Yahoo Finance National Grid drops Chinese supplier over security fears
The National Grid is scrambling to remove parts from Britain’s electricity transmission system that were made by a Chinese government-owned company after cyber security concerns were raised by Whitehall.
Following advice from security officials, the FTSE 100 company has scrapped a supply contract with NR Electric UK Ltd and is now thought to be stripping out components that were supplied by the company.
NR Electric is ultimately owned by Nanjing-based Nari Technology Co, which in turn is controlled by China’s state electricity grid operator.
The UK company was incorporated in 2016 and appears to have worked with the National Grid since at least 2019, when it was described in one document as a “stakeholder”.
The move comes after the National Grid sought advice from the National Cyber Security Centre, part of intelligence agency GCHQ, according to the Financial Times, which first reported the story.
Accounts published by NR Electric on Companies House show that the Manchester-based business was told in April this year that the National Grid was terminating its contract.
The Grid was the company’s main customer and NR Electric said the decision would cause “a material loss of income for the business”, which did not disclose its revenues.
It had assets worth £2.5m, including £2m in the bank, at the end of last year.
On Sunday, the National Grid said it would not comment on “confidential contractual matters”, refusing to say how much of the Chinese-owned company’s parts were still being used in the electricity transmission network.
The Grid’s website describes the network as being “at the heart of Britain’s energy system”, carrying power from generators across the country via 4,500 miles of overhead wires and some 22,000 pylons.
A National Grid spokesman said: “We take the security of our infrastructure very seriously, and have effective controls in place to protect our employees and critical assets to ensure we can continue to reliably, safely and securely transmit electricity.”
A spokesman for Nari Technology Co could not be reached for comment.
An employee at NR Electric told the Financial Times that the China-owned company no longer had access to sites where the components were installed and said that no reason was given by the Grid for the termination of its contract.
It is thought that the components it supplied are used to help control and balance the grid and minimise the risk of blackouts.
The Department for Energy Security and Net Zero said that it did not comment on business decisions taken by private companies.
A spokesman said: “As a government department we work closely with the private sector to safeguard our national security.”
The situation has echoes of the recent upheaval seen in the UK telecoms industry over components supplied by the Chinese company Huawei, which was a major hardware supplier to mobile networks.
Huawei was accused of posing a security risk by the US government and some Conservative MPs, an allegation strongly denied by the company.
The Government subsequently ordered that all Huawei kit be stripped from the UK’s 5G networks by 2027.
