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Utilities Face Greatest Threat as Climate Risks Intensify

Climate change significantly disrupts the business of power companies by posing a risk to their electricity-generating assets. The main reasons behind climate change for utilities are Greenhouse Gases and Carbon emissions. 

Numerous Governmental and legal bodies are designing environmental protection laws that require utility providers to adopt solutions that help them transition their power plants into a low-carbon energy system. 

Historic transmission lines failures

Extreme weather events are harsh, and utility providers risk electrical assets such as towers, transmission lines, and substations. Let’s look at three of the most extensive power outages caused by extreme climates. 

  • California, August 2020800,000 homes and businesses were left without power for two days when two gas plants crashed unexpectedly.
  • Texas, February 2021A storm hit Texas by surprise in February 2021. 10 million customers had to live without power as the transmission system exceeded its maximum load.
  • California June 2021In 2021, California narrowly survived the heatwave even when several old gas-fired plants overheated. However, a turbine also exploded due to excessive heat.

Challenges for electric utilities

Climate change disrupts the traditional business model of electric utilities by creating the following challenges: 

Demand for electricity

Greenhouse gases have led to an increase in the average global temperature. Since customers turn on air conditioners in the summer, the demand for electricity increases. Even when this is a good thing for utility providers, the increase in temperature makes it difficult to meet the power demand. Excessive heat causes the power systems to overheat. 

The most problematic aspect of climate change is the weather getting warmer every year. For example, Los Angeles will have 12 extreme heat days in 2022, but the number could rise to 96 extreme heat days by 2100.

Generation Capacity

The increase in demand will force the providers to generate more electricity to meet the peak demand. The system will crash if it fails to transmit the required amount of electricity. At the same time, excessive heat will limit the infrastructure’s capacity. Utility providers use Hydropower to meet peak loads at low costs and zero emissions quickly. 

Dams rely on rainfall or snowmelt to fill up their water reserves. Climate changes have induced irregularities in rains and snowfall. However, in the summer, water reserves also deplete as the demand for water increases. Therefore, the utility providers will have less water to meet peak demands. 

Infrastructure

Power plants and power lines suffer the most from climate change. During extreme heat scenarios, power plants require more water to cool themselves while transmission lines are left at the sun’s mercy. Extreme heat and drought can:

  • Reduce power generation capacity.
  • Limit current-carry capacity of the transmission lines.
  • Increase peak electricity loads.

As carbon concentration increases, the frequency of heatwaves will also increase and place the electrical network under significant stress for longer periods. Similarly, extreme heat also reduces air density, making power output sources such as Gas turbines less efficient. The rise in air temperature will also reduce the rated capacity of transmission lines, meaning their ability to transmit power will diminish as the load increases.

In the case of extreme cold, the power plants are safe from the cold, but a potential ice buildup on the transmission lines can cause shorts that can lead to a temporary blackout. This damages the sensitive equipment installed on the power plants that causes a loss to power utilities. 

Suggestions to address climate risks

Power companies need to develop innovative ideas that ensure their survival and safety during climate change. Here are some suggestions that can address climate risks:

Site risk assessment and disaster planning

Providers have started making investments in extensive physical risk assessments that help them prepare for extreme weather events, disasters, and equipment malfunctions. Corporate examples: 

  • EVN (Austria)EVN directed its Geology division, Geoinfo GmbH, to analyze and integrate detailed data (such as floodwater studies) to create and plan processes to identify sites, protect the environment and manage crises. 
  • Centrica (United Kingdom)Several hurricanes in the Berkshire area led to the creation of extensive employee and customer well-being plans to relocate homes and keep their employees safe in case of an emergency from extreme weather events. 

Investing in climate-resilient assets

Providers are also investing in new technologies that improve their existing infrastructure to minimize disruption and damage from sudden temperature changes. Corporate examples: 

  • Con Edison (United States of America)A team of experts from Con Edison has implemented an internal energy reduction and efficiency plan by upgrading their lighting, HVAC systems, and insulations. Their plan has a payback period of fewer than four years and will reduce their carbon emissions by 1,250 metric tons every year. 
  • Entergy (United States of America)Entergy management has a plan to upgrade their powerplant by installing coal retrofits, smart grids, and gas turbine plants, all while the energy industry enters into an era with high depreciation rates for power plants. 
  • Transocean (United States of America)Transocean is considering making investments in processes that help them increase their water recycling to reuse residual water. Additionally, the company has also introduced a drainage system that reduces the water intake for its rigs. These tactics will lead to an overall reduction in water and energy consumption. 

Customer energy management

Utility providers are also working on the development of customized solutions that help them cope with the increasing demand for energy management systems and renewable energy sources. Corporate examples: 

  • EDF Group (France)The top leadership directed their public relations team to design a game to teach customers energy-efficient measures. Similarly, EDF also created solutions that help companies under the carbon emission regulations. 
  • PHI (Germany)Their subsidiary utility companies decided to offer smart-meter programs to their customers to monitor their energy usage, understand how their consumption is translated into bills, and adjust their patterns to save energy and bills. 

Federal utilities also need to establish climate change adaptation strategies that should contain the following key components:

  • Customer engagement programs should expand beyond energy tracking programs to identify innovative ways to reduce GHG emissions together.
  • Regulatory uncertainty and policy misalignments lead to complicated investments. Therefore electric utilities can play a significant role in designing energy policies that are clear and concise to address issues.
  • Utility companies need to forecast the availability of water supplies as it’s an essential resource for cooling systems. Signing contracts and building partnerships timely can save costs and help in meeting peak demand in summers.
  • Climate change management consists of two aspects:
  • Making investments in risk management by purchasing weather equipment that helps monitor the change on their sites.
  • Developing innovative business models that can collaborate and address the unique needs of the utility provider.

Conclusion

Greenhouse Gases and Carbon emissions are the main causes of climate change, electric utilities can introduce low-carbon emission solutions that help the environment and their electrical assets. Resolving climate irregularities is possible through constant carbon reduction techniques. 

Aptimize offers an all-in-one solution to design and implement strategies to manage assets for easy implementation, scalability, and adaptability according to EU carbon emissions.

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