One Billion People Are At Risk Of Rolling Blackouts This Summer
This summer, power grids worldwide won't produce enough electricity to meet the soaring demand, threatening more than one billion people with rolling blackouts. Grids are stretched thin by fossil fuel shortages, drought and heatwaves, commodity disruptions and soaring prices due to the war in Ukraine, and the failed green energy transition where grid operators retired too many fossil fuel generation plants. Combine this all together, and a perfect storm of blackouts threatens much of the Northern Hemisphere.
The power crisis, affecting a large swath of the world and top economies, could be less than a month away when summer begins on June 21. Regions that concerned Bloomberg are Asia, Europe, and the US, where there's not enough power to go around when cooling demand is set to surge as households crank up their air conditions to escape the sweltering heat. Asia's heatwave has caused hours-long daily blackouts, putting more than 1 billion people at risk across Pakistan, Myanmar, Sri Lanka and India, with little relief in sight. Six Texas power plants failed earlier this month as the summer heat just began to arrive, offering a preview of what's to come. At least a dozen US states from California to the Great Lakes are at risk of electricity outages this summer. Power supplies will be tight in China and Japan. South Africa is poised for a record year of power cuts. And Europe is in a precarious position that's held up by Russia — if Moscow cuts off natural gas to the region, that could trigger rolling outages in some countries. --Bloomberg
BloombergNEF analyst Shantanu Jaiswal says the combination of "war and sanctions" disrupting commodity markets, "extreme weather," and "an economic rebound from COVID boosting power demand" is a "unique" situation that he "can't recall" the last time a "confluence of so many factors" happened together. As we noted in the beginning, it's a perfect storm of factors.
Henning Gloystein, an analyst at Eurasia Group, warns if major blackouts spread across the world this summer, "that could trigger some form of humanitarian crisis in terms of food and energy shortages on a scale not seen in decades."
If the US is any guide to the world's faltering power grids, as warned last week, regulators said half the country could experience blackouts from the Great Lakes to the West Coast. The reason is due to the lack of power generation and a megadrought. The pattern across the world's power grids is fragility due to the lack of fossil fuel investments and the reduction of fossil fuel power generation plants as grids attempt to transition to cleaner and greener power sources.
Alex Whitworth, an analyst with Wood Mackenzie Ltd, points out that as grids transition to green energy, the lack of battery storage when the sun doesn't shine or the wind doesn't blow will create instabilities and more stress on grids at a time fossil fuel plants are being retired at a rapid clip. "You'll be facing a supply scare every time there's clouds or storms or a wind drought for a week," Whitworth said. "We really expect these problems to get worse in the next five years."
