Power supply challenges leave 350 million with major outages – study

Some 350 million people, more than 4% of the global population, were impacted by a major power outage in 2021 as the combination of traditional market challenges and new factors disrupted the operations of energy systems, according to a new report released by research firm IHS Markit Global Power and Renewables.

The report, Are We Entering an Age of Increasing Power Supply Disruptions, states that emerging power supply challenges including extreme weather events and unsynchronised pace of the energy transition are posing more challenges to system efficiency.

Rama Zakaria, associate director of global power and renewables at IHS Markit, said: “While power supply challenges are not new and power supply disruptions have long plagued certain parts of the world, new challenges are emerging and exacerbating older ones.”

Climate change-related power outages

Climate change-related extreme weather conditions are making it difficult for utilities to predict generation and align it with anticipated consumer energy usage resulting in power shortages.

Very hot and cold conditions can result in increased energy demand for cooling and heating, respectively, and in turn affect wholesale power prices and even result in outages, according to the study.

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Very cold snaps such as the one experienced in Texas in 2021 can result in asset failure as aging infrastructure struggles to withstand weather conditions resulting from climate change.

In hydro-heavy markets such as South China and Brazil, climate change can impact hydropower supply and strain the system. In Guangdong Province, for example, soaring power demand and lower-than-expected hydro imports due to the drought in neighboring southwest China resulted in inadequate capacity in 2021, according to the study.

Brazil also faced the worst drought in almost a century, increasing its exposure to the surging global gas prices.

Other power outages mentioned by IHS Markit in the report include in Pakistan and rolling blackouts in Sri Lanka.

Disparity in energy transition pace across the energy value chain

Whilst other segments within the energy value chain are increasing the pace at which they are adopting next-generation technologies and business cases to achieve energy transition targets, others are lagging behind resulting in grid bottlenecks.

For instance, the deployment of wind and solar energy generation capacity is happening at a faster pace than transmission and distribution infrastructure is being modernised or built.

Solar and wind generators are typically located far away from load centers resulting in grid bottlenecks and supply curtailments, according to the study.

Europe’s reliance on gas sourced from Russia and of China on coal sourced from outside the country resulted in increases in power prices in the two regions in 2021 and in power outages. In the past, these high prices would naturally lead to more supply in gas and coal, but energy transition pressure has broken that market linkage as investors shun new investments in fossil fuel production.

At the same time, increased reliance on solar and wind, which provide intermittent capacity has increased the vulnerability of grids to weather-related patterns.

Aging infrastructure

The lack of infrastructure maintenance and underinvestments to upgrade and improve power generation and grid assets have traditionally been the main causes of power outages across the globe, according to the study.

Zakaria, added: “Transitions are inherently bumpy and not easy to manage. The energy transition is no exception. An unsynchronised pace of transition across different parts of the value chain can create challenges and expose energy markets to increased volatility.”

Xizhou Zhou, vice president and managing director of global power and renewables, reiterated: “Fossil fuel supply is still the dominant form of energy in most parts of the world. If that supply is curbed faster than demand for it declines—and before alternative technologies can fill the gap—shortfalls can arise, leading to soaring prices.”

Find out more about the study.