Energy Current

Biden Administration Executive Order on AI: Implications for the Energy Sector

President Biden’s recent executive order (EO) to manage risks associated with artificial intelligence (AI) is intended to establish new standards governing AI safety, security, and privacy concerns while promoting innovation and competition. This executive order is applicable to many aspects of the U.S. economy, including the energy sector.

Within the energy sector, this EO instructs the Department of Energy to address AI system’s threats to critical infrastructure by coordinating with the National Institute of Standards and Technology (NIST) to set rigorous standards, subject to so-called “red team” testing that simulates worst case scenarios to ensure safe deployment of AI systems within energy infrastructure, all prior to public release of the technology.

The Department of Energy is now beginning to establish rules and regulatory compliance in accordance with this executive order, a process that will take at least the next nine months. In the meantime, energy sector companies may wish to consider implementing their own AI governance process to prepare for the forthcoming legal requirements, as certain segments of the sector are specifically identified in the EO. For example, the EO calls out efforts to use AI to improve the planning, permitting, investment, and operations for electrical grid infrastructure to enable the provision of clean electric power. 

Those using AI for the above purposes may want to consider ensuring that their technology is auditable or transparent, preserving the ability to explain how their AI solutions operate and what data is required. In an effort to get ahead of the forthcoming regulations, companies would likely want to focus on maintaining the privacy and security of any data used by the AI technology, for example, by complying with the above-referenced NIST data security standards. In addition, energy sector companies that utilize AI should also be prepared to demonstrate how their AI models are trained while preserving the privacy of the training data.

Energy sector companies that develop AI technology that may be a serious risk to national security should also be prepared to share their safety test results and any other critical information with the U.S. government. Any such companies should be prepared to explain how their AI includes or is surrounded by adequate protections against AI-enabled fraud and deception. Further, those developing AI for energy sector companies would want to be able to demonstrate authentication features that would make it clear that any AI-generated communications are authentic.  

This landmark EO provides a roadmap for energy sector companies to begin addressing larger general public concerns regarding the growth and use of AI.  Furthermore, the EO specifically encourages independent regulatory agencies to consider using their full range of authorities, including rulemakings and revising existing regulations and guidance that apply to AI, to protect American consumers from fraud, discrimination, financial instability, threats to privacy, and other risks that may arise from the use of AI. In the energy sector alone, AI is already being deployed in applications to interact with potential residential solar and energy storage customers to process consumer data and accelerate screening for consumer energy products. Grid operators, utilities, and energy market participants are increasingly looking to AI-based tools to more efficiently manage, automate, and transact in a distributed, interconnected, and instantaneous energy grid, including merchant energy markets that can be subject to volatility during extreme weather events and natural disasters.

As these systems become more complex and system decision-making becomes further removed from direct human intervention, innovators, sponsors, and financing parties will need to further evaluate the allocation of liability and risk—to the extent regulators pursue new rules or restrictions after identifying emerging risks to consumers’ individual privacy, energy market vulnerabilities, and community infrastructure threats.

Proper execution of this EO is intended to balance the security and privacy interests of the public while allowing for the safe and effective use of AI to advance economic growth in the energy sector.

Go Deeper

Foley is here to help explore this new terrain – over the next several weeks we will examine the Executive Order through the lens of different industries and areas of the law. For our latest insights, check out the following: