Economic Benefits of Increasing Electric Grid Resilience to Weather Outages

Severe weather is the leading cause of power outages in the United States and between 2003 and 2012 - with an estimated 679 widespread power outages to have occurred due to severe weather during this time frame. The number of outages caused by severe weather is expected to rise as climate change increases the frequency and intensity of hurricanes, blizzards, floods and other extreme weather events.

This report was prepared by the President’s Council of Economic Advisers and the U.S. Department of Energy’s Office of Electricity Delivery and Energy Reliability, with assistance from the White House Office of Science and Technology. The report describes the current state of the U.S. electric grid, the impact of widespread power outages caused by severe weather, and the increasing intensity and frequency of severe weather due to climate change. Numerous strategies are offered for increasing the grid resilience and reliability, as well as an economic model is presented and used to estimate the annual cost of power outages caused by severe weather in the U.S.

Grid resilience, a core requirement for climate adaptation, includes hardening, advanced capabilities, and recovery/reconstitution. Although most attention is placed on best practices for hardening, resilience strategies must also consider options to improve grid flexibility and control. Resilience includes reconstitution and general readiness such as pole maintenance, vegetation management, use of mobile transformers and substations, and participation in mutual assistance groups. Several key ways of modernizing the grid and increasing grid resilience are summarized.

The annual cost of power outages caused by severe weather between 2003 and 2012 is estimated to have cost the U.S. economy an inflation-adjusted annual average of $18 billion to $33 billion. Annual costs fluctuate significantly and are greatest in the years of major storms such as Hurricane Ike in 2008, a year in which cost estimates range from $40 billion to $75 billion, and Superstorm Sandy in 2012, a year in which cost estimates range from $27 billion to $52 billion.

In June 2011, President Obama released 'A Policy Framework for the 21st Century Grid' which set out a four-pillared strategy for modernizing the electric grid. The initiative directed billions of dollars toward investments in 21st century smart grid technologies focused at increasing the grid’s efficiency, reliability, and resilience, and making it less vulnerable to weather-related outages and reducing the time it takes to restore power after an outage occurs. The American Recovery and Reinvestment Act of 2009 (“Recovery Act”) allocated $4.5 billion to the U.S. Department of Energy (DOE) for investments in modern grid technology which have begun to increase the resilience and reliability of the grid in the face of severe weather (Executive Office of the President 2013).

Publication Date: August 2013

Related Organizations:

  • White House Office of Science and Technology Policy (OSTP)
  • Department of Energy
  • Executive Office of the President of the United States
  • U.S. Department of Energy (DOE)

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  • Assessment

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