Adaptation10: Powering Through the Storm — How Utilities Are Adapting to Climate Risks

Correntics is a climate risk analytics company that leverages data-driven methods and risk expertise to serve clients across sectors.

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🙌The Adaptation10 series is back! This edition includes an in-depth feature on how electric utilities are addressing physical climate risks and working to prepare, protect, and recover their operations from extreme weather shocks, plus profiles of 10 companies providing adaptation services to this critical sector. Use the link below to download the full report for free, or scroll down to read the in-depth feature 👇

The global power system is facing an unprecedented test. Climate change is transforming the physical environment that electric utilities operate in, exacerbating extreme weather risks and ushering in new challenges that threaten to overwhelm the unprepared.

International headlines reflect the scale and severity of the danger. “Extreme Heat Shuts Down Some Nuclear Reactors in Europe”, the New York Times reported this July. “Hurricane-force winds tear through the Midwest and Plains leaving a trail of damage and power outages”, CNN blared the same month.

Around the world, electric utilities are waking up to the growing peril of a warmer, wilder climate. But while some players are pioneering new tools, technologies, and organizational shifts to adapt, others are only just beginning the journey. This edition of Adaptation10 unpacks how electric utilities are grappling with climate risks, explores the adaptation strategies taking root, and highlights the solutions companies are pining for. Through interviews with utility executives, risk experts, and adaptation tech professionals, a picture emerges of a sector at a crossroads: increasingly aware of the stakes, yet still building the playbook for survival.

Electric utilities’ exposure to climate physical risks runs the gamut. Extreme heat and extreme cold alike can impair power generating assets. Windstorms and thunderstorms can ravage transmission lines and disrupt electricity supply. Flash floods can overload substations and short-circuit transformers. Wildfires can scorch essential infrastructure. The list goes on.

Building an inventory of these risks is the first step for many utilities on their adaptation journey. “We are exposed both to acute physical risks, like extreme events, and also chronic changes,” says Mario Ciancarini, Head of Climate Adaptation and Scenarios at Italian energy giant Enel. “For example, power generation is exposed to extremes like floods, extreme rains, windstorms producing direct impact damages. Then there’s hailstorms — an important phenomena for solar power plants.”

The next step is determining which physical risks could have a material impact on utilities’ assets, operations, and finances. That way, companies can prioritize which preparatory and responsive actions to take. This isn’t always easy.

“Acute physical risks are more event-driven, and often short-lived, but they can have devastating impacts,” says Rynier Brandt, Head of Enterprise Risk at EnergyAustralia. “Chronic physical risks are longer-term shifts in climate patterns. This could include things like extreme heat, drought, rising sea levels, and they could potentially affect our assets, but it depends on where the asset is physically located and what is the asset type.” He adds that right now, flooding is probably the top climate-related risk facing his company, especially in the eastern Australian states.

Complicating things further, combinations of climate hazards — occurring together or in sequence — can have outsized effects that also have to be prepared for. “Compound hazards, in which multiple variables can combine to worsen impacts, are concerning for grid infrastructure,” says Andrea Staid, Principal Technical Leader in the Energy Systems and Climate Analysis Group at EPRI, an independent, non-profit energy R&D institute based in the US.

This puts a premium on companies’ ability to model how one, two, or more risks manifesting at once could test their capabilities.

Mapping multiple climate risks onto complex, distributed infrastructure is no small task. Quantifying the amount of physical and financial damage a specific extreme weather event — or long-term climatic change — could have is challenging, too.

“It’s mostly qualitative at this stage,” says Brandt at EnergyAustralia, when asked how his company is going about calculating potential climate risk impacts. “What we are busy doing now is looking at the risks that could most materially affect our operations — and then the type of impacts of that could vary. So it could be things like increased need for capital. It could be business interruption costs, etc.”

Other organizations are further along in this process. At E.ON, one of Europe’s largest energy network operators, Vice President of Sustainability David Radermacher says satellite imagery and AI are being used to scan infrastructure for climate vulnerabilities. “We can literally analyze any project and identify the physical climate risks — and then plan adaptation measures,” he says.

The company’s analytical capabilities extend to an impressive level of granularity. “[With our] AI-based tree recognition software, we can identify whether a tree that’s growing underneath a power line is fast-growing, and needs to be cut down, or slow-growing bush that can remain in place,” Radermacher explains. In this way, E.ON can eliminate threats to its transmission infrastructure long before they manifest.

