Wildfires a burning issue for utilities in times of climate change

Size: px

Start display at page:

Download "Wildfires a burning issue for utilities in times of climate change"

Amy Boone
5 years ago
Views:

Wildfires a burning issue for utilities in times of climate change More than AUD 500 million was the cost to utility companies to settle claims after power lines, blown over in a hot windstorm, were

1 Wildfires a burning issue for utilities in times of climate change More than AUD 500 million was the cost to utility companies to settle claims after power lines, blown over in a hot windstorm, were linked to Australia s Black Saturday bushfires in In times of climate change, events of this kind are set to happen more often endangering not only lives and homes but also utilities in Australia and many other parts of the world.

2 The fires not only destroyed the properties of the plaintiffs compen sated. They also claimed 173 lives, burnt ha of land and destroyed more than houses, 59 commercial properties and 12 community buildings. Five of the 13 major Black Saturday fires were started by power lines. The event was the most prominent but not the only reminder that the risk landscape for utilities and operators of transmission and distribution lines is changing and with it, their exposure to claims.

3 Wildfires in the urban sprawl Wildfires have emerged as more prominent loss events in recent years. This has been driven by three key factors: more people moving to areas prone to wildfires more properties built, leading to larger potential losses and additional, man-made wildfire hazards Barbecue fires, cigarette butts, arson and power lines are all wildfire hazards introduced by property development as it encroaches on areas that once only had lightning from thunderstorms to fear. And with many events traced back to power lines or lack of maintenance around them, the risk landscape is changing significantly for companies that produce and/or distribute power as illustrated in the table below. Year Location Description Damage 2011 Bastrop County (Texas, US) 2009 Victoria State (Australia) 2007 San Diego County (California, US) 2006 Asturias Province (Spain) Tropical Storm Lee raised strong winds that severed trees in two locations and caused them to fall on power lines, the sparks setting fire to the timber below. Black Saturday Bushfires, resulting in Australia s highestever loss of life from a bushfire when a three-day extreme heat wave caused power lines to sag and these clashed and sparked against trees in very high winds. The Witch Creek Fire was the largest of the October 2007 California wildfires, the main cause of which was a combination of extremely dry conditions, hot weather and strong Santa Ana winds. According to the fire investigation report of the California Department of Forestry and Fire Protection, the cause was power lines coming into contact with each other in the wind. According to eye witnesses, on 21 May 2006 strong winds affecting the region made power cables touch, causing sparks that started a fire in Busindre. The local utility company was suspected initially but found not responsible due to insufficient evidence. 2 people killed, homes destroyed 173 people killed, more than homes destroyed 2 people killed, homes destroyed 616 hectares burnt Table: Selection of wildfires potentially triggered by power utilities Swiss Re Wildfires a burning issue 1

Climate change will turn up the heat Around the world, populations are rapidly urbanising at a time when climate change is turning up the heat on many of the fastest-growing cities.

4 Climate change will turn up the heat Around the world, populations are rapidly urbanising at a time when climate change is turning up the heat on many of the fastest-growing cities. Projections from the Intergovernmental Panel for Climate Change (IPCC) predict that wildfires will become more frequent and also more devastating. This is due to fire seasons growing longer as dry cycles are expected to extend in duration The maps below show the changes in wildfire-conducive weather conditions expected by the IPCC based on results from various climate models. While lightning storms are acts of God, the other trends mentioned are factors that power and utility companies must consider in managing their operational and financial risks in the years ahead. The immediate surroundings of power lines will gradually see drier conditions in the nearer term. Given rising property values in the vicinity of power lines, this radically changes the risk landscape for the owners of power lines.. Maps A and C show the expected mean change, based on all models. Reds mark an increase, blues a decrease of wildfireconducive weather hazards. Mean change B Maps B and D show the agreement between all models. Regions in red will most likely see an increase, regions in blue a decrease in weather conditions that foster wildfires. Agreement A dry seasons also becoming more severe, with less rainfall and higher temperatures longer dry spells generating more dry wood to fuel fires, which easily ignites beetle infestations compounding the problem as bugs thrive in warmer climates, leaving behind dry deadwood as a prime fuel source for wildfires more fires being triggered by lightning strikes as thunderstorms are expected to be more frequent D C 0.25 Decrease 0.25 No change Increase Likely decrease Likely increase 90% 66.7% 66.7% Low agreement 90% Source: M ax A. Moritz, Marc-André Parisien, Enric Batllori, Meg A. Krawchuk, Jeff Van Dorn, David J. Ganz, and Katharine Hayhoe Climate change and disruptions to global fire activity. Ecosphere 3:art Swiss Re Wildfires a burning issue

