The Human and Economic Costs of Power Cuts and Blackouts

Credit: iStock/PeeBee23

Not only are many unprepared for disruptions to their lives and businesses brought about by power blackouts, but often they remain stolidly unaware of the true costs and impact that these can have on their operations and security.

Those involved with energy understand that having something to fall back on when the grid goes down is more than just a good idea, but in the wake of last year’s hurricanes in the Southeast where several unnecessary deaths were involved, it seems appropriate for us to ask the question of why the vast majority of businesses and homeowners throughout the nation are still without backup power.

True, most grid failures last only a few hours, but longer outages, though rare, do occur, paralyzing business activities as well as critical infrastructures such as telecommunication networks, financial services, water supplies, and hospitals.

Recent evidence suggests that blackouts are becoming more frequent, reflecting sluggish investment in infrastructures, exacerbated by increasing competition from decentralized renewable sources sundering grid structures that were designed, and in some cases built, 50 or 60 years ago. Along with systemic problems, risk such as terrorism, cyber attacks, and solar flares adds to the problems.

Estimates of the cost to medium-sized industrial activities from a 30-minute power cut run to as high as $20,000 and, from an eight-hour interruption, as high as $100,000. Annual losses from intermittent outages are estimated to be in excess of $100 billion in the US, although the indirect costs could be up to five times higher. Beyond direct effects, blackouts can affect the economy and our everyday lives in a number of ways:

  • Without refrigeration, much of our food cannot be stored safely, leading to increased risk of food poisoning.
  • Security system failures provide opportunity for greatly increased criminal activity in areas such as fraud, theft, and physical exploitation.
  • All transport systems are impacted by power outages with vehicular traffic, rail systems, and aircraft operations severely compromised through the loss of management and control infrastructures.
  • While distributed renewable energy resources such as wind and solar offer great promise for the future, locality factors affecting volatility in energy production put pressure on traditional energy resources.
  • It is postulated that as much as $25 billion is lost to poor power quality issues such as voltage fluctuations, power surges, and spikes, while industrial and digital business firms suffer losses amounting to twice this amount annually.

To meet these escalating technical challenges, grids need to become much smarter, a challenge requiring tremendous investment here and abroad.

The International Energy Agency (IEA) estimates that the world will need to invest $13.6 trillion between now and 2030 to boost power supply to meet increasing demand. The IEA says that 50% of this amount needs to be invested in transmission and distribution and another 50% in the generation of electricity.

According to Price Waterhouse research, after a power outage disrupts IT systems:

  • More than 33% of companies take more than a day to recover
  • 10% of companies take more than a week
  • It can take up to 48 hours to reconfigure a network
  • It can take days or weeks to re-enter lost data
  • 90% of companies that experience a computer disaster and don’t have a survival plan go out of business within 18 months

Financially, power outages can mean substantial losses for the company affected. According to the US Department of Energy, when a power failure disrupts IT systems:

  • 33% of companies lose between $20,000–$500,000
  • 20% lose $500,000 to $2 million
  • 15% lose more than $2 million

Gartner research identifies the costs for one minute of commercial downtime as follows:

  • $241 for lost ATM transaction fees
  • $1,483 for airline reservations
  • $1,883 for home shopping
  • >$40,000 for the inability to process credit card authorizations

It seems likely that these losses will only increase as we go forward.

Prior to providing an example of an installed backup power system, I’m going to present a case study of my own involving a small gas station/convenience store I’ve used as my default pit stop place for the last several years. To the owners I posed the question, “Why don’t you protect your business from a blackout?”

First, a little background. Bill and Doris (not their real names) own and operate one of those independent service stations—the three-letter variety that you see knocking several cents off the price per gallon charged by the big guys—looking to supplement their day-job wages and build a little nest egg for their retirement. Bill is a civilian employee at the Port Hueneme Naval Base, CA, and Doris is a substitute elementary school teacher, now working full-time at the service station.

