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Climate Change, Water Availability to Impact Utilities

energyusebyregionNearly all electric utilities claim that climate change will result in power outages, higher costs and changes in usage in the midst of growing demand to power the world’s expanding population and urbanization, according to a new report.

Over ninety percent of global electric utilities that report climate change activity to the Carbon Disclosure Project say they are at risk from changes in climate and water availability. The report, conducted by Acclimatise with IBM’s support, also indicates that less than one third of respondents claim to undertake any financial or quantified evaluation of the impact of climate change on their business. The survey is based on 219 respondents.

The report reveals the energy industry is rapidly approaching a critical stage of development, and utilities need to attract new financial investment to grow existing capabilities and to develop emerging technologies in a low carbon way. Without correct adaptation measures built into business plans, climatic risks could impact a utility company’s financial and operational performance, according to the research.

Key findings of the report, “Global Electric Utilities — The Adaptation Challenge,” indicate that only six percent of them refer to adaptation directly as an integrated element of their governance, reporting and lobbying practices; only 31 percent provide evidence of climate change risks, and although 48 percent report that they manage their climate risks, adaptation actions are isolated and are rarely part of any climate risk management strategies.

The study indicates that climatic issues have the potential to impact how all major electric utilities operate, resulting in several major challenges. As examples, power interruptions and longer term outages can cause major financial losses for utilities, and damage caused by extreme weather events can lead to decreased operational efficiency and availability that may result in higher energy prices.

Less water, declining water quality, and growing water demand are also creating significant challenges to the electricity sector, which is a major user of water, according to the study. As an example, changes in security and quality of water supplies used for cooling will have significant cost implications for water-intensive thermoelectric generating facilities.

As part of the study, Acclimatise and IBM have jointly prepared a set of Prepare-Adapt questions to help electricity companies take their first steps towards managing these climate change challenges.

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