Combating Risks to the Electric Grid

Electricity is the foundation of society, making the electric grid one of our most critical infrastructures. It is also one of the most vulnerable, and is subject to a number of variables, according to, Lights Out: The risks of climate and natural disaster-related disruption to the electric grid, a study by students of Johns Hopkins University’s School of Advanced International Studies, funded by Swiss Re.

According to the report, in recent years there has been a trend of more natural disasters globally, with 191 natural catastrophes in 2016 and a 24% increase from the level in 2007. In the United States, 43 natural catastrophes caused huge property losses in 2016, almost double those of 2007.

Lights Out focuses on the Pacific Northwest, which is an “illustrative case study in climate and natural disaster related electric grid disruption. The region is prone not only to high-frequency, low-intensity natural disasters such as droughts and flooding, but also at risk of catastrophes like the Cascadian Subduction Zone (CSZ) event, an earthquake-tsunami combination that is expected to devastate the coastline from northern California to southern British Columbia,” according to the report.

As climate change alters the seasonality of water runoffs in the Pacific Northwest, the study found that electricity generation and the operation and maintenance of hydroelectric dams face greater challenges. What’s more, different parts of the grid are vulnerable to different perils. For example, above-ground lines are vulnerable to weather events, while underground lines are susceptible to earthquakes. In Oregon, for example:

More than 50% of substations would be damaged beyond repair in the event of a magnitude 9.0 earthquake. In addition, the vulnerability of the electric grid is highly interdependent with other critical infrastructure systems, including roads, water and sewage treatment, and natural gas pipelines. In the event of a major earthquake, damage to road networks can make it impossible to repair transmission and distribution lines, thereby preventing the restoration of all other electricity-dependent lifeline services (water, sewage, telecommunications).

The costs of outages for construction and restoration of the grid are estimated to be 1.59 times higher in highly populated locations versus flat land areas with fewer inhabitants. Costs are also higher when infrastructures such as emergency roads are destroyed, which would slow down repairs to roads, in turn delaying restoration of electric power and impacting telecommunications, water and sewage services.

There may be long-term financial implications as well, as entire communities would be impacted, leading to a possible migration of residents to areas not effected by the disaster. Following Hurricane Katrina in 2005, for example, the population of New Orleans dropped dramatically, and 10 years later, had only returned to 90% of its pre- 2005 levels.

Total population of New Orleans 2000-2015; Hurricane Katrina hit New Orleans in 2005:

With the increase in natural disasters, the recent destruction caused by Hurricane Katrina and Superstorm Sandy as well as the prospect of a magnitude 9.0 Cascadia earthquake, “It is imperative that public and private sector entities explore potential solutions for combating and mitigating damage to the electrical grid and disruption from power outages.” The report urged utilities to increase the resilience of their systems in a number of ways, beginning with conducting utility vulnerability assessments to identify vulnerable infrastructure and develop resilience plans. While many utilities have taken the initial step of identifying the resilience and mitigation strategies that they intend to implement, their implementations after these assessments vary widely by utility.

Utilities have several options for hardening the resilience of their systems, depending on the specific types of natural hazards they face. For example, checking poles for rot and moving infrastructure out of flood zones and landslide-prone areas helps to maintain distribution and transmission infrastructures, keeping them from going down in regions with heavy rainfall and flood risk. Pruning trees to protect wires from falling branches is also important in regions experiencing higher intensity storms, according to the report.

Highlighted trends:

  • Climate change is causing more severe and frequent natural disasters, meaning power systems face increased strain from catastrophes.
  • The interdependence of systems creates further complications: if the electric grid is down for an extended period, collateral effects can lead to disruptions in other services such as water, sewage and telecommunications.
  • The economic implications are challenging governments and energy providers. Not only do they require pre-disaster financing provided by insurance, they must address how to make their systems more resilient to future flooding, droughts and earthquakes.

Disaster Losses Climb as Protection Gap Widens: Swiss Re Sigma Study

Global Economic losses from disaster events almost doubled in 2016 to $175 billion from $94 billion in 2015, according to the most recent Sigma Study from the Swiss Re Institute.

Insured losses also rose steeply to $54 billion in 2016 from $38 billion in 2015, the study found. This led to a “protection gap,” as the company calls it, of some $121 billion, the difference between economic and insured losses, a figure highly indicative of the opportunity for greater insurance penetration, according to Swiss Re. “The shortfall in insurance relative to total economic losses from all disaster events…indicates the large opportunity for insurance to help strengthen worldwide resilience against disaster events,” said the report. The gap was $56 billion in 2015.

Total economic and insured losses in 2015 and 2016:

The two headline loss figures are the highest since 2012 and end a four-year decline as the year saw a higher amount of significant disaster events including earthquakes, storms, floods and wildfires worldwide. The report noted that some events hit areas with high insurance penetration, leading to the 42% jump in insured losses.

Despite the precipitous rise in both economic and insured losses, human losses plummeted to approximately 11,000 lost or missing in 2016, down from more than 26,000 in 2015.

Of the 327 disaster events last year, 191 were natural disasters while 136 were man-made. Regionally, Asia experienced the most disaster events with 128 leading to approximately $60 billion in economic losses. Asia also had the single most costly disaster event of 2016 as the April earthquake on Kyushu Island, Japan caused an estimated $25 billion-$30 billion in economic losses.

