May 24, 2023

How to ensure data residency for the energy industry

How to ensure data residency for the energy industry

The energy industry is at the epicenter of global infrastructure development and trade. Many countries, including Saudi Arabia and China, consider their energy industry to be on par with their national security. The energy industry includes production, extraction, transportation, and distribution; hence the energy industry comprises a wide range of companies.

Given the risks associated with data use, and as nations work to develop their energy sectors through technological advancements, it is more important than ever to practice responsible data management. So, numerous laws protecting the energy sector data have been passed by national governments. These provide guidelines for managing data, including collection, storage, sharing, and communications, to ensure data protection for energy companies.

In this article, we’ll go over the importance of data protection for the energy industry, the laws, and how to comply with them. 

Why is data protection important to energy companies?

Data protection is essential as energy companies evolve into information-oriented businesses that use both personal and energy data as tools for energy efficiency mechanisms. Energy-related enterprises deal with a lot of information daily. These may include customer data, designs and documentation for capital engineering projects, maps showing where resources are, artifacts from project management, performance metrics, field service reports, environmental information, etc. Since everyone uses energy products in some capacity, the market for energy companies is one of the broadest and most diverse of any industry. This volume of information necessitates more effective data management techniques.

As more energy companies leverage cloud computing, new security and residency risks present themselves. A proactive stance on data protection is needed if the energy sector is to continue its digital transformation. Only when such safeguards are in place can the advantages of digitalization be fully tapped. 

Last but not least, the prospect of financial penalties for policy violations should seriously influence energy companies to consider creating an effective, sustainable strategy for data protection.

What are the primary data residency concerns that energy companies face?

Energy companies encounter their first significant problem with data residency during data collection. While gathering data for business operations, legal requirements must be complied with. For example, the data must be accurate, concise, and relevant and come from individuals informed about how their personal information will be collected, used, stored, and shared and who have given consent.

Data sharing and storage is another area that could be improved. Data protection for energy companies necessitates that data be stored securely to protect individuals’ privacy. It entails taking the necessary security measures to stop unauthorized data access, disclosure, alteration, or destruction. It also requires the informed consent of the subjects, which can be challenging to obtain.

Furthermore, more challenges emerge as more energy companies migrate to the cloud for obvious reasons. The cloud creates the adaptable and open digital future that the energy sector demands. It gives users cutting-edge analytics and intelligence that sift through various data sources to uncover novel insights for seamless collaboration and automated decision-making. The cloud protects data in ways that on-premise storage environments cannot. Cloud data is encrypted, making it impossible for unauthorized parties to access it. Aside from that, cloud infrastructure makes it possible to leverage high-performance technologies like edge computing, AI, machine learning, IoT, and high-resolution simulation. However, transferring data to a public cloud creates new problems for energy industry data residency compliance. Many energy companies now forgo cloud-based services altogether to avoid the red tape associated with cloud data residency regulations.

However, what businesses need as they migrate from antiquated analog processing systems to more modern digital methods is an effective data residency service provider. And industry leaders worldwide agree that no one offers data residency-as-a-service like InCountry.

Data privacy regulations energy companies should comply with

The laws regulating data residency for energy companies are numerous and strict. They prohibit storing personal data and other regulated data types on centers or servers outside the country without the approval of regulatory authorities.

Energy companies that handle regulated categories of data within a given jurisdiction are subject to all applicable data privacy laws in that jurisdiction.

Some energy companies’ data protection laws include:

  • The General Data Protection Regulation (GDPR) of the European Union. This regulation deserves special attention because it establishes minimum standards for data processing that apply to 27 European nations, some of which are the most technologically and economically advanced countries in the world. The GDPR introduces new possibilities for data protection. For instance, it grants people the authority to ask any company that holds their personal data to disclose or erase it. It also allows regulators to work together across the EU rather than having to take separate legal action in each jurisdiction. It provides severe penalties for violating its provisions.
  • The Chinese Personal Information Protection Law (PIPL). Energy companies, among others, fall under a classification under this law known as critical information infrastructure operators (or “CIIOs”) because the data they manage can affect the economy, national security, and general welfare if it is leaked, lost, or destroyed.
  • The Data Protection Regulation (NDPR) of Nigeria, which is Africa’s largest economy.
  • The Personal Information Protection and Electronic Documents Act (PIPEDA) of Canada.
  • The Japanese Personal Information Protection Act (APPI).

Although no federal law in the United States currently governs personal data protection, some state laws exist, such as the California Consumer Privacy Act (CCPA). In addition, the Federal Energy Regulatory Commission (FERC) regulates all businesses engaged in the energy sector. 

In Germany, one special regulation for electricity companies in the energy industry is the Metering Point Operation Act (MSBG), which governs using smart measuring devices. Smart meters collect and transmit data on consumer behavior, which poses serious data protection concerns, especially given that these devices seem to put the user’s convenience and experience ahead of the security and privacy of their data. Therefore, to regulate the use of smart meters and the personal data collected from them, the MSBG was implemented in addition to the GDPR’s general rules.

Other data management standards include:

  • The Payment Card Industry Data Security Standard (PCI DSS). It applies to all businesses that handle, store, or transmit debit or credit card data.
  • SOC 2: A standard for auditing that guarantees customer privacy and data security.
  • The Federal Risk and Authorization Management Programme (FedRAMP) sets up a standard procedure to ensure security in the cloud.
  • NIST 800-53: Offers a list of security and privacy controls for all U.S. government information systems and is updated regularly for federal organizations.
  • The North American Electric Reliability Corporation (NERC CIP) stipulates security standards for all bulk electric system providers in Canada and the US.

These laws and institutions guarantee secure data localization for energy companies. They are enforced through regular audits and inspections of the operations of data holders, as well as punitive action in the event of non-compliance.

If the energy sector is to grow sustainably, data collection, storage, and sharing must be done responsibly and securely. As such, data-holding companies in the energy sector should be aware of data residency requirements by country and take appropriate steps to comply with them.

How InCountry can help with data compliance in the energy sector 

InCountry provides data residency for the energy industry using an integrated, comprehensive strategy for data compliance. Our legal department is always in step with the laws regulating the energy industry’s data localization across all nations and how they relate to and differ from one another. They collaborate seamlessly with our highly skilled technical experts to create ready-made compliance solutions that adhere to the letter of every law. 

Data localization by InCountry is the quickest and most straightforward way to ensure data residency for energy companies. It eliminates the red tape associated with various residency and localization laws, allowing energy companies to address issues without disrupting routine operations and smoothly expand into any region without fear of noncompliance. With industry best practices in law and technology, we help energy companies avoid the risks and complications associated with cloud data residency in one step.Contact our experts to learn more about how our compliance solution fits your needs.