Security and Resilience (Cyber and Physical)

How Much Does a Resilient System Cost?

The cost of resilience can be difficult to pinpoint. Utility resilience investments often include figures for system hardening or building assets, such as storage or microgrids. However, resilience can overlap with other initiatives, including emergency planning and digitization. In these cases, it would be difficult to decouple what costs are related to resilience versus other strategic goals.

Investing in resilience can include a number of items before, during, or after a major event.

BEFORE DURING AFTER
Helps minimize potential impacts Allows greater flexibility and adaptability Supports quick restoration
Includes: system hardening, microgrids and cybersecurity controls Includes: workforce and supply chain contingencies, access to diverse generating mix, dynamic control systems and demand response Includes: mutual aid contracts, exercise of response plans, maintaining stock of key supplies and access to resources

Investment gap

Larger investor-owned utilities have issued reports tallying resilience expenditures in billions of dollars. An ICF report estimated that investor-owned utilities need to spend $500 billion to make their systems more resilient to climate hazards. It says improvements are needed to mitigate risks from:

pie chart on share of costs to utilities by extreme weather type
  • 60% Rising Temperatures
  • 22% Wildfires
  • 13% Extreme Storms
  • 5% Rising Sea Level

The Proceedings of the National Academy of Science estimated about $180 billion in new capacity will be needed by the end of the century to offset decreased efficiency and increased peak demand during heat waves.

Cost is utility-specific

Utilities considering how much to invest in resilience should start by conducting a risk analysis of hazards the system might face. Then, conduct a cost-benefit analysis of how much potential disruptions and solutions could cost. Utilities should then prioritize assets based on risk, impact, and maintenance and upgrade schedules.

Funding for resilience

Current sources of federal funding for energy resilience include:

  • The Federal Emergency Management Agency has various hazard mitigation and preparedness grants for communities and nonprofit entities. FEMA’s Building Resilient Infrastructure Communities program began in 2020, with more than $91 million approved for utility projects.
  • The Department of Energy’s State Energy Program funds states and territories, with one of its goals being to bolster and implement energy security, resiliency and emergency preparedness plans.
  • The Department of Housing and Urban Development’s Community Development Block Grant program provides funding to cities and states for disaster recovery — such as for power system improvements in Puerto Rico and the U.S. Virgin Islands — and mitigation, including for energy efficiency and renewable energy projects.

Increased resilience is part of the focus of infrastructure discussions in Congress. The Bipartisan Infrastructure Framework released in June 2021 includes $47 billion for resilience, “to prepare more of our infrastructure for the impacts of climate change, cyber attacks, and extreme weather events.” It also designates $73 billion for power infrastructure, specifically calling for “resilient transmission lines.”