The Impact of Power Outages

Electrical power is a fundamental commodity of modern life, and its disruption can pose immense consequences for commerce and public health. Power outages, whether caused by natural calamities, aging infrastructure, or physical or cyber-attacks, have profound financial consequences that extend far beyond the immediate inconvenience to households and businesses.

When the lights go out, factories halt production, servers go down, and shops close their doors. For the modern digital economy, reliant on a constant stream of data and cloud-based operations, even a short-lived outage can spell significant monetary losses. Cost estimates hold that storm-related outages alone cost the American economy between $20 billion and $55 billion annually. A recent U.S. Department of Energy report estimated that the total cost of power outages to American businesses is around $150 billion every year.

Understanding the causes of power outages

The vast majority (86.6%) of electrical outages are caused by extreme weather scenarios or natural disasters. About 12% of outages are the result of inadequate and aging power infrastructure. Only 01.5% of power outages are caused by intentional attacks on electrical infrastructure. According to Department of Energy data, however, these attacks have increased in recent years. 2022 experienced 71% more attacks on electrical infrastructure than 2021.

Many communities face an increased risk of power outages due to extreme temperatures, natural disasters, and aging local infrastructure. Some regions are more susceptible to outages, and varying climate challenges contribute to power outages across all regions in the United States. The greatest exposure to power outages occurs in counties in California, the Northeast, and South.

It may come as no surprise that larger, more populated states suffer more outages per year on average. Texas leads with an average of 25, while California is close behind at 23. Still, the top 10 states for average outages per year closely follows the county data.

Recent studies found that among about 73% of the U.S. population with available data, there was an estimated average of 520 million customer-hours total without power annually. Much of this time occurred in over 230,000 outages of one or more hours, as well as approximately 17,500 outages of eight or more hours.

Power outages and impact on public health

Outages of more than eight hours have been determined to be medically significant outages, with potential health consequences. Arkansas, Louisiana, and Michigan face the dual and compounding problems of frequent outages lasting more than eight hours and a prevalence of electricity-dependent medical equipment use, creating a high social vulnerability to electrical outages.

In addition to medical equipment failure, the adverse health outcomes associated with outages lasting more than eight hours include carbon monoxide poisoning from improper generator use, exacerbation of cardiovascular and respiratory conditions, hypothermia or heat stroke, and food insecurity.

Power outages have a ripple effect on supply chains

Power outages of significant length can severely impact local economies, stopping retail transactions as well as bringing production and manufacturing to a halt. Furthermore, power outages can impact supply chains, causing bottlenecks and disrupting just-in-time manufacturing processes. This ripple effect is felt not only domestically but also by international partners.

Effects of natural disasters and weather events on power outages

Outages lasting more than eight hours happen most often during summer hours, initiating from 3 p.m. to 8 p.m. Frequently, long outages occur in response to emergency weather events, with tropical cyclones producing the greatest increase in long outages.

Approximately 75% of outages lasting more than eight hours occur in conjunction with a single weather or climate event featuring heavy precipitation. Heavy precipitation in tandem with anomalous heat, tropical cyclones, or lightning strikes are common drivers of power outages.

In the American Northeast and West, heavy snowfall contributes to many outages lasting more than eight hours during the winter months. During September and October, 75% of outages in the West are driven by wildfire activity.

Leveraging Pinkerton Risk Advisory for effective risk mitigation strategies

Power outages pose significant risks to commerce, public health, and supply chains. While intentional attacks on electrical infrastructure and extreme weather scenarios contribute to outages, the strain on America's power grid also plays a role. Accounting for an area’s susceptibility and exposure to risk are important facets of risk mitigation.

To effectively manage these risks, organizations can turn to Pinkerton Risk Advisory. By understanding the causes and consequences, applying a total risk perspective, and using applied risk methodology, organizations can implement proactive measures and targeted solutions to protect their businesses. Just don't wait until the lights go out!

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