Webinar Recap: Utility Climate Resilience—Future-Proof Your Capital Investment Strategy

August 18, 2021 Boudewijn Neijens

Each year, the assets of electric, gas and water utilities become more threatened by the looming impacts of climate change. This poses substantial long-term risks to the reliability of utility service, as well as to public safety. However, it’s challenging for utilities to calculate the full costs associated with climate-related risks. In a recent panel discussion moderated by Utility Dive, I had the opportunity to explore the topic of climate-resilient capital investment planning alongside:

Valuing Hard Trade-off Decisions

A recent survey by Copperleaf® and Utility Dive found that utilities may be underestimating dramatic risks related to climate change.

To address the planning gaps that were brought to light in our survey, panelists explored how utilities can value the trade-offs of achieving climate resilience—for individual capital investment projects and across an organization’s entire portfolio of capital projects.

At PG&E for instance, Andy discussed the challenges of addressing wildfire risk across such a large system. With 25,000 miles of distribution circuits that traverse high-fire threat districts, determining how to mitigate risk during peak wildfire season is no easy feat. During the webinar, Andy shared the various tactics PG&E uses to address this specific challenge—and stressed the complexity of making such critical decisions across the entire utility. He explained how Copperleaf is helping PG&E quantify the risks and benefits of various mitigation strategies, and identify the optimal mix and timing of climate resilience investments alongside all their other initiatives.

You’ve got to plan around not just the portfolio of one type of work, but the portfolio of all the work taking place in the utility," shared Andy. "When you’re dealing with a large portfolio, you need asset investment planning tools that Copperleaf brings to the table.

Investment Planning Must be Dynamic

As utilities work to mitigate the source of climate change by decreasing or eliminating carbon emissions from the electric power supply, they will need to simultaneously make big changes to their infrastructure. In short, investment planning will need to be incredibly dynamic in order for utilities to be able to change course as needed.

During the webinar, Pradheep shared National Grid’s net-zero targets and the trade-off decisions they must consider as they react to everchanging conditions. The speed of electrification, the addition of district heating and of energy storage, and the willingness of consumers to pay for going green and potential carbon pricing schemes, will all affect National Grid’s plans—yet there is considerable uncertainty for each of these factors. National Grid is considering injecting hydrogen into the network, but this requires significant changes to its existing asset base and will trigger the need for large new investments. Pradheep commented that we are all wired to look at each piece of the puzzle separately—but solutions like Copperleaf allow for a holistic approach that can explore different “what-if” scenarios to help utilities develop optimal plans that can evolve as the situation changes and new information becomes available.

Turning Strategy into Tactics

High-level strategic objectives are a great starting point, but they need to be translated into something more tangible in order to operationalize a plan to drive that strategy forward. The Copperleaf Value Framework helps organizations assess all investments in a consistent way and translate strategy into a transparent plan that can be executed with available resources. Having a consistent value framework across an enterprise helps utilities evaluate difficult trade-off decisions and track progress toward achieving strategic goals and KPIs. Copperleaf's robust what-if analysis capabilities can help utilities take into consideration a variety of potential future scenarios, allowing them to remain dynamic throughout their journey to climate resiliency.

To learn more about how leading utilities like PG&E and National Grid are leveraging Copperleaf’s Decision Analytics Solutions to develop plans that address the impacts of climate change, be sure to watch the full panel discussion here.

About the Author

Boudewijn Neijens

Boudewijn is the CMO at Copperleaf, a Board Member of the Institute of Asset Management, and Chair of the Canadian committees for the International Organization for Standardization (ISO) on asset management and the International Electrotechnical Commission (IEC) on managing electrotechnical assets.

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