Electricity Resilience: future-proofing the energy system for the coming storm

This week we released our latest report on #ElectricityResilience. Climate change is producing more extreme weather events every year, with increasing devastation, swelling the importance of climate adaptation in lockstep. This was lauded during November’s #COP27 conference in Egypt, as it is now beyond doubt that adaptation has become a sink-or-swim issue globally. As the climate clock ticks away and Europe’s energy independence demands faster electrification, the electricity sector needs stronger investments in adaptation measures. This is the focus of our latest report in collaboration with EPRI .

“Infrastructure is exposed to the entire range of extreme weather effects that climate change is already bringing us, so it’s not a future problem, it is a today problem.” ~Antonio Cammisecra, Head, Enel Grids

Over the past decade, extreme climate-related events caused over €145 billion in economic losses across the EU. The report released on Wednesday documents the amplitude and acceleration of extreme weather impacts on the power sector. In July 2021, floods in Belgium and Germany resulted in 200,000 customer outages. During the winter of 2021-2022, storms in the UK and Ireland led to over 1 million households being without power.

“Adaptation to climate change and extreme weather has become a big challenge for power companies. Climate-related resilience is a growing component of utilities’ investment strategies and requires all actors to act together: utilities but also policymakers and other sectors which are critical during extreme weather events, such as telecommunications.” ~ Kristian Ruby , Secretary-General, Eurelectric

The stakes are clear. A failure to reach energy decarbonisation goals could result in increased adaptation costs in the long term, and a failure to adapt to climate change could be devastating for the European economy. Delaying action to make the energy system more resilient, therefore, comes with a price tag, and one far greater than that of the investment to avert it.

In our Connecting the Dots study from 2021, we found that the need for grid investments amounts to some €400 billion by 2030, out of which only 8% or €32 billion would be for resilience. This share is set to grow as the world is not on track for the 1.5°C scenario. However, this cost should be partly balanced out by the increased capacity of cheaper renewables lowering energy prices.

Nonetheless, we need clear market signals to build the investor confidence needed to attract this investment in resilience. For example, policymakers could promote a ‘Resilience Incentive Mechanism’ to pursue adaptation measures and remunerate system operators’ digital investments, as well as reorganise EU climate adaptation funding to reward future-proofing investments. Further, any intervention in the current electricity market design – as the European Commission is currently contemplating in light of the energy crisis – must consider the impact it would have on resilience investment as well.

"You cannot be resilient alone – you have to work with your supply chain, you have to work with your local partners and stakeholders to make sure we are all resilient together." ~Alexandre Marty, Head of Climate & Natural Resources, EDF

Beyond the investment signal, efforts for cooperation and coordination among all the actors in the energy system, including utilities, regulators, and grid operators must be taken. That’s why the launch event for the report gathered these actors to discuss best practices, and how they can improve energy system resilience collaboratively. This exchange included moderator Oliver Franz from E.ON , Council of European Energy Regulators (CEER) ’s President Annegret Groebel , Alexandre Marty from EDF , ANTONIO CAMMISECRA from Enel Group , Elena Višnar Malinovská from the European Commission at DG CLIMA, and our partner EPRI ’s Mark McGranaghan . If you missed it, catch the full event below:

What we know is that climate change is not going away and the longer we wait to act, the worse things get. This also goes for adaptation. That makes this report a timely one, and one which all stakeholders should take heed of in order to prepare now for the coming storm. Oliver Franz said it perfectly in his closing remarks to Wednesday’s event:

“On the European level, the regulatory framework is in place for resilience. All the stakeholders in the energy sector have to work together. This means additional investment, additional staff, and better, more hardened organisational procedures… The way to net zero is still very long. At Eurelectric, the time to do the resilience investment now. We should not be waiting because waiting will only be more expensive in the end.” ~Oliver Franz, VP European Associations, E.ON