s winter storm Uri spread across the U.S. fueled by a polar vortex, more than 100 million people faced the onslaught of record low temperatures and, in the case of more than 4 million people in Texas, a preventable blackout — 12 million people were under a boil water advisory showing the link between reliable energy and other public utilities. Hospitals had to be evacuated due to power failures in the middle of a pandemic, while images of frozen people and icicles forming inside homes were beamed around the world.
Days later, power was gradually restored across the Lone Star State and many questions remain about how the electricity grid of the 1 largest economy in the world could fail so calamitously How could energy regulations (or the lack thereof) allow for such wanton price gouging, where in some cases consumers were reporting 3,500% price increases in their electricity bills? Is the case of one state’s enfeebled power grid an isolated matter, or is the climate risk vulnerability we saw in Texas in the face of winter storm Uri part of a larger national pattern where the dearth of risk resilient energy and other critical infrastructure requires a national investment strategy? Arguably, what happened in Texas in 2021 may very well be a rule, rather than an exception.
What Winter Storm Uri Wrought in Texas…
If low levels of risk-resilient energy infrastructure are a national pattern, then the cascading set of examples began in 2003 with the Northeast Blackout. On August 14, 2003, the Eastern Seaboard of the U.S., including iconic cities like New York, Philadelphia, and Washington, DC (along with parts of Canada) were all plunged into darkness. In all, more than 50 million energy consumers, businesses and local governments faced sweltering heat in darkness. By the end of the crisis, 100 people lost their lives and the hard reality that you cannot power an economy, hospital, and anything in between without reliable and resilient energy was laid bare.
This case was not triggered by climate change, but rather a cascading set of errors beginning with not pruning trees near high-tension power lines in Ohio. Yet it nonetheless underscores how a single point of failure in the energy matrix was and remains a national vulnerability. The failure of the Colonial gas pipeline due to a crippling ransomware attack, which caused fuel shortages across Southeastern and Northeastern states triggering states of emergency, is a more recent example of this very vulnerability. The onset of unchecked climate risk, natural and man-made hazards such as cyber-threats, means our vulnerable energy matrix puts the U.S. in the crosshairs, unless concerted efforts are undertaken to shore up grid resilience. Climate change is only one of the hazards we must guard against, but its effects may be the most serious on critical infrastructure. A nationwide upgrade is both necessary and urgent.
…Was a Rule Not an Exception
The pattern that began in 2003 with the Northeast Blackout, continued throughout the last two decades with perhaps the most poignant example of how energy and economic viability are inextricably linked coming from post-Maria Puerto Rico. Even before Hurricane Maria, a record-breaking Atlantic Hurricane, decimated Puerto Rico, the local utility, PREPA, was hobbled by mismanagement, aging gas-powered turbines, and sclerotic infrastructure that already saw island-wide blackouts with blue skies. When Hurricane Maria struck in 2017, PREPA, like many Puerto Rican households and businesses, broke with ease.
The island’s healthcare system, already enfeebled before the storm by a record municipal debt crisis of more than $73 billion (or $12,000 per capita), faltered. This, along with the second longest blackout recorded in history, exceeded only by the blackout caused by Super Typhoon Haiyan in the Philippines in 2013, accelerated the death rate on the island. While initial mortality rates were recorded at 64 due to Hurricane Maria, those who suffered chronic diseases, required hospitalization or a reliable cold supply chain (the very requisite for COVID-19 vaccines) for simple life-saving treatments like insulin, were consigned to their deaths. The New England Journal of Medicine estimated that the total loss of life in Puerto Rico during and in the aftermath of Hurricane Maria — those who wallowed in six long months of darkness — was more than 4,645 people. This technique of calculating excess mortality is also in use to track the real human toll of the COVID-19 pandemic.
Hurricane Maria’s damage in Puerto Rico. Photo via Adobe Stock.
Hurricane Maria’s damage in Puerto Rico. Photo via Adobe Stock.
