Energy Infrastructure at Risk as Hurricane Season Intensifies

We are well into hurricane season, and early indications suggest this could be one of the more eventful years for tropical-storm activity in the Atlantic. Forming on June 28^th, Hurricane Beryl was the earliest-forming Category 5 hurricane ever recorded, and a below-average August in terms of cyclone activity has given way to a very active September. Not including Hurricane Francine, which made landfall on September 11^th as a Category 2 storm, the National Hurricane Center has already tracked two other disturbances in the Atlantic, including Tropical Storm Gordon. As the frequency and intensity of hurricanes increase due to climate change, it is crucial for companies with energy infrastructure in high-risk areas to adapt to ensure reliable power delivery and minimize economic and human impacts while also preparing for the inevitable market volatility that comes with such disruptive weather events.

BTU Analytics is currently tracking nearly 1,300 operational power plants located in communities in the Southeast U.S. with a FEMA Hurricane Risk Index of moderate, high, or very high. While utilities and power plant owners based in Florida, such as NextEra's Florida Power and Light and Duke Energy Florida, are naturally at higher levels of risk, Duke's utilities in the Carolinas are also open to elevated risk.

Focusing on one of the top five companies with at-risk generators listed in the graphic above, NRG's Southeast assets, located primarily near Houston and the Texas/Louisiana Gulf Coast, are highly at risk as well, with nearly 90% of their 2023 generation residing in moderate- or very high-risk areas. Overall, 50% of 2023 generation in the Southeast falls into areas with a moderate risk rating or higher, with 60% of the region's heavily relied-upon gas generation at risk.

It should be noted that generation assets are not the only pieces of power infrastructure located in at-risk areas. Both power plants and transmission infrastructure reside in these communities. However, while thermal plants are generally resilient enough to withstand significant damage that could interrupt operations, overhead transmission and distribution lines that carry electricity from generation sources to customers are far more vulnerable to damage. The graphic below illustrates the at-risk operational transmission mileage by company from our database of both operational and planned transmission lines.

Duke Energy, with over 10,000 miles of transmission infrastructure in Florida and the Carolinas, takes the top spot of having the most at-risk transmission. And though NextEra has far less transmission mileage than Duke Energy, it has far more transmission mileage at very high risk than any other peer.

As hurricanes increase in both frequency and intensity, energy infrastructure will continue to face increased risk. Furthermore, with NOAA still predicting an above-normal hurricane season, understanding a company's asset exposure risk is paramount. Be sure to check back in with BTU Analytics as we continue to monitor and analyze the evolving hurricane season and its impacts on energy infrastructure.

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