These emerging risks are posing ever greater threats to the energy sector. Unless we have a solid understanding of the nature of these risks and adapt energy financing mechanisms and infrastructure design, we may well see an investment impasse that could cripple global energy systems.
This is why the World Energy Council's latest report, "The Road to Resilience: Financing Resilient Energy Infrastructure", focuses on three critical emerging risks: extreme weather events; energy-water-food nexus; and cyber threats. The report provides an overview of the Road to Resilience series and provides seven recommendations that aim to improve the financing of resilient energy structures.
When interdependent parts of a system go down, the system as a whole is at risk. As Hurricane Sandy or Typhoon Haiyan and many other extreme weather events have illustrated, restarting the energy system can be delayed by days, possibly weeks, if critical system parts cannot be restarted autonomously.
Increasing competition for water and water stress, as experienced in parts of Latin America, North Africa, the Middle East and other world regions expose the sector — which, in terms of its water intensity, is exceeded only by agriculture — to a multitude of operational vulnerabilities across the entire value chain. In 2016, water-strained Algeria is unable to access its domestic shale gas reserves — the largest in the world — due to the arid desert landscape where 95 percent of the nation’s shale plays are located.
The same may happen after a cyber breakdown with “black-brained” system components. Black-starting capability, decentralized decision autonomy and local empowerment have become key words for system operators.
The increasing interconnection and digitization of the energy sector, ranging from smart grids or digital oil fields to the Internet of Things, along with the sector’s critical role in the functioning of a modern economy, makes the energy sector a highly attractive target for cyber attacks geared to disrupt operations.
As experienced in Ukraine at the end of 2015, an attack on a supervisory control and data acquisition system used to operate the power grid can affect the power supply of a country. A lot is at stake and new risks have become the focal point of boardroom and cabinet discussions.
The different risks to resilience have distinct meaning and priorities in different regions. Yet the imperative to cope with these risks is a powerful catalyst for innovation with transformative global impact: innovation in technology; system design and management; cross-country and cross-value-chain cooperation; the required policies; and last but not least, financing concepts. Securing the future investments to expand and transform the sector is the critical challenge ahead.
The road to resilience series is just the beginning of a long journey of adaptation and innovation. It is a process of aligning interests, informing debate and encouraging new thinking, and will form the basis of many high-level discussions at the 23rd World Energy Congress in Istanbul next month.
Increasing the resilience of energy infrastructure to extreme weather events is not an option — it is a must. Energy systems must be smarter, not just stronger, to withstand diverse emerging risks and be more resilient. Successfully managing these risks has become crucial for energy leaders globally, bringing the need for resilience to the fore.
About the author
Christoph Frei is the World Energy Council’s fifth Secretary General. Since joining the World Energy Council in 2009, Dr Frei’s priorities have been to mobilise international energy leaders and decision-makers to work together towards building a sustainable future, underpinned by robust policymaking. “Our energy system today is unsustainable,” he says. “The World Energy Council is uniquely placed in being able to bring high-level decision-makers together for dialogue on the most important energy issues. It can act as a powerful catalyst for change. On behalf of the World Energy Council’s global network, I am determined to make sure that by working across sectors, geographies and diverse interests, we will help ensure that energy is seen as a central part of sustainable development.”
Dr Frei’s main focus has been to provide world decision-makers with the necessary evidence base and the high-level dialogue platform for energy policies to address the Energy Trilemma – the trade-offs between energy security, energy affordability, and environmental impact mitigation.
This story first appeared on BrinkNews.