Single Sources of Failure
In the face of climate change, as goes the experience of island nations, so goes the world. A vulnerable, single source of failure energy matrix like Puerto Rico’s, presages what is an emerging national reality. Texas is only the latest place where the energy matrix is faltering, in this case due to the cold, but in California’s due to heat and fires. Long home to wildfires, dry spells, pacific storms, and other natural hazards, California’s infernal summers and fire seasons have become an unchecked annual threat. Each year for the last five years, California’s fire season breaks the prior year’s records in terms of physical damage, acreage of lost forest and, tragically, loss of life.
Pointedly, Paradise Lost, where the town of Paradise, California was left an ashen waste land in 2018, has challenged the state's risk and recovery plans. Similarly, how California’s electricity grid performed in the face of these fires exposes climate risk vulnerabilities of the attritional kind and the false choice between keeping the lights on or inadvertently sparking a fire — because, yet again, high-tension power lines come into contact with trees in increasingly arid forests with changing prospects of rain. This combustible mix of anthropogenic hazards and unseasonably dry periods, underscores how the lines between built up urban environments and nature’s boundary imperil our way of life.
In California’s case, as a part of the state’s fire abatement strategy particularly during peak weather conditions for fires, the state’s electricity operators have the unpopular task of triggering targeted blackouts. Last year, millions of Californians lost power and eerie Martian skies descended on the West Coast’s iconic cities due to a record-breaking number of more than 10,000 fires, the most in the state’s modern history. These fires, like ones in past years, were exponentially more devastating and, as with Winter Storm Uri and the power failure in Texas, came amid a pandemic challenging emergency responders and social distancing norms as millions of people were under ordered evacuations.
Cars crossing Golden Gate Bridge from Lime point. Smoky orange sky covers the bridge and the city of San Francisco after the California fires in September 2020. Photo via Adobe Stock.
Cars crossing Golden Gate Bridge from Lime point. Smoky orange sky covers the bridge and the city of San Francisco after the California fires in September 2020. Photo via Adobe Stock.
Risk Receivership — Who Pays Matters
California’s energy risks like Puerto Rico’s, raise important questions about public utilities and bankruptcy rules in the face of climate change. PREPA, Puerto Rico’s electric utility, contributed $10 billion to the island’s debt burden largely due to the twin perils of mismanagement and underinvestment. Yet the reconstruction of the grid and improvements in energy resiliency post-Hurricane Maria, raise questions about whether a climate change receivership model is a better approach than letting such a necessary (essential) part of a modern economy falter. The same questions were raised about PG&E in California, which was found liable for causing the 2018 Camp Fire, which triggered Paradise Lost.
PG&E’s case is ostensibly the world’s first and most prominent climate change bankruptcy and demonstrates the untenable nature of becoming climate resilient if there is an “us versus them” posture between the public sector and the private sector. The nation’s energy matrix stops being privatized the moment the lights go out. The reality, simply, is that in the face of societal risks and the prospects of running a modern, competitive economy with pockets of prolonged darkness is a false choice. The better option is to prioritize, invest in and outline a national strategy for improving climate and risk resilience in critical infrastructure. It bears highlighting, you can have power and no economic growth, but you cannot have economic growth without power.
While energy is the principal form of infrastructure outlined thus far, it is certainly not alone in terms of a low resilience scorecard, not only in the face of climate threats, but also in the face of other man-made risks. New Orleans and the city’s levee system was a known vulnerability before Hurricane Katrina struck in 2005. The Oroville Dam nearly suffered a catastrophic failure in 2017, due in no small measure to localized excess rainfall (bombogenesis) that was not a part of the statistical weather sample when the dam was built 60 years ago. The flood prone idyllic town, Ellicott City, Maryland, has had more than 16 catastrophic floods in the last 200 years. All these cases raise nuanced questions about whether we should build back, build back better or, critically, build back at all, which may be the most unpopular option requiring political will and societal tradeoffs. At the crux of these cases is an asset base in critical infrastructure such as the energy grid, roadways, bridges, mass transit systems, among others, that were designed in the 40s, built in the 60s and 70s and now face the turbulent and risk-prone reality of a new century.