As last December’s Thomas Fire blew through the hills above Ventura, CA, causing power losses throughout the area, I headed to their station to top off just in case I needed to make a quick getaway (which I did), only to find the pumps dead, the lights out, and Doris sitting behind the counter, appearing to age before my eyes.

“The power’s been off all morning,” she said in a flat voice, “so until it comes back on, we’re dead in the water.”

Clearly she wanted to talk about the situation, so I bought a soft drink with a $5.00 bill—the only cash I had on me—and listened to the tale beginning with the apology that she hadn’t any change.

“People complain about the cost of gas, thinking we’re getting rich at their expense, but the fact is that we’re lucky to clear five cents a gallon,” she explained. What little profit they’ve seen is from the drinks and munchies and stuff that line the shelves and racks, but for the most part that’s only when there’s power to run the electronic cash register and channel charge card sales through the internet.

“What we’ve lost so far today in doughnut and coffee sales alone will put us in the hole for the week,” she said despondently, “and if it’s still out tomorrow we’ll have to dip into savings to pay the utilities this month,” an admission that prompted me to ask why they didn’t have a backup power unit.

“Huh,” she snorted, “we’re already so close to the wall that I lay awake at night worrying that some idiot is going to drive off with a hose still attached to the car. It’s that or that we’ll lose more than the usual $100 this week to shoplifters.”

“Besides,” she said after a pause, “we bought a genset for our home a couple of years ago, and when the power went out last year in the middle of a rainstorm, Bill came back in after an hour, saying it wouldn’t start.”

Coming back in the evening from a trip a month or so later, I stopped for gas, and seeing Bill at the counter, decided to get his take on the situation…one that was a little different.

“Back in 2007 when we laid out the business plan, the economy was in high gear,” he explained, “We actually made pretty good money on the gas and no one gave a thought about the grid going down. People, even those who were using credit cards, still carried cash, but not today. It’s credit cards or nothing, so we get squeezed at both ends…chump change on the gas and a rip from the credit card people at the back end.”

Then there is the internet, and other disruptions.

“When the power’s out, it means that we can’t get online,” continued Bill, “so effectively we’re out of business until the power comes back.”

“And now there are hybrids and electrics, more efficient engines across all the lines, a slug of new taxes, and lord knows what’s next,” he concluded with a sad smile.

How many small business people are there like Bill and Doris? 10 million? 20 million? Certainly a lot. And for many, the ever-evolving energy landscape has, as in Bill’s case, overwritten the basic premises on which many businesses were based. Many business owners don’t have a clear picture of what’s at stake…or what to do about it.

Credit: iStock/ideeone

Comfort for Bill and Doris and the Community They Serve
Comfort may seem to be a strange term to use in this case, but as I look back on the Thomas Fire situation, Bill and Doris’ situation was no different from that of the vast majority of the businesses in their area. Not only had their inability to conduct businesses had a dire impact on their personal comfort levels, but considering the three-quarters empty state of my gas tank, it affected mine as well…and if mine, then by extension that of the community at large as well.

As it turned out, this particular outage lasted for less than a half a day since the power utility crews were able to bypass the affected portion of the grid and bring other resources to bear. But what if the disruption were more widespread, affecting the major trunk lines bringing baseload power to the area? How long would it take for community services on which we all count to grind to a halt?

To an extent never experienced before, our wellbeing—both personally and corporately—is held captive by not just a need but by an absolute requirement for reliable power, a situation made patently clear by the lessons of last September’s Hurricane Irma in which, among other catastrophes, a number of people living in assisted care facilities died of exposure to high temperatures. What is being done to deal with such consequences? Here’s an example.

Assisted Care Facilities are Choosing to Upgrade Emergency/Backup Power Systems to Ensure Safety and Comfort

It’s no secret that our population is getting older. Projections by the Institute for Health Metrics and Evaluation indicate that by 2030, global female life expectancy will be 85.3 years and male life expectancy will be 78.1 years. This means more assisted living and nursing home facilities will be needed to properly care for our seniors.