While access to appropriate tools, expertise, and capital are key factors determining the level of climate risk maturity at utilities, organizational and cultural idiosyncrasies can play a role, too.

“Every organization seems to be a bit different in that respect,” says Michael Gloor, CEO of climate risk software start-up Correntics, on why climate preparedness differs across companies. “Some are super interested in the topic, while others are still doing just the minimum to fulfil regulatory requirements. They know that they need to do a climate scenario analysis for their public disclosures. They know they need to have a section on climate change in their due diligence when they invest in new assets, but some often don’t really bridge between the different parts of the business to initiate effective climate adaptation measures.”

A “tick-the-box” mentality may be one unintended consequence of the raft of climate and ESG reporting requirements loaded onto companies in recent years. However, newer regulatory mandates may actually be forcing some entities that took this approach to think deeper now.

For example, Australia recently adopted Australian Sustainability Reporting Standards (ASRS). These require large entities, from this year on, to publish detailed information on the climate-related financial risks they face. Brandt says this is a game changer.

“Everybody’s thinking through how exactly to quantify and disclose climate-related risks over and above our normal financials that we've done in the past,” he explains.

But the insights generated via climate risk assessments and disclosure exercises are only so many bytes of data unless they can be used to inform risk mitigating actions.

For utilities, adaptation can take many forms. Organizations may use what they understand about current and future climate hazards to site infrastructure and plot new transmission lines. Or they could spur investment in hardening measures, early warning systems, and preventative maintenance.

Because utilities are typically large, complex entities — not to mention highly regulated —their planning horizons often extend years into the future. This means adaptation has to be systemic and forward-looking. It’s no use investing billions in adaptive measures today if they will be overwhelmed a few years down the road.

Hence why big utilities institute multi-year adaptations strategies. “We started a dialogue with the regulatory agency that has introduced in 2025 a forward-looking approach in defining the needs of the grids,” says Enel’s Ciancarini. “This informed our three-year resiliency plan for Italy, which uses data on future heatwaves to identify priorities and substitute underground cables with new technologies more resilient to heat,” he adds.

Recent policy and market focus on energy security may offer a powerful tailwind to adaptation investment. Geopolitical conflicts are pushing governments to secure their power supplies. Meanwhile, the rise of AI — and its insatiable appetite for electricity — is heightening the importance of grid reliability.

Protecting power utility assets from worsening extreme weather events aligns with these two priorities. “When we do investments, it’s always with the lens of security of supply,” says Brandt.

Yet at some companies, adaptation progress is frustrated by organizational silos. “The adaptation piece is quite disconnected from the risk management piece today,” says Gloor. “There’s a risk management department that assesses financial risk, and then a totally different part of the company taking care of protection measures for their infrastructure. The two things are not necessarily going hand in hand today.”

This siloing also affects adaptation budgeting. “The risk management department sits within the finance department, and the infrastructure budgets for maintenance and adaptation is sitting somewhere else. There should, in theory, be some connection. Some behavioral changes will be needed as well as more collaboration within organizations,” explains Gloor.

Given the range of climate hazards that are menacing utilities, and the sprawling nature of the infrastructure they oversee, it’s small surprise that companies are turning to technology to sharpen their adaptation capabilities.

A large and growing array of software companies are providing data, modeling, and risk monitoring solutions to help firms pinpoint weak points in their asset portfolios and inform spending priorities. This way, utilities can get the maximum bang for their buck.

“The use of tools where you can analyze a climate risk based on geodata locations, that’s helping a lot,” says Radermacher at E.ON.

Remote and on-the-ground sensor tech is also enabling companies to react fast to emerging risks, helping to contain damage and expedite clean-up. “Technologies that support early detection of wildfire ignition, or high-risk wildfire areas in systems are increasingly emerging as valuable response resources in managing power systems,” says Staid at EPRI.

Still, some express frustration with the capabilities of certain solutions.

“What I find on the market is often not suitable for us,” says Ciancarini at Enel. “For entry level users, a lot of these solutions could be a good way to start being aware of the risk. When you are a bit higher with your experience, you start to use this data for real. Most of the time I find that this dashboard or that data are not useful, either because they are not accurate enough or fit for purpose.”