Guarding Against All Hazards
While climate risk is the central antagonist outlined thus far, many of the same points of vulnerability in the energy matrix and with national critical infrastructure, suffer vulnerabilities to perennial and rapidly evolving cyber threats. Only recently, a water filtration plant in Oldsmar, Florida faced the specter of poisoning consumers due to a cyber-attack that seized control of internet-connected systems and industrial controls to increase volumes of sodium hydroxide in the water. In small amounts, sodium hydroxide helps fight naturally occurring contaminants and potentially harmful water-borne diseases. But in large enough quantities it could be harmful to humans and cut off a critical public good in the water supply. These same perils exist and are amplified in the nation’s electricity matrix, which is vulnerable to cyber threats — those that emerge between the proverbial keyboard and the chair, particularly as energy operators ride on legacy or un-patchable data systems and software — or those that arise via sophisticated nation-state backed or other malicious actors. Ironically, many of the solutions and approaches that would shore up cyber resilience in critical infrastructure, will also shore up vulnerabilities against climate threats and geo-physical hazards.
Solar panels and wind turbines at sunset. Photo via Adobe Stock.
Solar panels and wind turbines at sunset. Photo via Adobe Stock.
Shared Risk, Shared Resilience
The first principle is to build resilience, redundancy, and diversification across the entire energy value chain. Enabling distributed systems, such as solar-powered microgrids, which California is onboarding for new home constructions, can help offset cascading outages and keep certain neighborhoods, hospitals, schools, governments, first responders and other critical sectors powered, even if there is a general outage. The key to enabling microgrids, is to enable peer-to-peer energy sales as an extension of the regulated market and as a way of recuperating the costs of solar-enabling homes, which can exacerbate affordable housing shortages. Companies in Australia are pioneering these use cases with technology-powered microgrids that are helping communities capture, recuperate and monetize renewable energy investments. While this alone may not scale up to the energy demands of the U.S. economy, especially not without storage capacity following suit, it can add crucial redundancy and energy localization.
While there was some controversy about freezing wind turbines and their potential contribution to cascading failures in Texas during Winter Storm Uri, wind energy represents 47% of the energy production in Denmark, which is among the colder places in the world. Turbines are not prone to freezing and onboarding more renewable energy across the U.S. is not only in our long-range interests in accelerating decarbonization, it will also ensure grid modernization efforts activate abundant, clean, and resilient sources of energy — adapting to the geophysical hazards and energy sources from sea to shining sea. Left unchanged, the energy matrix is not only vulnerable to climate threats, the reliance on carbon-heavy fuel sources is an economic double jeopardy (a source of risk from two places). In this double jeopardy in the economy, taxpayers are bearing the acute costs of vulnerable infrastructure and frequent power outages, and the attritional costs of slow commitments to decarbonization, which in turn exacerbates climate change, thus creating a vicious and largely unfunded cycle of risk.
The energy sector like the banking system is a space where the failure of any one constituent part erodes confidence in the system writ large or creates cascading systemic risk. Unlike the banking sector, which enjoys nationalized backstops and consumer protections in the form of the Federal Deposit Insurance Corporation (FDIC), critical infrastructure does not have a similar economic backstop. Strategic risk-sharing along with a climate change bankruptcy or risk receivership model should be implemented to begin prefunding the future costs of climate hazards, while creating a pathway for viable recovery and remediation of parts of the energy system that are systemically important.
If systemic financial institutions (so called SIFIs) are required to create “living wills” following the 2008 financial crisis and Dodd-Frank reforms, perhaps a similar model can help audit the critical linkages in the nation’s energy matrix and which firms contribute the highest proportion of systemic risk or are too big to fail like the Colonial gas pipeline, PG&E and PREPA demonstrated. As with the COVID-19 response, addressing an energy vulnerability when the lights go out is not only cost prohibitive, but also foolhardy in an age with so many mathematically predictable risks.
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Learning by Candlelight: Energy Resilience Lessons When the Lights Went Out
Skyline of Manhattan after a blackout, via Adobe Stock
September 6, 2022
Instances of energy grid vulnerability in recent years highlight how disruptive and damaging climate change will be. Building more resilient, redundant, and diversified grids is important, but so are strategic risk sharing models similar to financial institutions, writes Circle's Dante Disparte.
