When the Problem Threatens the Solution

When the Problem Threatens the Solution

(First of a two-part series)

Perhaps no other industry but farming is as affected by the weather as the electric power sector. When the lights go out, the weather is usually at least part of the cause. And the weather itself drives demand for space conditioning — heating and cooling are strategically important markets for the electric power industry.

But the electric power industry’s capital investments and business environment are also pervasively vulnerable to the impacts of advancing climate change.

That story begins with the network of wires that form the connective tissue of the grid and their clear, longstanding vulnerability to extreme weather. But other climate change impacts are significant for the electric power industry, or soon will be:

  • The influence of global warming on the hydrological cycle, from rainfall patterns to glacial melt rates, is an obvious business risk for hydroelectricity producers. There is also growing stress on a water resource that faces high demand for a wide variety of agricultural, industrial, and consumer end uses. Climate change will have an important impact on how we use water in the future.
  • The efficiency of thermal power plants is affected by the temperature of the cooling water they use. The specific operational and environmental challenges will depend on local circumstances, but power plants are heat engines operating in a warming ambient environment. Plant operators will need to understand and prepare for the consequences.
  • Wind turbines must withstand extreme weather conditions, and their efficiency depends on a successful match between system design and local wind conditions. Climate change may shift those conditions over the lifetime of plants being built today.
  • The photovoltaic effect declines as the temperature increases. But in the years ahead, solar panels will be have to operate more frequently at very high temperatures.
  • Coastal facilities of all kinds will be vulnerable to storm surges and sea level rise.

As climate change progresses, these and other weather-related impacts will begin to spike and trend outside historical patterns, bringing stress to the overall climate ecosystem and new costs to the economy. Some of these costs have been externalized or deferred in the past, but now they’re coming home to roost, and electric power will feel the results more keenly than most other industries.

From storm surge impacts on coastal infrastructure (look no farther than Hurricane Katrina’s damage to oil industry operations in the Mississippi Delta) to the various impacts of severe heat waves on grid operations, the operational and financial effects of advancing climate change can be expected to accumulate for the foreseeable future. There will be surprises, things that we don’t know we don’t know. But the known risks are more than sufficient to warrant closer attention to climate change preparations from the industry, its regulators, and its customers.

In the decades to come, climate change will shift power industry revenues, investments, and operating practices in ways that we can only partly foresee. One of the few certainties is that it would be imprudent to do anything but aggressively and strategically prepare for a world in which the global climate system will be upset on an ongoing basis.

There are risks and costs here, but there are also significant opportunities for the electric power industry in a low-carbon energy future, as we’ll see in Part II of this series.

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