When considering how to improve its wildfire resiliency, PG&E had some trade-offs to make. The California utility was investing in undergrounding power lines and covering conductors, but for lines reaching into rural areas, the cost of the operation was exorbitant. So instead PG&E decided to deploy remote grids to keep servicing its hard-to-reach customers, rather than leave them exposed to fire risk.
This balancing act of costs and benefits is key to how utilities across the U.S. are incorporating resiliency into their distribution system planning. That’s according to Mishal Thadani, CEO of climate resilience planning platform Rhizome, and co-author of a new report published today in conjunction with the Smart Electric Power Alliance.
“[With] a blank check, you could make a bulletproof system… but affordability is becoming increasingly important,” Thadani said. “Utilities are trying to make sure that they implement resilience practices that are worth the money, because protecting their communities is just as important as making sure that those communities’ bills don’t go up too much.”
The report, titled “Resilient by Design: Utility Strategies for Climate-Ready Distribution Systems,” reviews the resilience plan filings of 17 utilities across the U.S., and offers an overview of the sector’s progress in incorporating resilience measures.
Many utilities have been investing heavily in resilience; capital expenditures have increased from $136.6 billion in 2021 to over $160 billion in 2023, 36% of which went towards adaptation. But the report notes that there’s still “a $500 billion gap in the capital needed to harden generation, transmission, and distribution systems against the effects of climate change.”
To bridge the gap, some utilities have been grappling with the challenge of how to measure the outcome of a resilience investment and quantify its value to regulators: How do you prove that building an emergency microgrid is worth the cost, especially when you don’t really know when and if you’ll need it?
‘Approaches to valuing resilience’
A first step is understanding the risk, which involves using historical records and climate projections to quantify the probability of different hazards, anticipate their impact on the system, and get an idea of the “loss” they could generate. Loss can be quantified in terms of outages and the percentage of people losing power during a specific event. But it can also be part of a more detailed picture.
“It’s not just people losing power; it’s that there’s economic loss of activity when there are outages,” Thadani said. “And some utilities have taken a further step into trying to understand the health and safety impacts of people not having power for long durations — food spoilage comes into play there.”
Some utilities are actually developing metrics that can contribute to putting a value on resilience.
Oncor, for example, proposed a set of metrics to evaluate the performance of a system over time, which include the number of customers experiencing long interruption durations, and the timeframes of power restoration. Entergy New Orleans prioritizes projects based on their cost-benefit ratios, using avoided outage time and storm restoration savings. And Consumers Energy has established trackable goals, such as “no customer outage longer than 24 hours,” to benchmark system performance over time.
Tracking investments and their performance, however, is not quite the same as putting a monetary value on them. Mac Keller, resilience manager at SEPA and one of the report’s co-authors, noted that the majority of utilities are still far from figuring out.
“The monetary value is still a little bit hard to put your finger on,” he said. “It’s early days, and there’s not a generally accepted silver bullet for valuing resilience. It’s what folks are looking for, but I’m not sure how we’re going to get there.”
“Considering approaches to valuing resilience” is only one of the actions the report recommends to incorporate resilience into utilities’ systems. Others include developing, refining, and tracking resilience metrics, and using advanced data-driven planning tools, among other things.