All assisted care, nursing homes, and medical facilities must meet the backup/emergency power codes of NFPA 110 and NEC 700, ensuring the ability of essential electrical systems to supply enough light and power for life safety in the event that normal electrical service is interrupted. In addition, there may be state and local Authorities Having Jurisdiction (AHJ) requirements that address resident safety, zoning, noise, and other requirements that have to be addressed. As a result, many assisted living facilities are upgrading their onsite generator units to ensure that residents are not only safe but also comfortable during harsh weather or potential grid failures.

Onsite generation is also becoming a key selling point for assisted living centers as many families want to ensure that their loved ones receive the best care.

Generator Retrofits/Upgrades for Assisted Care Facilities May Pose Challenges

Many health care groups purchase existing assisted care facilities to expand services in different cities. Many times, these tend to be older buildings that require upgrades for health and aesthetic purposes. For onsite generation, the first step is to perform a comprehensive analysis of the facility to determine:

  • where the power sources are entering the building,
  • whether the existing systems meet current life/safety codes, and
  • potential growth opportunities, so generator sizing can be addressed.

“Frankly, we see a lot of odd issues when we first evaluate an older building such as oversized units with 3,000 amps being fed into a 200-kilowatt generator, conduits buried in concrete, and annunciators that are not located near nursing stations or other areas to meet monitoring requirements,” says Keith Findley, Power Solutions Manager, EVAPAR, a Generac Industrial Power distributor.

“In addition, we still find that essential life/safety equipment and nonessential lighting and comfort systems are on the same circuit, which is no longer acceptable—those systems must be separated to meet code,” he notes.

An assisted care facility in Indiana, part of a large consortium of care facilities, had some unique challenges as it upgraded a center to better serve the residents.

“When we performed the initial evaluation, we determined the service feeders coming into the building were single-phase 208 volts and three-phase 480 volts, so it made sense to provide two different diesel generators—350 kilowatts and 500 kilowatts—along with the appropriate transformers,” explains Findley.

The two units are not paralleled at this facility, although Generac’s Modular Power System (MPS) can provide the needed kilowatt-hours to address comfort systems along with the benefits of redundancy, scalability, and safety, through integrated paralleling.

“We selected diesel for the fuel as the staff was familiar with the products, fuel prices tend to be constant, and the Generac diesel gensets are tough and reliable. They also meet the requirements for onsite fuel storage, and local AHJs tend to have more experience with diesel generators, although natural gas is gaining acceptance as onsite fuel,” he says.

Credit: Generac
A backup power installation at an Indiana assisted living facility

With respect to sizing, EVAPAR evaluates overall electrical usage at the facility and sizes up at least 25% to ensure all key medical equipment, lighting, and essential systems can be powered in an emergency.

“We have also found that many facilities are sizing up to ensure nonessential systems such as refrigerators, stoves, air conditioning, and more can be served by onsite generation,” explains Findley.

Services for Assisted Care Facilities
With strict enforcement of the air emissions regulations, diesel powered generators do require extra care and regular fuel polishing. EVAPAR trains the maintenance staff at the facility to perform the weekly generator runs and log the results to ensure compliance. Industrial Distributors such as EVAPAR also offer programs to assist with annual fuel testing and polishing as needed.

“With so much on the line, it’s vital assisted living centers work with experts who understand the current and future needs, the rules and regulations, and can then design practical onsite generation solutions that keep the residents the top priority,” insists Findley.

Credit: Stock/peeterv

How about for home care?
A similar situation is emerging in other areas of our society, where, as for instance, care for many of our infirm and/or aging population is provided at home, but where similar needs exist, introducing the need for highly reliable, automatically initiated backup power systems. No longer a small step, it is a giant leap in our vision for the future of onsite power generation.

