AGCS says the energy market is facing a period of dramatic economic, ecologic and technical change and warns of the increasing threat posed by power blackouts and cyber attacks at its Expert Days risk conference in Munich.
AGCS brought together leading international experts from 11 countries to discuss the issue of future energy supply in Europe at its recent Expert Days conference.
Representatives from academia, suppliers, power generation and the insurance industry gathered at The Charles Hotel in Munich over the course of two days in order to exchange expertise and experience around the latest innovations in areas such as renewable energies, smart grids and information technology security.
More than 130 leaders in the energy sector also discussed the opportunities and challenges around implementation of the European Commission’s long-term strategy for the sector Energy Roadmap 2050, which aims to not only restructure the energy market in the European Union – in order to reach specific climate targets – but at the same time ensure security of its supply and competitiveness.
The Energiewende Director of the Environmental Policy Research Center and Professor of Comparative Politics at the University of Berlin, Dr. Miranda Schreurs told Expert Days delegates that energy policy across Europe is still “a national matter” despite the best efforts of the European Union, which poses a challenge for Europe to establish common goals.
In Germany, the Energiewende – the term used to describe the planned move by the country towards an era of renewable energy, energy efficiency and sustainable development – is currently changing the risk governance and risk management landscape at a “breathtaking speed”, according to Hartmut Mai, Chief Underwriting Officer, AGCS.
Politicians in Europe's largest economy want renewable power to contribute 35% of the country's electricity consumption by 2020 and 80% by 2050 as part of its clean energy drive.
“Planned transition of the energy supply has triggered the most intense topic discussion, given the massive and radical changes this will have for the next decades and generations to come,” Mai said at the Expert Days event.
“These changes cause challenges not only to politicians, scientists, industry, government, regulators and society but also to the insurance industry in terms of whether it has sufficient solutions.”
Mai said there were a number of issues around energy transition currently occupying insurers, including how such transitions of energy supply will be financed and whether such models are sustainable.
“How will basic energy supply be granted in this economic environment? The mix between flexible and non-flexible power generation is not solved yet. How will the peaks of alternative energy supply be balanced to grant for this basic supply?” Mai said.
Impact of increasing interconnectivity
And while there are technical, legal and financing challenges associated with energy transition moves across Europe, he also warned of the increasing risk cyber attacks could pose, “as the risk potential of the future takes on a new dimension in terms of scope and gravitas.”
The energy sector is already the fifth most frequent sector targeted by cyber hackers, Expert Days delegates heard and attacks will become more likely due to increasing connectivity.
The threat posed by power blackouts is also increasing. Outside of Europe, major power outages in the US caused by weather increased from five to 20 each year during the mid 1990s, to 50 to 135 each year during the past five years.
The impact of power quality and blackout issues in the US currently costs industrial and commercial companies between $132bn and $209bn.
Meanwhile, in Germany 77% of production plants are affected at least once a year by power outages, according to AGCS.