Global power grids are facing their biggest test in decades as power generation in the world’s largest economy shuts down.
War. Drought. Production deficit. Historically low inventory. And epidemic response. Energy markets across the planet have been kept in the ring for the past year, and consumers have suffered the consequences of rising prices. But, somehow, things are getting worse.
Blame the heat. Summer is a common peak for electricity use in most parts of the Northern Hemisphere. This year, it is going to get warmer as a result of the grip of climate change. It is already so hot in some parts of South Asia that the air temperature is blistering enough to cook raw salmon. Scientists are predicting a burning month for the United States. Power consumption will increase with the cranking of air conditioners in homes and businesses.
The problem is that the power supply is so fragile that it will not be enough to get around, and the power cut can put lives at risk when there is no fan or air conditioner that can release the temperature.
Asia’s heatwave has created hours of daily blackouts, putting more than 1 billion people at risk across Pakistan, Myanmar, Sri Lanka and India, with little relief. Six Texas power plants failed earlier this month as summer heat just began to come in, giving a foretaste of what was to come. At least a dozen U.S. states, from California to the Great Lakes, are at risk of power outages this summer. Power supply to China and Japan will be tight. South Africa prepares for record year power outage And Europe is in a precarious position that Russia holds – if Moscow shuts off natural gas in the region, it could trigger a rolling disruption in some countries.
“War and sanctions are disrupting supply and demand, with extreme weather and an economic return from Covid increasing demand for electricity,” said Shantanu Jaiswal, a BloombergNEF analyst. “The combination of many factors is quite unique. I can’t remember the last time they all got together. “
Why Blackout Brings Suffering and Economic Suffering
If there is no power, the welfare of the people will be under pressure. Poverty, age and proximity to the equator will increase the chances of illness and death from unbearable temperatures. Prolonged disruption means thousands of people could lose access to clean water.
If the blackout continues and business closes, it will also bring a huge economic shock.
In India, power deficits in many states are already close to levels since 2014, when it was estimated that they reduced the country’s gross domestic product by about 5%. This means a reduction of about $ 100 billion if the disruptions are more widespread and persist throughout the year. A race on electricity will probably contribute to higher profits for the electricity and fuel market, increase utility bills and further increase inflation. When the Texas Power Grid plant failed this month, the price of wholesale electricity in Houston briefly rose above the cap of $ 5,000 per megawatt-hour, 22 times the average cost of protected on-peak power for the day.
Henning Gloucestein, an analyst at the Eurasia Group, said: “The world is reeling from more than two years of global supply chain crisis caused by the epidemic, the outbreak of war in Ukraine and extreme weather caused by climate change.” “The main risk is that if we see big blackouts at the top of all the problems mentioned this year, it could create some kind of humanitarian crisis in terms of food and energy shortages on a scale not seen for decades.”
How energy transitions bring strain
This year could enter the record book for the biggest pressure on global energy, but the hurdles are unlikely to go away any time soon. Climate change means that today’s extreme heat waves will become more common, and the pressure on the power supply will continue.
At the same time, Alex Whitworth, an analyst at Wood Mackenzie Ltd. in Shanghai, says that with the lack of investment in fossil fuels in recent years and strong demand growth, especially in emerging markets in Asia, markets need to stay strong for the next few years. . And while the share of total power wind and solar is expected to increase over the next decade, until energy storage facilities are shifted, it will put even more pressure on grids, he said.
Whitworth said: “Every time you have a cloud or a storm or a drought for a week, you are afraid of the supply. “We really hope that these problems will get worse in the next five years.”
Of course, change in renewable energy is crucial in the fight against climate change. Burning more coal now to deal with energy shortages will increase emissions, creating a vicious cycle that could lead to more heat flow and more pressure on the grids.
See what’s happening around the world here.
