Providing utility customers with reliable electricity isn’t an option—it’s a necessity. The world’s health, comfort, and economy depend on it. For electric utility companies, this is becoming more difficult due to an increase in extreme weather events (EWEs) and the growth of renewables, which can be unpredictable.
This white paper analyzes EWEs, the energy transition, and the relationship between the two. Based on utility outage stories and input from industry experts, it also seeks to answer the question: “What can utilities do about it?”
The research process included:
Information sources include:
World leaders have made enhanced commitments to mitigate climate change, but EWEs are wreaking havoc globally. EWEs, a result of climate change, have risen significantly over the past 20 years. They include unexpected, unusual, severe, or unseasonal weather events that exceed historical norms. According to the United Nations World Meteorological Organization, there were almost 12,000 extreme weather, climate, and water events worldwide from 1970 to 2021, and these events are increasing in frequency and intensity.
Junaid Hollis, General Manager of Assets for Ausgrid in Sydney, Australia, notes: “We have seen the frequency of severe storms increase over the last two decades. This aligns with climate models that predict a 30 percent increase in thunderstorm activity in our network area over the next 70 years. The extent of the damage we are seeing is also worse. The last heavy storm season came on the back of a multi-year drought, and the combined effect of high winds on weakened trees in dry soils created an environment for significantly more network damage than we would usually expect.”
The costs associated with EWEs are growing alongside the number of events. The National Oceanic and Atmospheric Administration (NOAA) reports that the United States has seen an average of eight events costing a billion dollars or more from 1980 to 2022. Between 2018 and 2022, that number skyrocketed to an annual average of 18 EWEs costing at least $1 billion each. Billion-dollar events aren’t limited to the regions most often discussed; since 1980, all 50 states have seen at least one such event.
A significant portion of these costs can be attributed to critical infrastructure failures, which are also increasing. In the U.S., major electrical grid failures or blackouts have increased by more than 60 percent compared to the previous 10-year period, according to the Journal of Environmental Science and Technology. These events are characterized as lasting at least one hour and impacting more than 50,000 utility customers. For example, infrastructure failures were blamed for the deadly outages in Texas in February 2021, which left 4.8 million homes and businesses without power for days and resulted in 246 confirmed fatalities.
Expensive systems used to communicate outages and restoration times are also under scrutiny. A problematic outage management system (OMS) upgrade at PSEG Long Island contributed to the utility’s poor response to Tropical Storm Isaias in 2020.
Other parts of the world have felt the growing costs of extreme weather events as well. According to Hollis, “The Sydney since the mid-90s.” The Climate Council projects that by 2050, Australia could spend $10 billion annually on extreme weather events.
Ausgrid is an electricity distribution company that owns, maintains, and operates the electrical networks supplying 1.8 million customers in Sydney, the Central Coast, and Hunter regions of New South Wales, Australia.
The cost of recovering from an EWE and related power failures can’t be measured by currency alone. These catastrophes and related service failures threaten lives. Using computer models to study three large U.S. cities, research published by the Journal of Environmental Science and Technology predicts that a combined blackout and heatwave would expose at least two-thirds of residents in those cities to heat exhaustion and stroke. Heatwaves can also create ideal conditions for forest fires that disrupt and damage infrastructure. Historically, brush fires in Australia have led to power blackouts.
Cold temperatures can be just as deadly. A study published in The Lancet estimated that freezing conditions contributed to 203,620 excess deaths in 854 European cities from 2000 to 2019.
There are threats even when extreme heat and cold are removed from the equation. Many people rely on electricity to power life-maintaining devices like ventilators, oxygen concentrators, intravenous equipment, communication devices, and nebulizers.
Most utilities follow a model for responding to EWEs, with differences in response capabilities across the steps:
A new survey by Publicis Sapient, Energy Central, and Appos asked utilities to rank their preparedness for an EWE. Only a little more than one percent indicated they were fully prepared to “provide regular and accurate estimated times of restoration,” showing that improvements are needed. Mobile technology for both field workers and customers is a good starting point; however, leveraging insights from asset health analytics and resource optimization should be a goal.
Respondents rated themselves highest in “identifying and accurately communicating the cause for outages to customers,” and lowest in “gathering feedback from customers about their outage experience.”
The top three challenges affecting utilities’ ability to prepare for EWEs are:
Supratik Chaudhuri, Publicis Sapient’s director, utilities, notes: “Over the years, utilities have developed many supply and demand models for long-, mid-, and short-term planning. But often, only historical data sets are used for planning purposes. Scenario models that are enhanced to include other types of third-party data sets can help forecast future supply availability and demand requirements. Planned and unplanned outages, weather variations, and other risk factors, like the lack of feedstock availability and pipeline outages, can help to avoid outages caused by EWEs.”
Ausgrid is using data and analytics to predict and prepare. “When we know with reasonable certainty that a severe storm is coming 12 to 24 hours in advance, we can begin to mobilize our workforce, contractors, and peer networks to get additional resources prepared ahead of time. This can bring the whole recovery effort in by a couple of days,” says Hollis.