Missing Out
In the midst of preparing this article, I attended a reunion in New Orleans, where a dinner—the event’s stellar attraction—was planned at one of the city’s more famous Creole restaurants.

Just before a group of us was about to walk from our hotel to the restaurant, the power went out in what is known as the Warehouse District, the result of a nearby building fire. We made our way along streets absent of signs of life, past unlit doorways and windows. My misgivings mounted upon spying a knot of people at what I presumed to be the entrance to our destination.

Just as we arrived to join the throng, the door opened, held by the proprietor who was busy ushering members of the staff onto the sidewalk where they scattered to the winds. That act completed, the boss or whatever gave a Gallic shrug, said, “C’est la vie” to the assemblage, then shut and bolted the door.

I and my companions had stored up a rather prodigious hunger in anticipation of a feast, so the question of a Plan B ran through the crowd without any great ideas save fanning out and see what options appeared. The task group with whom I embedded myself headed off in the direction away from the river, and after two blocks of blackened storefronts, happened upon a gaily lit oasis…a hotel whose bar and restaurant were going full-tilt as more and more passersby crowded through the entrance.

Just as our group was finishing dessert, the street lights came back on, but not before many of the businesses and restaurants in the area had taken severe hits to their evening’s receipts. How much, I don’t know, but our group numbering 30-some-odd famished bodies were probably good for at least a C-note apiece, a not inconsequential loss of revenue to our intended eatery.

The System Average Interruption Duration Index (SAIDI)[1] is commonly used as a reliability indicator by electric power utilities. SAIDI is the average outage duration for each customer served, and is calculated as:

SAIDI = sum of all customer interruption durations divided by the total number of customers served

SAIDI is measured in units of time, often minutes or hours. It is usually measured over the course of a year, and according to IEEE Standard 1366-1998, the median value for North American utilities is approximately 1.50 hours.

The following is the list of power disruptions involving at least 1,000,000 person-hours for 2017 and thus far in 2018:

2017
On February 25, convective winds of 110 miles per hour (180 kilometers per hour) from a severe storm struck near Scranton, PA, causing 285,000 to go without electricity for at least three days.

On March 1, a severe thunderstorm with conditions similar to Typhoon Fitow affected New York, New Jersey, New Hampshire, Maryland, Vermont, and Pennsylvania. This left 10 million without electricity. Power was restored the next day.

On March 8, a severe winter windstorm interrupted power for about 1 million customers in the state of Michigan. About 730,000 were still without power the next day.

On July 8, an explosion at a Northridge power plant caused a widespread power outage in the San Fernando Valley, Los Angeles.

On July 27, a crew working on the replacement for the Herbert C. Bonner Bridge in the Outer Banks of North Carolina severed a power cable and caused a blackout on the Outer Banks islands that affected more than 7,000 people during the peak of tourist season. The outage lasted eight days.

On September 10, Hurricane Irma hit the southeast of the US, causing over 7.6 million customers to lose power—6 million in Florida, 1.3 million in Georgia, and 200,000 in South Carolina.

On September 20, Hurricane Maria hit Puerto Rico. As of September 26, the power grid has totally failed, and there is very extensive damage to power transmission infrastructure. Power outages are expected to last from three to six months.

On October 30, a combination of the remnants of tropical storm Philippe and an extratropical system resulted in approximately 1.8 million power outages in New England. The storm was particularly bad in Midcoast Maine where roads became impassable for almost a week, leaving many schools to close for five to six days. This storm has been said to rival the Ice Storm of ‘98. Many people did not get their power back on for over 10 days in some of the worst hit areas. In Canada, Hydro-Québec reported 200,000 customers losing power because of damages as a result of strong winds produced by the storm.

On December 7–10, a rare Winter Storm named Benji came through the southeast states of the US, causing over 900,000 customers to lose power.

2018
On March 2, a “nor’easter” struck the east coast, leaving over two million customers without power.

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