  Modern smart grids offer several types of digital control and monitoring of
electric power transmission and distribution that enable greater efficiency and
integrative functionality than traditional power grids. These benefits,
however, introduce greater complexity and greatly disrupt and expand the threat
landscape. The number of vulnerabilities is increasing as grid-connected
devices proliferate. The potential costs to society of these vulnerabilities
are difficult to determine, as are their likelihoods of successful
exploitation. In this article, we present a method for comparing the net
economic benefits and costs of the various cyber-functionalities associated
with smart grids from the perspective of cyberattack vulnerabilities and
defending against them. The economic considerations of cyber defense spending
suggest the existence of optimal levels of expenditures, which might vary among
digital functionalities. We illustrate hypothetical case studies on how digital
functionalities can be assessed and compared with respect to the costs of
defending them from cyberattacks.