EPCOR Utilities implemented intelligent middleware applications to gain a single view of information about their power system in near real time. According to the Western Energy Institute, this integration has enhanced their grid and the ability to communicate outage information to their customers, allowing a faster and safer response.
The 2021 Texas crisis underscores that critical infrastructures are vulnerable to failure when confronted with events that exceed the levels of stress for which they are designed, and now grid modernization efforts are on the rise.
Ausgrid is currently conducting a climate risk assessment, analyzing data to identify not just the changing probability of acute climate risks resulting in damaged network assets, but also chronic risks affecting workforce, assets, and customers, such as higher ambient temperatures and rising sea levels.
Supratik Chaudhuri emphasizes: “The key for us is to use advanced analytics to aid in that decision-making. Good data and analysis are critical. For that, utilities need a unified view and one golden version of the truth. This centralized system should be able to drive all your natural disaster communications, activities, and tasks. The data and the intelligence you counted on during the last extreme event also needs to be audited. Distribution routes may no longer be the same, for example. Make sure you have the latest versions and that the people who need access to the data can access it securely.”
The move to clean energy sources—what’s being called an “energy transition”—is well underway. Several factors are driving this, including a growing interest in environmental stewardship to combat the impact of global warming. According to the Intergovernmental Panel on Climate Change (IPCC), scientists urge the planet to limit global warming to 1.5°C to avoid the worst impacts of climate change. To achieve this, global emissions must be reduced by 50 percent from 2017 levels by 2030 and reach net zero emissions by 2050.
Another factor pushing the energy transition is the desire to lower utility bills. Renewables are no longer just an option for the wealthy. “The costs of both solar and wind have fallen so drastically that in some regions of the U.S. as well as in the U.K. and Europe, wind power has become cheaper than traditional high-carbon energy resources,” reports S&P Global. By 2030, wind and solar are expected to generate more than 30 percent of power globally.
Lane Belsher, director of grid and market operations for AESO, notes: “Today, solar generation accounts for only 300 megawatts (MW) in an 11,000 MW system. However, that is set to more than double in the next 12 months with a new solar farm delivering 400 MW expected to come online in Southern Alberta. Gas accounts for about 60 percent of generation, and this is increasing because of the carbon tax in Alberta.”
Enablers of the energy transition include:
One successful demand response program is Peak Performance Pricing, launched through a partnership between Oshawa Power and Publicis Sapient. It leverages smart meter energy consumption data and other data sources to drive electricity bill savings for participants, providing energy savings tools through an advanced web portal, emails, text messages, specially trained customer service representatives, and an interactive smart phone app called Peak Power.
In partnership with Reposit Power, Ausgrid is running a smart solar and battery storage demonstration project. It aims to demonstrate a method of effectively managing a two-sided market in which services are bought from distributed resources such as rooftop solar and EVs. For an initial period of five years (which could increase to 10), Reposit will offer a “no electricity bill” product. To participate, customers must invest in an $18,000 system for a combination of solar panels (at least 6.6kW), battery storage (at least 11.8kWh), and a Reposit box. Once installed, the household will be abstracted from the electricity system, and the customer will no longer receive a bill.
While the growth of renewables is ahead of electrification trends, electrification is another primary enabler of the energy transition. S&P Global reports: “As the average cost of lithium-ion batteries has fallen drastically on a mixture of manufacturing economies of scale and technology improvements, companies and consumers alike are increasingly turning to electrification for power transportation, making the transition to electric vehicles (EVs) one of the largest potential areas for electrification. The global EV adoption rate could reach 10 to 12.5 percent.”
Electrification is also important to the energy transition because it helps advance the use of renewables. A global customer behavior survey, Digital Life Index, deployed by Publicis Sapient, shows a link between domestic renewables and EVs in Europe:
These percentages are expected to increase as EV adoption accelerates alongside more affordable storage options. Electrification is expected to catch up with renewables as an enabler of the energy transition. “This is the ‘point of singularity,’ when the world rings out the old and rings in the new, welcoming the future of alternative energy,” says Wood Mackenzie.
Because the electricity sector accounts for more than 30 percent of U.S. carbon emissions, Publicis Sapient has identified five major themes key to the success of the energy transition:
Renewables currently pose a challenge for short-term load balancing. Kevin Dawson, director of forecasting and analytics for AESO, explains: “As the percentage of renewables increase, so does the unpredictability of supply which makes an already delicate balancing act more challenging. This will only get more difficult as the percentage of renewables increases unless economic storage solutions can be adopted. Renewables are not an issue for long-term forecasts, but they are an issue for short-term balancing. Variability of supply will increase with an increasing percentage of renewables. There is a lot of wind under development in Alberta. Solar can be more variable minute-to-minute with potentially ever-changing cloud cover. In the past, weather would impact load. With increased reliance on wind and solar, weather impacts not just load but also supply.”
