Changes in Climate and Water Availability Adding Stress and Costs to Global Electricity Sector
23 August 2009
Nearly all electric utilities claim climate change is threatening power outages, higher costs and changes in usage as demand for power grows in response to new requirements such as electric vehicles, increased cooling during warmer summer months and rapid urbanization, according to a new Acclimatise global report, backed by IBM.
More than 90% of global electric utilities that report climate change activity to the Carbon Disclosure Project recognized they are at risk from changes in climate and water availability, which are already adding stress to the sector. However, less than a third claimed to undertake any financial or quantified evaluation to the impact of climate change on their business.
The report suggests the energy industry is rapidly approaching a critical stage of development. As demand grows, utilities need to attract new financial investment to grow existing capabilities and 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, potentially leading to additional operational and capital expenditure. Financial projections made today based on current life, performance and value of assets may not be robust, which could impact a utilities value and interest from investors.
The report “Global Electric Utilities—The Adaptation Challenge” is based on 219 responses to the Carbon Disclosure Project’s annual request for investor information from the industry, analysed using the Acclimatisation Index Methodology.
Further key findings of the report include:
- While responding companies seem to have incorporated climate change in general into their governance structures, only a few electric utilities (6%) refer to adaptation directly as an integrated element of their governance, reporting and lobbying practices.
- 48% report to manage their climate risks, however adaptation actions are generally isolated and rarely form part of climate risk management strategies.
- 31% provide evidence of their climate change risks.
- Compared to identifying climate risks (93%), far fewer electric utilities report that they recognize the opportunities of changing climatic conditions (59%).
Acclimatise is a specialist risk management company providing world-class expertise in dealing with climate risks.
Resources
Global Electric Utilities Carbon Disclosure Project Report: Building business resilience to inevitable climate change.
Increasing electricity consumption and changing usage patterns have always been there. Now it's all suddenly due to 'climate change'. What nonsense.
And instead of seeing a business opportunity, they are feeling it as a threat. How depressing.
Posted by: Arne | 24 August 2009 at 02:40 AM
It seems that they may be worried about the global impact of more and more GHG from many more coal fired power generating plants to meet future increased demands.
Fortunately, there are many other cleaner options available, but how can you convince COAL + NG people to use Wind turbines, Geothermal, Sun power, Nuclear etc that will all cost more?
Coal is dirt cheap and NG is at its lowest price for a long time. The only way to move away from those two very cheap energy sources would be to apply relative pollution charges.
Would their very powerful lobbies allow it?
Posted by: HarveyD | 24 August 2009 at 08:11 AM
According the DOE's Wind 2030 study released a few years ago, wind was seen as a way to make major amounts of electricity without water ...
Of course water needs of the present/future system are hardly looked at. It's just assumed that what's necessary will always be there. And of course charge appropriately. Very few utilities have the foresight to recognize the future costs of increasing demand and dwindling resource constraints.
Posted by: aym | 25 August 2009 at 11:44 AM