

concerns about potential security vulnerabilities, two former

government officials said.

"The threat we face from the Chinese Communist Party (CCP)

is real and growing. Whether it's telecom hacks or remotely

accessing solar and battery inverters, the CCP stops at nothing

to target our sensitive infrastructure and components," said

U.S. Representative August Pfluger, a Republican member of the

Committee on Homeland Security.

"It is about time we ramp up our efforts to show China that

compromising us will no longer be acceptable," he told Reuters.

In February, two U.S. Senators introduced the Decoupling

from Foreign Adversarial Battery Dependence Act, banning the

Department of Homeland Security from purchasing batteries from

some Chinese entities, starting October 2027, due to national

security concerns.

The bill was referred to the Senate Committee on Homeland

Security and Governmental Affairs on March 11 and has yet to be

enacted.

It aims to prevent Homeland Security from procuring

batteries from six Chinese companies Washington says are closely

linked to the Chinese Communist Party: Contemporary Amperex

Technology Company (CATL), BYD Company,

Envision Energy, EVE Energy Company, Hithium Energy

Storage Technology Company, and Gotion High-tech Company

.

None of the companies responded to requests for comment.

Utilities are now preparing for similar bans on Chinese

inverter manufacturers, three people with knowledge of the

matter said.

Some utilities, including Florida's largest power supplier

Florida Power & Light Company, are attempting to minimise the

use of Chinese inverters by sourcing equipment from elsewhere,

according to two people familiar with the matter. FPL did not

respond to requests for comment.

The DOE spokesperson said: "As more domestic

manufacturing takes hold, DOE is working across the federal

government to strengthen U.S. supply chains, providing

additional opportunities to integrate trusted equipment into the

power grid."

'CATASTROPHIC IMPLICATIONS'

Huawei is the world's largest supplier of inverters,

accounting for 29% of shipments globally in 2022, followed by

Chinese peers Sungrow and Ginlong Solis, according to

consultancy Wood Mackenzie.

German solar developer 1Komma5 said, however, that it avoids

Huawei inverters, because of the brand's associations with

security risks.

"Ten years ago, if you switched off the Chinese inverters,

it would not have caused a dramatic thing to happen to European

grids, but now the critical mass is much larger," 1Komma5 Chief

Executive Philipp Schroeder said.

"China's dominance is becoming a bigger issue because of the

growing renewables capacity on Western grids and the increased

likelihood of a prolonged and serious confrontation between

China and the West," he said.

Since 2019, the U.S. has restricted Huawei's access to U.S.

technology, accusing the company of activities contrary to

national security, which Huawei denies.

Chinese companies are required by law to cooperate with

China's intelligence agencies, giving the government potential

control over Chinese-made inverters connected to foreign grids,

experts said.

While Huawei decided to leave the U.S. inverter market in

2019 - the year its 5G telecoms equipment was banned - it

remains a dominant supplier elsewhere.

Huawei declined to comment.

In Europe, exercising control over just 3 to 4 gigawatts of

energy could cause widespread disruption to electricity

supplies, experts said.

The European Solar Manufacturing Council estimates over

200 GW of European solar power capacity is linked to inverters

made in China - equivalent to more than 200 nuclear power

plants.

At the end of last year, there was 338 GW of installed solar

power in Europe, according to industry association SolarPower

Europe.

"If you remotely control a large enough number of home solar

inverters, and do something nefarious at once, that could have

catastrophic implications to the grid for a prolonged period of

time," said Uri Sadot, cyber security program director at

Israeli inverter manufacturer SolarEdge.

STRATEGIC DEPENDENCIES

Other countries such as Lithuania and Estonia acknowledge

the threats to energy security. In November, the Lithuanian

government passed a law blocking remote Chinese access to solar,

wind and battery installations above 100 kilowatts - by default

restricting the use of Chinese inverters.

Energy minister Zygimantas Vaiciunas said this could be

extended to smaller rooftop solar installations.

Estonia's Director General of the Foreign Intelligence

Service, Kaupo Rosin, said the country could be at risk of

blackmail from China if it did not ban Chinese technology in

crucial parts of the economy, such as solar inverters.

Estonia's Ministries of Defence and Climate declined to

comment when asked if they had taken any action.

In Britain, the government's review of Chinese renewable

energy technology in the energy system - due to be concluded in

the coming months - includes looking at inverters, a person

familiar with the matter said.

In November, a commercial dispute between two inverter

suppliers - Sol-Ark and Deye - led to solar power inverters in

the U.S. and elsewhere being disabled from China, highlighting

the risk of foreign influence over local electricity supplies

and causing concern among government officials, three people

familiar with the matter said.

Reuters was unable to determine how many inverters were

switched off, or the extent of disruption to grids. The DOE

declined to comment on the incident.

Sol-Ark and Deye did not respond to requests for

comment.

The energy sector is trailing other industries such as

telecoms and semiconductors, where regulations have been

introduced in Europe and the U.S. to mitigate China's dominance.

Security analysts say this is partly because decisions about

whether to secure energy infrastructure are mostly dictated by

the size of any installation.

Household solar or battery storage systems fall below

thresholds where security requirements typically kick-in, they

said, despite now contributing a significant share of power on

many Western grids.

NATO, the 32-country Western security alliance, said China's

efforts to control member states' critical infrastructure -

including inverters - were intensifying.

"We must identify strategic dependencies and take steps to

reduce them," said a NATO official.

(Additional reporting by Andrius Sytas in Vilnius; Editing by

David Clarke)