Insured losses of $54 billion almost equaled the $53 million inflation-adjusted annual average of the past 10 years, said the report, despite being 42% higher than 2015’s $38 billion. Natural catastrophes accounted for $46 billion of insured losses, equal to the 10-year annual average, as man-made disasters led to $8 billion of insured losses, according to the report.

“In 2016, both economic and insured losses were close to their 10-year averages. Insured losses made up about 30% of total losses, with some areas faring much better because of higher insurance penetration,” Kurt Karl, Swiss Re’s chief economist said in a statement.

More than half of insured losses occurred in North America as a record number of severe convective storm events hit the region. These included an April hail storm in Texas, which caused $3.5 billion in economic loss and $3 billion in insured loss as some 86% of losses were covered. An August system brought severe storms and flooding to Louisiana, causing $10 billion in economic loss and $3.1 billion in insured loss.

The region saw several major disaster events.

In May and June, wildfires in Alberta and Saskatchewan, Canada caused $4 billion in economic losses and $2.8 billion in insured losses, Canada’s largest-ever insurance loss. The fire consumed 590,000 hectares of land and caused the evacuation of about 88,000 people. In October, hurricane Matthew, the first Category 5 storm in the North Atlantic since 2007, led to $12 billion in economic losses and $4 billion in insured losses while also, sadly, causing the greatest loss of life as 700 were lost, mainly in Haiti.

Flooding across Europe and China was also devastating at times. In May and June, severe rain and floods hit Belgium, France and parts of Germany, causing economic losses of $3.9 billion and insured losses of $2.9 billion. Flooding along China’s Yangtze River basin caused an estimated $22 billion in economic losses but low insurance penetration, in contrast to Europe, led to insured losses of just $400 million, according to the report.

Software May Help Oil Companies Determine a Location’s Earthquake Potential

New software for monitoring the probability of earthquakes in a targeted location could help energy companies determine where they can operate safely.

The free tool, developed by Stanford University’s School of Earth, Energy & Environmental Sciences, helps operators estimate how much pressure nearby faults can handle before rupturing, by combining three important pieces of information:

  • Location and geometry of the fault
  • Natural stresses in the ground
  • Pressure changes likely to be brought on by injections

“Faults are everywhere in the Earth’s crust, so you can’t avoid them. Fortunately, the majority of them are not active and pose no hazard to the public. The trick is to identify which faults are likely to be problematic, and that’s what our tool does,” said Mark Zoback, professor of geophysics at Stanford, who developed the approach with graduate student Rail Walsh.

Fossil fuel exploration companies have been linked to the increased number of earthquakes in some areas—Oklahoma in particular—that have been determined to be the result of fracking. According to the Dallas Morning News:

Only around 10% of wastewater wells in the central and eastern United States have been linked with earthquakes. But that small share, scientists believe, helped kick-start the most dramatic earthquake surge in modern history.

From 2000 — before the start of America’s recent energy boom — to 2015, Oklahoma saw its earthquake rate jump from two per year to 4,000 per year. In 2016, its overall number fell to 2,500, but its quakes grew stronger.

Five other states, including Texas, Arkansas and Kansas, have seen unprecedented increases in ground shaking tied to the wells, although North Texas had no earthquakes strong enough to be felt last year.

The insurance industry has also been monitoring the rise in temblors. A Swiss Re report concluded, “It’s highly likely that this dramatic rise in earthquake occurrence is largely a consequence of human actions.”

According to the report:

Along with the increase in seismicity, Oklahoma has seen a growth in its oil and natural gas operations since 2008, specifically hydraulic fracturing (often referred to as “hydrofracking” or “fracking”) and the disposal of wastewater via deep well injection. Both hydrofracking and deep well injection involve pumping high-pressure fluids into the ground. A consensus of scientific opinion now links these practices to observed increases in seismic activity. Earthquakes where the cause can be linked to human actions are termed ‘induced earthquakes,’ and present an emerging risk of which the insurance industry is taking note.

Authorities Examine Hotel Owner’s Request for Help Before Italian Avalanche

avalanche barriers
As the search for survivors at an Italian hotel buried during an avalanche continues, an investigation has been launched into a distress call and emails for help by the hotel’s owner. Triggered by a series of earthquakes, the avalanche claimed the lives of at least 14 people, with 15 still missing, according to reports. A staff of eight and 20 guests were reported to have been at the hotel at the time.

Bruno Di Tommaso, owner of hotel Rigopiano, a popular ski resort, reportedly sent an email asking for help from authorities in the nearby town of Pescara. “The phones are out of service. Customers are terrified by the earthquakes and have decided to stay outdoors. We tried to do everything possible to calm them but, unable to leave because of blocked roads, they are willing to spend the night in the car,” his email read. “With our shovels we were able to clean the driveway, from the gate to the SS42 (state road). Aware of the general difficulties, we ask you to intervene.”

The UK’s Telegraph reported that prosecutors in Pescara have opened an investigation into the situation, questioning why there was no attempt to evacuate the hotel. Investigators looking into possible manslaughter charges are examining Di Tommaso’s email.

According to the Telegraph:

Authorities had reportedly promised to send a snow plow to clear the road to the hotel on Wednesday afternoon, but its arrival was constantly postponed and in the end it did not turn up at all, amid reports that some snow plow in the region were out of service while others had been dispatched to other emergencies.

There have already been claims that when the alarm was first raised, by a man who survived the avalanche by luck because he was collecting medicine from his car, his pleas for help were initially rebuffed by emergency services.

The quakes struck near Amatrice, one of the towns destroyed in August by an earthquake that left almost 300 people dead and thousands homeless.