By: Mackinnon Lawrence

Alongside the grim societal and economic reality we face amid the COVID-19 pandemic is the very real challenge of maintaining and operating critical infrastructure around the world. Referring to assets that are essential for the everyday functioning of societies, critical infrastructure provides the foundation on which modern economies are built. As the World Economic Forum’s Infrastructure Future Scenarios project aptly states: “Infrastructure – the most long-term of assets – needs to be prepared for an uncertain future.”

While risk mitigation and adaptation are central to infrastructure resiliency, COVID-19 is unique in its acute, short-term disruptive impact and in its far-reaching implications on long-term investments. It brings into focus the importance of investing in solutions and technologies that can accelerate infrastructure development and increase operational resiliency, while also stimulating economic recovery.

As one of 16 critical infrastructure industry segments identified by the US Department of Homeland Security, energy is no exception when it comes to improving resiliency.

Compounding Threats

Utilities are already faced with difficult decisions around which infrastructure maintenance projects to prioritize while balancing how best to protect their workers in the field against exposure to the disease. A high infection rate among critical staff would make it extremely difficult to maintain even baseline operations.

Shifting load profiles caused by a global workforce suddenly working from home presents additional challenges. Meanwhile, deferred infrastructure maintenance amplifies the potential impact of compounding risks. For example, what if a Category 5 hurricane struck a major metropolitan area in the middle of social distancing efforts? Recent earthquakes in the Western US illustrate this point.

Among other things, investments in greater automation and remote monitoring solutions go a long way toward mitigating the effects of COVID-19 and speeding recovery. Many of the technologies needed to enable these capabilities are available today. Moving beyond pilot programs to full-scale implementation is a critical next step. 

Facing its fair share of service disruptions at the hands of destructive storms, Florida Power and Light has already invested several billion dollars over the past decade in grid hardening initiatives, proving that it is possible to rebuild and improve resilience with available technology. In doing so, it has improved service reliability to its more than 5 million customers. Other utilities, like PSEG, Consolidated Edison
, and Entergy
have completed or are in the middle of similar grid hardening and modernization programs.

A global energy transformation is propelling the industry toward a cleaner, increasingly distributed, more mobile, and intelligent Energy Cloud system. When you factor this in, the critical post-COVID-19 question facing the energy sector is—is it moving fast enough?

Mind the Investment Gap

The power sector is among the least digitally transformed industries in the global economy and underinvested when it comes to infrastructure. And it is by no means alone in wrestling with underinvestment.

Fourteen percent of global GDP is invested in infrastructure today. However, the world will need to invest nearly $100 trillion by 2040 just to maintain current levels of economic growth, according to estimates published by the World Economic Forum. Current investment levels would add up to a $15 trillion investment gap by 2040. These estimates are before the effects of COVID-19 are factored in.

Infrastructure investment has the potential to accelerate economic development. At the same time, it creates new market opportunities.

Just over a decade ago, the post-Great Recession stimulus package (American Recovery and Reinvestment Act of 2009, or ARRA) coupled with similar initiatives from major global economies led to a 40% compound annual growth rate in the cleantech sector between 2010 and 2019.The global cleantech industry is now worth over $1.5 trillion and is increasingly reshaping the status quo for diverse infrastructure segments, including buildings, transportation, cities, and energy.

Still, the energy sector faces a massive shortfall in infrastructure investment globally at precisely the moment it needs to accelerate technology integration and greatly improve operational sophistication.

The good news: an infrastructure-targeted stimulus package focused on economic recovery and growth appears to have bipartisan support in the US. The bad news: it remains to be seen whether such a bill will prioritize conventional infrastructure systems or accelerate climatetech and a shift to a more sustainable, inclusive economic vision.

Either way, infrastructure is a long-term play. Prioritizing adaptive, flexible networks of assets to insulate critical infrastructure from acute impacts will pay dividends into the future.

Accelerating Implementation

Emerging Energy Cloud platforms like Smart Cities, Building-to-Grid, and Integrated Distributed Energy Resources (iDER) are already burgeoning hubs of innovation. According to Guidehouse Insights estimates, by supporting a greater share of electron flow and two-way power flows, these platforms have the potential to collectively generate at least $1 trillion in additional revenue across the power sector.

Each Energy Cloud platform sits at the confluence of investments into assets and technologies that will form the backbone of our future global economy.

In Smart Cities, for example, cross-sector coordination, a focus on citizen well-being, and climate adaptation offers a fertile test bed for new business models and customer-centric solutions. While the provision of electricity remains critical to urban resilience, closely linked emerging industries like e-mobility are capturing a greater share of growth while piggybacking on investments in vehicle electrification, 5G, and charging infrastructure. As Enel X has demonstrated through a portfolio of investments and partnerships, such intersections can offer traditional energy companies a bridge into high growth adjacent markets.

The reverse is true as well. Tech companies like Alphabet, Verizon, and Amazon
boast liquid cash reserves and collectively have written the book on customer experience. Each are broadly invested across emerging Energy Cloud platforms from consumer tech to renewables to mobility. At the same time, they are increasingly customers, partners, and competitors with traditional utilities.

With the majority of the global workforce stuck at home for the time-being, it’s the service providers, the content aggregators, and the smart home solutions providers that provide the lifeline to the outside world. Building on this core and displacing the utility with more flexible products and services linked to proprietary hardware and community power networks is not out of the question. Especially in times of crisis, customers look for increased security and reliability.

Looking Ahead

No matter how deep or prolonged the current economic downturn, the global economy will spring back. But especially for critical infrastructure, we can no longer assume physical and cyber threats are random and utterly unforeseeable or unmanageable. Pandemics, destructive storms, and cyber attacks loom either directly in front of us or just around the corner with potentially catastrophic consequences.

Orchestrating Energy Cloud platforms requires approaching the energy industry and infrastructure differently. In both cases, technology is an enabler for improving resiliency and an accelerant for innovative business model design that can deliver new value to more sophisticated customers. For utilities, this means embracing a more diverse and dynamic competitive landscape to build infrastructure, operational, and business model resiliency.

For critical infrastructure as a whole, taking a holistic approach to system design will enable far greater flexibility and durability.

Join us this Thursday, April 9, for a free, related webinar, Accelerating Resilience: Bringing the Energy Cloud from Innovation to Implementation, the first installment of a new Guidehouse webinar series, Pathways to Resilience: Infrastructure 4.0.