Business on the Edge 2024

Value chain implications of climate hazards Recommendations Avoid economic lossIncrease revenue, cost savings & sustainability Protect communities & ecosystems Enhance resilience Capitalize on opportunities Shape collaborative outcomes Upgrade infrastructure to withstand climate hazards. Reinforce transmission and distribution infrastructure to prevent or minimize damage. Improve vegetation management to reduce contact with power lines. Decentralize power generation. Locate smaller, renewable utility-scale facilities closer to population centres to reduce transmission interruptions and reliance on long transmission lines. Implement technology-enabled advanced solutions. For example, weather monitoring and forecasting, or dynamic line rating, to cope with extreme heat.Invest in climate-resilient renewable energy projects. For example, integrating solar panels with battery storage systems can provide reliable power when the grid is under strain from climate hazards. Support the development of microgrids. These can operate independently from the main grid during emergencies. Develop nature-based solutions. Natural barriers, such as restored mangroves and salt marshes, act as effective buffers against storm surges. They can significantly reduce the impact of flooding on critical infrastructure such as power plants and substations situated along coastlines.Engage in industry alliances. Share best practice and drive collective progress towards climate adaptation and resilience. As a platform for collaboration and knowledge sharing, alliances help utilities align their efforts with global nature and climate initiatives. Foster cross-sector collaboration. Work with banks to assess climate risk and adaptation strategies; with insurers to provide innovative products tailored to climate-related risks, such as parametric insurance with predefined payout triggers; and with reinsurers to help underwrite climate risks following agreed-upon investments in modernizing infrastructure.Tropical cyclones, wildfires and floods cause physical damage to facilities and other infrastructure, leading to disruptions in supply and higher operational costs. Water stress and drought reduce the operational efficiency of the plants, particularly those relying on water for cooling. Droughts can reduce hydropower plant generation capacity. Extreme heat leads to overheating of equipment and increased demands for cooling systems, limiting gas processing efficiency.Wildfires and tropical cyclones combined with extreme heat cause physical damage to transmission lines, substations and pipelines, leading to power interruptions or gas leaks. Flooding and tropical cyclones disrupt gas and fuel supply chains, leading to reduced gas availability and grid shortages. Flood damage to water pipelines and pumping stations contaminates water supplies. Coastal floods drive saltwater pipeline intrusion, raising rates of corrosion.Tropical cyclones and floods lead to power outages, with droughts and water stress further increasing the risk of blackouts and reducing access to essential services. Extreme heat leads to increased demand for cooling, straining distribution networks and leading to potential system overloads. Tropical cyclones, wildfires and floods require infrastructure repair and upgrades to withstand extreme weather events, which leads to increased utility prices.Energy generation, water treatment & gas processingUtilities transmission Utilities distribution Extreme heat Wildfire Tropical cyclone Coastal flooding Fluvial flooding Water stress Drought Business on the Edge: Building Industry Resilience to Climate Hazards 62