Significant power outages in 2021 affected around 350 million people, or 4 percent of the world’s population, according to a new study.
In a report titled “Are We Entering an Age of Increasing Power Supply Disruptions?” IHS Markit said that extreme weather events and energy transition trends eroded reliability and disrupted some of the world’s largest power supplies, including in the United States and China.
The global analytics, information, and solutions firm also highlighted that these developments added pressure to other countries enduring existing issues, such as Pakistan and Sri Lanka.
Climate-related changes in weather patterns and poorly managed energy transitions can present “new challenges” and “exacerbate older ones,” such as perpetual under-investment in power generation and grid assets, said Rama Zakaria, associate director of global power and renewables at IHS Markit.
“Add to that greater frequency of extreme weather events and the unsynchronized pace of energy transition, and it increases the potential for a new age of more-frequent power supply disruption,” Zakaria said.
Because of the prevalence of cold snaps and droughts, the study authors note that it has become increasingly difficult to forecast supply and demand. This can affect wholesale power prices, escalate threats of power shortages, and alter conditions related to operating voltages and transmission flows, according to the report.
The shift to solar and wind resources has also added a strain to utilities. The IHS report alludes to transmission and distribution infrastructure as being a notable setback since “wind and solar resources [are] typically located farther away from load centers,” resulting in grid bottlenecks and supply reductions.
Global Energy Crunch
During the pandemic, the global energy industry has been on a roller coaster ride.In the early days of COVID-19, the world was flooded with crude oil, resulting in floating storage apparatuses and a Cushing, Oklahoma, storage facility filled to the brim. During the lockdowns and restrictions, production was halted and demand nearly ceased, causing prices to crater to below zero.
As the international economy gradually reopened, major economies consumed considerable amounts of crude and natural gas, exhausting inventories worldwide. With output failing to satisfy demand, many countries that had turned to renewable energy then resorted to coal to keep the lights on.
Over the past 12 months, China’s power outages have intensified, shutting down factories and impacting economic growth. The country’s State Grid Corp. warned of tighter supplies in the winter and power outages due to lackluster hydropower generation. This prompted Beijing to introduce power rations.
“The grid would overall see a tight balance of the supply and demand situation and power shortage in some regions,” the firm said in a statement in November. “The current electricity supply and demand situation in the region managed by the company has returned to normal.”
In India, power disruptions have become almost the norm. Several states have been enduring outages amid a paucity of coal despite ramping up coal production.
The same conditions are unfolding in Pakistan, Sri Lanka, Kazakhstan, and Kyrgyzstan.
Despite its vast green infrastructure, Europe has failed to keep up with swelling demand, especially with low wind speeds reducing production for most of the past year.
The European Union’s gas stockpiles are below their five-year average. With a potential military conflict at the Ukraine–Russia border, the 27-nation bloc will need to import more crude oil and liquefied natural gas from other major energy-producing markets.
European utilities, faced with an energy crunch and possible government price caps, have been raising billions of dollars from bond markets.
Even the United States, one of the world’s largest energy producers, has endured tough times. Last year, Winter Storm Uri blindsided Texas and devastated its utilities. With active winter weather approaching the state, some industry experts purport that many gas production and delivery systems remain vulnerable because they were not winterized.
So far in 2022, it’s been a brutal winter for tens of millions of Americans. The East Coast has been blanketed by substantial snowstorms, causing about a million people to be without power.
With the energy squeeze growing and prices not slowing down, these shortages could trigger higher inflation and social unrest, Blackstone Inc. co-founder Stephen Schwarzman warns.
Although crude and natural gas prices are trading at their best levels in years, multiple analysts and strategists have told The Epoch Times that many firms have refrained from investing in more capacity and output. This, they forecast, will facilitate an environment of demand continually outstripping supply.