Climate-advanced companies like Enel are looking for bespoke solutions, and more granular insights. Moreover, they want to know the data and forward-looking projections churned out by a software provider are explainable. “We cannot work with black boxes because we know how much uncertainty there is in the data. When I buy a climate service, I want to know what’s inside, because I have to know what I’m buying and how to use it,” says Ciancarini.

These are demands that Gloor at Correntics is familiar with, and is striving to address with a flexible, client-centric approach. While some customers are purely focused on disclosure and regulatory compliance, and are happy with an out-of-the-box solution, others demand the white glove treatment.

“Some clients really want to understand every detail. For example, in Switzerland or Austria, in the alpine region, you have a lot of exposure to landslides, avalanches, and other very local hazards that are still poorly understood from a climate change scientific perspective. They care about those topics, while others might just accept the baseline risk or a historical perspective,” he explains.

But software alone can only take electric utilities so far. ‘HardTech’ solutions that actually protect generation and transmission assets are needed, too. Staid at EPRI also says companies have to broaden their infrastructure portfolios to enhance resilience. “Hardening against specific hazards like wind or wildfire is important, but so is integrating diverse generation sources, demand response, and local control technologies that can reduce the impact of disruptions,” she says.

Plenty of obstacles stand in the way of utilities that are on the path to climate resilience.

Climate data, while improving, is still far from complete. Available solutions are not always capable of providing the actionable information that users crave, either. Staid speaks to some of these gaps: “There is often insufficient data on specific assets in the field, on how they may perform against compound hazards, and on how new or emerging technologies will perform when exposed to different types of climate hazards.”

Over at EnergyAustralia, Brandt is yearning for comparable metrics and data that shows how different adaptation solutions perform. “One of the things that we really are interested in is the ability to benchmark. So if we look at what we declare as some of our material risks and also mitigation strategies, how does that compare against some of our competitors and other industry players as well?”

In some cases, closing these data gaps is a matter of scaling risk model capabilities and enhancing the granularity of remote sensors. In others — like in Brandt’s benchmarking example — what may be needed is greater collaboration across utilities, and the public authorities that oversee them.

“There’s not too much information known about certain critical infrastructure assets, and not everyone is willing to share detailed information about the interconnectivity of certain assets,” says Gloor. “If you really want to model the whole power grid, [that can’t happen because] some players are hesitant to share critical data. That’s where we hope to make progress through joint initiatives such as the RECIPE project for a resilient energy future in Switzerland.”

Other barriers are attitudinal. For years now, many utilities have pursued decarbonization strategies and worked to upgrade their infrastructure and operations to keep pace with the rollout of renewable energy. They have been spurred along on this journey by policymakers and regulators, and also by a shared understanding that the low-carbon transition is an opportunity for their own businesses.

The same mentality has yet to take hold when it comes to adaptation.

“The big focus in our energy system is decarbonization — and that requires a balance between reducing emissions and ensuring a stable energy supply,” says Brandt. This means the company is prioritizing new, clean energy infrastructure like battery energy storage solutions and diversifying its energy sources. While ensuring new assets are not excessively vulnerable to physical climate risks is a key consideration, Brandt says adaptation itself is not seen as a revenue driver — yet. “I think the largest opportunities are the new products and services that go with the renewable energy footprint,” he explains.

For his part, Radermacher is concerned that if adaptation is framed purely as a risk management imperative — rather than something that enables and supports the energy transition — then the renewable drive of the last two decades could sputter out.

“We have a long term view on our infrastructure. But I think probably in four or five years time, acute crisis management will take a lot more capacity — in a very negative way. You hear countries already saying they’re not investing in climate mitigation anymore because they can’t afford it, because climate adaptation requires so much capex. If we are moving into a discussion that goes: ‘let’s shift from decarbonization onto adaptation’ that worries me,” he says.

The climate threat to the power sector is real, rising, and relentless. While utilities are alert to the dangers, there are plenty of ways in which adaptation progress could still be stymied. Data gaps could go unplugged. Solutions providers could fall short of companies’ needs. And the sector’s inertia could delay responses that may already be overdue.

Time is not on the side of utilities, however. “We have floods in northern Bavaria. We have tornadoes in the Czech Republic. We have heavy snowfall in Sweden. The frequency has increased,” says Radermacher.

“We have once-in-a-century events almost every year now.”

Thanks for reading!

Louie Woodall & Daniel Schmitz-Remberg