A
s winter storm Uri spread across the U.S. fueled by a polar vortex, more than 100 million people faced the onslaught of record low temperatures and, in the case of more than 4 million people in Texas, a preventable blackout — 12 million people were under a boil water advisory showing the link between reliable energy and other public utilities. Hospitals had to be evacuated due to power failures in the middle of a pandemic, while images of frozen people and icicles forming inside homes were beamed around the world.
Days later, power was gradually restored across the Lone Star State and many questions remain about how the electricity grid of the 1 largest economy in the world could fail so calamitously How could energy regulations (or the lack thereof) allow for such wanton price gouging, where in some cases consumers were reporting 3,500% price increases in their electricity bills? Is the case of one state’s enfeebled power grid an isolated matter, or is the climate risk vulnerability we saw in Texas in the face of winter storm Uri part of a larger national pattern where the dearth of risk resilient energy and other critical infrastructure requires a national investment strategy? Arguably, what happened in Texas in 2021 may very well be a rule, rather than an exception.
What Winter Storm Uri Wrought in Texas…
If low levels of risk-resilient energy infrastructure are a national pattern, then the cascading set of examples began in 2003 with the Northeast Blackout. On August 14, 2003, the Eastern Seaboard of the U.S., including iconic cities like New York, Philadelphia, and Washington, DC (along with parts of Canada) were all plunged into darkness. In all, more than 50 million energy consumers, businesses and local governments faced sweltering heat in darkness. By the end of the crisis, 100 people lost their lives and the hard reality that you cannot power an economy, hospital, and anything in between without reliable and resilient energy was laid bare.
This case was not triggered by climate change, but rather a cascading set of errors beginning with not pruning trees near high-tension power lines in Ohio. Yet it nonetheless underscores how a single point of failure in the energy matrix was and remains a national vulnerability. The failure of the Colonial gas pipeline due to a crippling ransomware attack, which caused fuel shortages across Southeastern and Northeastern states triggering states of emergency, is a more recent example of this very vulnerability. The onset of unchecked climate risk, natural and man-made hazards such as cyber-threats, means our vulnerable energy matrix puts the U.S. in the crosshairs, unless concerted efforts are undertaken to shore up grid resilience. Climate change is only one of the hazards we must guard against, but its effects may be the most serious on critical infrastructure. A nationwide upgrade is both necessary and urgent.
…Was a Rule Not an Exception
The pattern that began in 2003 with the Northeast Blackout, continued throughout the last two decades with perhaps the most poignant example of how energy and economic viability are inextricably linked coming from post-Maria Puerto Rico. Even before Hurricane Maria, a record-breaking Atlantic Hurricane, decimated Puerto Rico, the local utility, PREPA, was hobbled by mismanagement, aging gas-powered turbines, and sclerotic infrastructure that already saw island-wide blackouts with blue skies. When Hurricane Maria struck in 2017, PREPA, like many Puerto Rican households and businesses, broke with ease.
The island’s healthcare system, already enfeebled before the storm by a record municipal debt crisis of more than $73 billion (or $12,000 per capita), faltered. This, along with the second longest blackout recorded in history, exceeded only by the blackout caused by Super Typhoon Haiyan in the Philippines in 2013, accelerated the death rate on the island. While initial mortality rates were recorded at 64 due to Hurricane Maria, those who suffered chronic diseases, required hospitalization or a reliable cold supply chain (the very requisite for COVID-19 vaccines) for simple life-saving treatments like insulin, were consigned to their deaths. The New England Journal of Medicine estimated that the total loss of life in Puerto Rico during and in the aftermath of Hurricane Maria — those who wallowed in six long months of darkness — was more than 4,645 people. This technique of calculating excess mortality is also in use to track the real human toll of the COVID-19 pandemic.
Hurricane Maria’s damage in Puerto Rico. Photo via Adobe Stock.
