Part of a new industry series: Powering the Future™: Climate Risk Intelligence For The Energy Industry
Part 2 of the series examines the changing landscape of electricity generation, highlighting the strengths and climate vulnerabilities of centralized power plants and distributed energy resources (DERs). Centralized plants, such as coal, gas, nuclear, hydro, and large-scale renewable sources, offer economies of scale and steady baseload power but face significant climate risks because of their size, geographic focus, and dependence on long-distance transmission. On the other hand, DERs, such as rooftop solar, microgrids, and battery storage, provide localized resilience and flexibility. However, they encounter challenges including intermittency, limited regulation, and sensitivity to local weather conditions. As climate threats intensify, from water shortages and heatwaves to storms and wildfires, utilities must prioritize resilience and diversification to mitigate these risks. Water-dependent and heat-sensitive systems are becoming increasingly strained, while extreme weather conditions impact operations across all types of generation. The section advocates for a hybrid approach that combines centralized and distributed models, enhances physical and operational flexibility, incorporates storage, and leverages geographic and technological diversity. This strategy is crucial for mitigating the increasing risks of climate change and ensuring reliable, adaptable power generation in a volatile future.
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