A survey question asked, “To what extent will this energy shift towards clean and renewable energy sources pose challenges to your utility’s service reliability?” With one being not a challenge at all and five being a major challenge, 82 percent rated themselves from three to five. Only nine percent indicated that this was not a challenge at all.
Respondents were then asked to rate their preparedness to deliver specific initiatives related to energy efficiency and renewables, including:
For some utilities, the energy transition isn’t challenging reliability today but will in the future. Lane Belsher, director of grid and market operations for AESO, notes: “Currently, Alberta is not highly dependent upon renewables. But this will change with energy transition and measures like the carbon tax. The intermittency of these renewable energy sources will increase greater volatility to supply.”
Publicis Sapient recently analyzed where utilities are investing across three key areas:
Combined, EWEs and the energy transition make the already complicated job of balancing supply and demand that much harder. Building/buying from renewable energy sources and increasing energy efficiency through advisory and customer education were the two areas where respondents expressed the most maturity. The areas where respondents are the weakest include supporting the building of energy-smart buildings or retrofitting old ones and reducing peak day demand through demand response.
Junaid Hollis, General Manager of Assets for Ausgrid, notes: “One thing that is changing on our side is the technology to provide more clarity about when power will be restored. Customers get really frustrated when there’s no information. In the event of a big storm, there are often large chunks of the network we can get back on in the first few hours, but the next day or two is mainly focused on rectifying safety issues before the network rebuild process can commence. With more data on which crews are where out on the network and sequencing and prioritization, we’re getting better at providing more accurate restoration times.”
Kevin Dawson, Director of Forecasting and Analytics, AESO, adds: “When AESO sees potential supply imbalances, they will communicate to customers via broadcast communications, i.e., social media news channels. If the forecasted imbalance is more urgent, the generators and distributors send out price signals. Of course, that can only happen with the right forms of communication between market participants.”
This large utility suffered widespread power outages due to storm damage. The utility wasn’t set up to provide complete information about restoration times, which hampered its ability to answer customer questions. Customers were unable to contact the utility through the website and contact center for real-time information. Updating the OMS was manual and time-consuming, and the website crashed due to capacity overload.
Publicis Sapient advised and helped with improvements in several areas:
This leading utility struggled with inconsistencies across its business that impacted its ability to manage outages. It had four disparate region-based incident approaches, limiting its ability to effectively utilize shared resources. Other challenges included inconsistent data and communication flow, ad hoc methods for dispatching work, and inability to capture accurate and timely information from the field.
Publicis Sapient helped create consistency across the organization in incident management, resourcing, mobility, and the virtual storm room:
Several communication best practices emerged across both case studies, including:
A coordinated, agile event response allows companies to take a strategic position on event management to overcome event and reputation risks.
Kevin Dawson, AESO, notes: “When AESO sees potential supply imbalances, they will communicate to customers via broadcast communications, i.e., social media or news channels. Of course, the market tends to communicate to generators and distributors based upon price signals. There are other more automated methods of communications between market participants.”
Outage management doesn’t stop when the power is restored. When asked, “How prepared are you to gather feedback from customers about their outage experience?” only two percent said they were “extremely prepared.”
After the lights are back on, it’s imperative to gather as much data and qualitative insights about the event and customers as soon as possible. Analyzing this information will give utilities the insights to make improvements that will help better predict, prepare, respond, and restore power in the future.
EWEs are increasing in both frequency and severity, creating uncertainty in supply and demand. The energy transition, while beneficial, increases uncertainty on the supply side. Combined, these factors make the already complicated job of balancing supply and demand even harder. They exacerbate the need for utilities to develop new capabilities and adopt new technologies to preserve reliability. This includes making improvements across the six stages of the EWE lifecycle, as mentioned in this report.
Whether it means conducting a climate assessment like Ausgrid, preparing for more solar in the energy mix like AESO, or something else, the “big ask” is putting plans in place to move the needle towards heightened reliability.
Extreme weather events are set to continue, at least for the near future, but as this paper has shown, data can hold the key to tackling these challenges—both at the scenario modeling stage to prevent outages and by providing a centralized and faster response to events through integrated field technology, outage management systems, and customer platforms. In turn, this keeps customers safer, happier, and better informed.
To find out more about how Publicis Sapient is navigating the energy transition and creating memorable experiences for utility stakeholders, contact:
Supratik Chaudhuri, Director, Utilities, North America
https://www.linkedin.com/in/supratikchaudhuri/
supratik.chaudhuri@publicissapient.com
Publicis Sapient is a digital business transformation company. We partner with global organizations to help them create and sustain competitive advantage in a world that is increasingly digital. We operate through our expert SPEED capabilities: Strategy and Consulting, Product, Experience, Engineering, and Data, which, combined with our culture of curiosity and industry-wide knowledge, enable us to deliver meaningful impact to our client businesses through integrating the products and experiences their customers truly value. Our agile, data-driven approach equips and drives businesses for change, placing digital at the core of how they think and work today. Publicis Sapient is the digital business transformation hub of Publicis Groupe, with more than 20,000 people and over 50 offices worldwide. For more information, visit publicissapient.com.