Hurricane Maria’s damage in Puerto Rico. Photo via Adobe Stock.
Single Sources of Failure
In the face of climate change, as goes the experience of island nations, so goes the world. A vulnerable, single source of failure energy matrix like Puerto Rico’s, presages what is an emerging national reality. Texas is only the latest place where the energy matrix is faltering, in this case due to the cold, but in California’s due to heat and fires. Long home to wildfires, dry spells, pacific storms, and other natural hazards, California’s infernal summers and fire seasons have become an unchecked annual threat. Each year for the last five years, California’s fire season breaks the prior year’s records in terms of physical damage, acreage of lost forest and, tragically, loss of life.
Pointedly, Paradise Lost, where the town of Paradise, California was left an ashen waste land in 2018, has challenged the state's risk and recovery plans. Similarly, how California’s electricity grid performed in the face of these fires exposes climate risk vulnerabilities of the attritional kind and the false choice between keeping the lights on or inadvertently sparking a fire — because, yet again, high-tension power lines come into contact with trees in increasingly arid forests with changing prospects of rain. This combustible mix of anthropogenic hazards and unseasonably dry periods, underscores how the lines between built up urban environments and nature’s boundary imperil our way of life.
In California’s case, as a part of the state’s fire abatement strategy particularly during peak weather conditions for fires, the state’s electricity operators have the unpopular task of triggering targeted blackouts. Last year, millions of Californians lost power and eerie Martian skies descended on the West Coast’s iconic cities due to a record-breaking number of more than 10,000 fires, the most in the state’s modern history. These fires, like ones in past years, were exponentially more devastating and, as with Winter Storm Uri and the power failure in Texas, came amid a pandemic challenging emergency responders and social distancing norms as millions of people were under ordered evacuations.
Cars crossing Golden Gate Bridge from Lime point. Smoky orange sky covers the bridge and the city of San Francisco after the California fires in September 2020. Photo via Adobe Stock.
Cars crossing Golden Gate Bridge from Lime point. Smoky orange sky covers the bridge and the city of San Francisco after the California fires in September 2020. Photo via Adobe Stock.
Risk Receivership — Who Pays Matters
California’s energy risks like Puerto Rico’s, raise important questions about public utilities and bankruptcy rules in the face of climate change. PREPA, Puerto Rico’s electric utility, contributed $10 billion to the island’s debt burden largely due to the twin perils of mismanagement and underinvestment. Yet the reconstruction of the grid and improvements in energy resiliency post-Hurricane Maria, raise questions about whether a climate change receivership model is a better approach than letting such a necessary (essential) part of a modern economy falter. The same questions were raised about PG&E in California, which was found liable for causing the 2018 Camp Fire, which triggered Paradise Lost.
PG&E’s case is ostensibly the world’s first and most prominent climate change bankruptcy and demonstrates the untenable nature of becoming climate resilient if there is an “us versus them” posture between the public sector and the private sector. The nation’s energy matrix stops being privatized the moment the lights go out. The reality, simply, is that in the face of societal risks and the prospects of running a modern, competitive economy with pockets of prolonged darkness is a false choice. The better option is to prioritize, invest in and outline a national strategy for improving climate and risk resilience in critical infrastructure. It bears highlighting, you can have power and no economic growth, but you cannot have economic growth without power.
While energy is the principal form of infrastructure outlined thus far, it is certainly not alone in terms of a low resilience scorecard, not only in the face of climate threats, but also in the face of other man-made risks. New Orleans and the city’s levee system was a known vulnerability before Hurricane Katrina struck in 2005. The Oroville Dam nearly suffered a catastrophic failure in 2017, due in no small measure to localized excess rainfall (bombogenesis) that was not a part of the statistical weather sample when the dam was built 60 years ago. The flood prone idyllic town, Ellicott City, Maryland, has had more than 16 catastrophic floods in the last 200 years. All these cases raise nuanced questions about whether we should build back, build back better or, critically, build back at all, which may be the most unpopular option requiring political will and societal tradeoffs. At the crux of these cases is an asset base in critical infrastructure such as the energy grid, roadways, bridges, mass transit systems, among others, that were designed in the 40s, built in the 60s and 70s and now face the turbulent and risk-prone reality of a new century.