The supply of natural gas, the No. 1 power-plant fuel in the United States, is limited nationwide and prices are rising. According to the North American Electric Reliability Corporation, electricity will be extended to most parts of the country and parts of Canada. This is one of the worst assessments ever made by a regulatory body. Consumers will be asked to take steps to help keep the grid stable by reducing their costs.
In California, the most populous state, gas supplies have been further clipped since a pipeline rupture last year that limited imports. Also, climate change is fueling the drought, severely hampering the supply of hydropower. The California Independent Systems Operator said this month that the state could be at risk of blackouts for the next few summers in extreme weather.
In the 15-nation grid operated by Midcontinental Independent System Operators (MISO), customers in 11 states are at risk of disruption. MISO, which serves about 42 million people, estimates that it has “insufficient” power generation to meet the highest demand this summer, especially in the Midwestern states. The grid has never issued such a warning before the start of summer demand.
In Texas, Gary Cunningham, director of market research at brokerage Tradition Energy, said the grid was “at risk” of deficits, despite the state’s push to improve resilience after the winter storm of February 2021.
Teri Bishwanath, chief economist for power, energy and water at CoBank ACB, said aging infrastructure and maintenance delays during the epidemic added to the more serious weather problems.
“The United States is experiencing more turmoil worldwide than any other industrialized country,” he said. “About 70% of our grids are nearing the end of their lives.”
The epicenter was reported below the ground, however; no tsunami alert was issued. The epicenter was reported below the ground, however; no tsunami alert was issued. Blackouts have been reported nationwide in Pakistan, Sri Lanka and Myanmar, where 300 million people live. And in India, 16 of the country’s 28 states – home to more than 700 million people – are battling two to 10 hours of disruptions a day, a state official said this month.
The Indian government has recently instructed companies to increase their purchases of expensive foreign coal, as well as to return environmental protocols for mine expansion in an effort to increase fuel supply. It remains to be seen, however, whether these measures will reduce the strain. The coming monsoon season will bring cooler temperatures and reduce energy demand, although it could flood mining areas and disrupt fuel supplies.
In Vietnam, state-owned utilities have been worried about power shortages for more than a month as demand rises as domestic coal supplies dwindle and foreign fuel costs rise.
In China, where coal shortages led to massive power shortages last year, officials have promised to keep the lights on in 2022 and push for a record increase in coal miners’ output. Nevertheless, industry officials have warned that the power situation in the country’s heavily industrialized south will be harsh this summer, far from domestic mining centers and therefore more dependent on expensive foreign coal and gas.
There was a power outage in Japan in March, when a cold wave just days after an earthquake triggered an increase in demand, pushing several coal and gas plants offline. According to the grid forecast, power supply is expected to be tight in the coming summer months, and demand will surpass supply again in the coming winter. The Tokyo metropolitan government has launched a campaign to save energy, urging residents to take measures such as watching less television.
The risk of blackouts is lower in Europe, as fewer people use air conditioners at home. The continent is running to replenish its gas storage.
But there is little room for error. Norway has a limited supply of hydropower in a dry spring. The price and supply pressure on the nuclear reactor at Electricite de France SA increased. The region’s largest producer has lowered its nuclear output target for the third time this year, the latest sign of a worsening power crisis in Europe.
If Russia cut off natural gas supplies to the region, it could be enough to trigger a rolling blackout in some countries, says Fabian Roninzen, a power market analyst at Restad Energy.
Although he said the possibility of Russia taking such a bold step was “impossible”, his views became more pessimistic as the war in Ukraine continued; Two months ago, he said, he described the possibility as “extremely unlikely.”
Some countries are accepting huge imports of liquefied natural gas and may have sufficient supplies to absorb the shock, including Spain, France and the United Kingdom. The story may be different in Eastern Europe, where countries, including Greece, Latvia and Hungary, use gas for a significant portion of their energy and rely heavily on Russian supplies. That’s where the chances of a blackout will be highest, Roninzen said.
“I don’t think European consumers can imagine such a scenario,” he said. “It never happened in our lives.”