5 Wildfire hot spots Changing risks need assessing before they can be managed. With this in mind, Swiss Re developed a new proprietary methodology to identify areas worldwide exposed to wildfires. The methodology combines population density as a proxy for exposed values, historical wildfire and fire intensity records, vegetation zones, drought severity records and additional datasets to create wildfire exposure zones. In addition, the methodology allows pinpointing areas of concern and updating risk management accordingly. Wildfire exposure zones High wildfire exposure Medium wildfire exposure Low wildfire exposure Example Frequent wildfires near large cities Average wildfire hazards in areas with medium population densities High wildfire hazards but low underlying values exposed Swiss Re Wildfires a burning issue 3

6 Global wildfire exposure zones North America Latin America Low wildfire exposure Medi wildfi expo

7 Asia Europe Australia um re sure High wildfire exposure

Taming wildfire storms For utilities operating in hazardous locations, managing their changing risk landscape will be key to minimise their exposure.

8 Taming wildfire storms For utilities operating in hazardous locations, managing their changing risk landscape will be key to minimise their exposure. Beyond stormproofing electricity poles, this means following latest industry best practices in maintaining power lines and the vegetation around them, to prevent fires in the first place. A dry branch falling off a tree and hitting a line may ignite, starting a firestorm if the conditions are right. Identifying favourable conditions for such events requires weather management looking out for wind and temperature conditions that help ignite fires and fan them. Considering these kinds of scenarios will be a task for quite a large community of companies. There are more than 200 electricity transmission and/or distribution companies in the US alone, more than 70 in Europe and 16 in Australia. Many of these utilities are in areas with a high wildfire hazard. Given the predictions by the IPCC, their number is set to grow as high-hazard zones expand due to climate change. 6 Swiss Re Wildfires a burning issue

9 Protecting your business against wildfire losses With the increasing exposure comes the need to also have financial protection for the risk that always remains even if the best risk management procedures are implemented properly. Wildfires resulting from unintended sparks from utility operations can result in catastrophes that impact liability coverages. To meet this challenge, the aforementioned risk management practices will need adapting for as long as global warming is not contained. In this time of uncertainty, insurance against wildfires is an important tool to protect companies against the effects of unchecked blazes. Drawing on its long experience worldwide, Swiss Re Corporate Solutions offers a unique approach in covering wildfire exposures. Power generators and transmission or distribution line operators may qualify for up to USD 100 million on an excess basis. Multiyear capabilities are available to ensure budget stability in line with local utility regulatory requirements. Having this protection in place will become more important in a world of expanding populations, higher property values and more frequent wildfirefriendly weather conditions. Swiss Re Wildfires a burning issue 7

10 8 Swiss Re Wildfires a burning issue

11 2015 Swiss Re. All rights reserved. Title: Wildfires a burning issue for utilities in times of climate change Authors: Peter Brenner, Daniel Andris Editing and realisation: Bernd Wilke Proofreading: Philippe Mettler Infographics Annie Wu Graphic design and production: Swiss Re Corporate Real Estate & Logistics/ Media Production, Zurich Photographs: Swiss Re The entire content of this publication is subject to copyright with all rights reserved. The information may be used for private or internal purposes, provided that any copyright or other proprietary notices are not removed. Electronic reuse of the data published in this report is prohibited. Reproduction in whole or in part or use for any public purpose is permitted only with the prior written approval of Swiss Re and with the following attribution: Swiss Re Corporate Solutions: Wildfires a burning issue for utilities in times of climate change. Courtesy copies are appreciated. Although all the information used in this report was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or completeness of the information given or forward-looking statements made. The information provided and forward-looking statements made are for informational purposes only and in no way reflect Swiss Re s position. In no event shall Swiss Re be liable for any loss or damage arising in connection with the use of this information and readers are cautioned not to place undue reliance on forward-looking statements. Swiss Re undertakes no obligation to publicly revise or update any forward looking statements, whether as a result of new information, future events or otherwise. Visit to download or to order additional copies of Swiss Re publications. 08/15, 120 en _15_EN

CALIFORNIA WILDFIRES OCTOBER 8-17, 2017

REPORT DATE: October 17, 2017 EVENT DATE: October 8-17, 2017 CALIFORNIA WILDFIRES OCTOBER 8-17, 2017 Summary Wildfire activity has rendered especially severe impacts to certain areas of California since