Almost exactly two years after the historic freeze in Texas and the resulting energy crisis, a cold snap knocked out power to tens of thousands of homes and businesses in the state earlier this month.
At the same time, a gust of arctic air blew deadly weather into the northeastern states and brought an unprecedented wind chill of -108 degrees Fahrenheit to New Hampshire’s Mount Washington.
The energy business must learn the lessons of the 2021 Texas freeze by rigorously “winterizing” its properties, according to Patrick Hauser (pictured), head of North America energy property at Swiss Re Corporate Solutions.
“The 2021 Texas freeze event was unique in that it was triggered by a series of winter storms that hit a wide area in a short time, resulting in extremely cold temperatures for an extended period and unforeseen high electricity demand,” Hauser said. Insurance business.
“The lack of winterization of power generation assets and fuel supply problems caused numerous generation outages: Texas and other south-central US states rely heavily on natural gas to meet electricity spikes.
“The severe weather and power outage affected the natural gas production, processing and transportation infrastructure at the same time.”
Are the states prepared for another deep freeze event?
The 2021 Texas freeze event exposed the inability of the state’s power supply chain to withstand extremely cold temperatures, according to the Dallas Federal Research Bank.
Two years later, power infrastructure remains hugely vulnerable despite new regulations, operational changes, and efforts to “winterize” the grid. Businesses that provide critical services to communities must find a way to financially fortify themselves against extreme weather events, Hauser urged.
“It took 138 days to restore permanent power to Grand Isle, Los Angeles, after Hurricane Ida,” the Swiss Re executive said.
“The ice storm of late January 2023 left more than 500,000 customers in the central US without power in the dead of winter due to ice-laden tree branches downing power lines, or the lines themselves. Power lines were overwhelmed by ice buildup.”
But some improved results have also shown that companies are learning important lessons from the 2021 Texas freeze event.
“The cold snap in December 2022 caused some forced blackouts, but a higher reserve margin helped prevent widespread blackouts,” Hauser said.
How can companies ‘winterize’ their power generation assets?
Winterizing assets for power generation and natural gas production and transportation is key to reducing widespread damage in extreme winter weather.
“There is an interdependence between natural gas and electrical reliability,” Hauser said. “Improved standards and coordination are important to prevent future widespread power outages.
“As we see extreme weather events occur more frequently, preparation becomes critical and companies must consider both prevention and risk transfer.”
From a hazard prevention standpoint, protecting just four types of power plant components from icing or freezing could have reduced outages by 67% within the Electric Reliability Council of Texas, or ERCOT, during the 2021 freeze.
Fuel supply is a critical element of winterization planning. Fuel issues account for about a third of outages or reductions, which means companies need to carefully assess their power capacity reserve margins, Hauser said.
Diversifying power generation assets and adapting new technologies, such as battery energy storage systems, can also have a positive impact on resilience.
And for risks that cannot be prevented, a strong insurance strategy might involve a mix of traditional and parametric products.
“Risk transfer is critical to fuel recovery efforts and a faster return to normalcy,” Hauser said.
Winterizing will come at a cost to businesses. In the energy industry, this cost will ultimately be reflected in consumers’ bills. Hauser advocated a “considered” approach to hardening and protecting energy infrastructure.
“It may not make economic sense, for example, to fully winterize southern plants or build them similar to plants in northern states, since implementing these cold-weather improvements can reduce the plant efficiency during the warmer seasons, which is the bulk of its use. ,” he said.
How can energy companies “winterize” amid climate change? Leave your thoughts in the comments below.
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