Energy companies in Europe and the US face crippling blackouts in the next few years unless they invest heavily in infrastructure upgrades and Smart Grids.
That’s the conclusion of a report released today by Allianz Global Corporate & Specialty and The Chief Risk Officer Forum.
It predicts that the 2003 blackout in the US and Canada which resulted in an economic loss of up to $8bn could be repeated because the existing aging infrastructure is not ready to cope with the rise of renewables.
The report also warns that high-voltage transformers could be knocked out of operation by solar storms, which follow an 11-year cycle and are expected to peak again in 2013.
A solution to these impending problems, says the analysis, is the Smart Grid. “Smart Grids with metering, communication and control technologies and new storage and transport capacities are needed to handle the growth of renewable energies,” says Michael Bruch, risk consultant for Allianz.
“Moreover, existing grids need to be expanded to link decentralized sources of power generation and enable cross-border trading of power and grid services.”