Guarding Against All Hazards
While climate risk is the central antagonist outlined thus far, many of the same points of vulnerability in the energy matrix and with national critical infrastructure, suffer vulnerabilities to perennial and rapidly evolving cyber threats. Only recently, a water filtration plant in Oldsmar, Florida faced the specter of poisoning consumers due to a cyber-attack that seized control of internet-connected systems and industrial controls to increase volumes of sodium hydroxide in the water. In small amounts, sodium hydroxide helps fight naturally occurring contaminants and potentially harmful water-borne diseases. But in large enough quantities it could be harmful to humans and cut off a critical public good in the water supply. These same perils exist and are amplified in the nation’s electricity matrix, which is vulnerable to cyber threats — those that emerge between the proverbial keyboard and the chair, particularly as energy operators ride on legacy or un-patchable data systems and software — or those that arise via sophisticated nation-state backed or other malicious actors. Ironically, many of the solutions and approaches that would shore up cyber resilience in critical infrastructure, will also shore up vulnerabilities against climate threats and geo-physical hazards.
Solar panels and wind turbines at sunset. Photo via Adobe Stock.
Solar panels and wind turbines at sunset. Photo via Adobe Stock.
Shared Risk, Shared Resilience
The first principle is to build resilience, redundancy, and diversification across the entire energy value chain. Enabling distributed systems, such as solar-powered microgrids, which California is onboarding for new home constructions, can help offset cascading outages and keep certain neighborhoods, hospitals, schools, governments, first responders and other critical sectors powered, even if there is a general outage. The key to enabling microgrids, is to enable peer-to-peer energy sales as an extension of the regulated market and as a way of recuperating the costs of solar-enabling homes, which can exacerbate affordable housing shortages. Companies in Australia are pioneering these use cases with technology-powered microgrids that are helping communities capture, recuperate and monetize renewable energy investments. While this alone may not scale up to the energy demands of the U.S. economy, especially not without storage capacity following suit, it can add crucial redundancy and energy localization.
While there was some controversy about freezing wind turbines and their potential contribution to cascading failures in Texas during Winter Storm Uri, wind energy represents 47% of the energy production in Denmark, which is among the colder places in the world. Turbines are not prone to freezing and onboarding more renewable energy across the U.S. is not only in our long-range interests in accelerating decarbonization, it will also ensure grid modernization efforts activate abundant, clean, and resilient sources of energy — adapting to the geophysical hazards and energy sources from sea to shining sea. Left unchanged, the energy matrix is not only vulnerable to climate threats, the reliance on carbon-heavy fuel sources is an economic double jeopardy (a source of risk from two places). In this double jeopardy in the economy, taxpayers are bearing the acute costs of vulnerable infrastructure and frequent power outages, and the attritional costs of slow commitments to decarbonization, which in turn exacerbates climate change, thus creating a vicious and largely unfunded cycle of risk.
The energy sector like the banking system is a space where the failure of any one constituent part erodes confidence in the system writ large or creates cascading systemic risk. Unlike the banking sector, which enjoys nationalized backstops and consumer protections in the form of the Federal Deposit Insurance Corporation (FDIC), critical infrastructure does not have a similar economic backstop. Strategic risk-sharing along with a climate change bankruptcy or risk receivership model should be implemented to begin prefunding the future costs of climate hazards, while creating a pathway for viable recovery and remediation of parts of the energy system that are systemically important.
If systemic financial institutions (so called SIFIs) are required to create “living wills” following the 2008 financial crisis and Dodd-Frank reforms, perhaps a similar model can help audit the critical linkages in the nation’s energy matrix and which firms contribute the highest proportion of systemic risk or are too big to fail like the Colonial gas pipeline, PG&E and PREPA demonstrated. As with the COVID-19 response, addressing an energy vulnerability when the lights go out is not only cost prohibitive, but also foolhardy in an age with so many mathematically predictable risks.
