The way forward to developing an effective resilience strategy: Sanjeev Arora, Accenture India

Climate change and extreme weather conditions are likely to become more frequent in the days to come. Such conditions will undoubtedly bring about operational stress on transmission and distribution utilities. In an interview with DataQuest, Sanjeev Arora, managing director and lead – Resources, Accenture India talks about how extreme weather events have expanded the scope of utilities’ responsibility, and what organizations must do to develop an effective resilience strategy.

DQ: What kind of trends are being experienced across the globe around extreme weather events?

Sanjeev Arora: High-impact extreme weather conditions are becoming increasingly frequent around the globe. The occurrence of events such as heavy rainstorms, high winds, seasonal flooding is increasing by the day. In 2018, Kerala suffered its worst monsoon flooding in a century, severely impacting the electricity distribution infrastructure in flood-ravaged areas. Events like this, 2019’s Cyclone Fani in eastern India and Tropical Storm Eleanor in 2018 in western Europe have caused significant damage and demonstrated the impact of extreme weather conditions in disrupting network operations.

The latest iteration of Accenture’s Digitally Enabled Grid research reveals that 92 percent of the executives surveyed expect extreme weather events to increase in the next 10 years, and nearly the same percentage (90 percent) say that this outlook represents an increased risk to the financial viability of their electricity distribution businesses.

DQ: Have the extreme weather conditions expanded the scope of utilities’ responsibilities?

Sanjeev Arora: As regulatory compliance evolves, the industry is expected to adopt a more significant and broader leadership role, building resilience for the community and society at large. Extreme weather will continue to impact the industry and new requirements must be considered, as we see the spread of new connections and network reinforcement from expanding distributed generation, including wind and solar. This is, in turn, will result in fundamental changes to the traditional distribution system.

The ever-increasing risk associated with extreme weather and the resulting extensive damage to network equipment and liability hampers the financing of the sector. The losses to third parties can be too large in some cases. With the growing risk, the scope for mitigation is also gaining momentum, especially when considered in the context of other events where long-term disruption for utilities, the economy, and society is yet-to-be-determined, such as the COVID-19 pandemic. For example, when a utility faces a tropical cyclone like Amphan - a category 5 storm that caused widespread damage in Eastern India in May 2020 - while the country was under a COVID-19 state of emergency, it raises many questions, including safety of crews working in damaged areas, reliability of the support from neighbouring utilities through mutual-aid agreements, etc.

DQ: What is the way forward to developing an effective resilience strategy?

Sanjeev Arora: The primary step is to establish a firm technical foundation for resilience, while also developing the additional supporting capabilities needed to provide an adaptable response to extreme conditions.

The leaders across the industry must define three strategic imperatives for greater resilience. The first is to establish the foundations of resilience to develop pliability within and outside the business. Leaders must strengthen investment and performance targets, with set regulations based on risk and societal value of resilience.

This will provide a robust decision-making process with effective risk analysis. Secondly, leaders must work towards building a resilient network. The industry must put in place a new system with flexibilities and capabilities through digital solution deployment and utilize emerging technologies like AI to enhance prediction analysis and renewal strategies. And lastly, leaders should explore emerging resilience services to support the utilization of end-user resilience solutions. The focus needs to be towards developing a differentiated network resilience solution to support poorly served communities and those with high resilience requirements.

DQ: How have events, such as the COVID-19 pandemic, cause long-term disruption for utilities, the economy, and society at large?

Sanjeev Arora: The pandemic has significantly affected the utilities industry. Ensuring that critical lifeline services are not interrupted has created an unprecedented challenge for the industry. It has also presented an opportunity for utilities to be more visible in supporting broader recovery efforts and community needs. The COVID-19 pandemic has proved supply chain assumptions for even basic components can rapidly disintegrate. The pandemic has also impacted the amount of manpower in control rooms - putting networks further at risk.

The sector is now adopting a renewed focus on remote monitoring, service, and control. The weather resilience planning can better prepare utilities to handle other unexpected events such as COVID-19. We believe that each crisis serves as a pivot point wherein businesses and industries that embrace innovative solutions will set themselves up for long-term success.

DQ: How can the industry reboot their risk approaches and position themselves to outmanoeuvre future uncertainty?

Sanjeev Arora: Utilities stand at a crossroads where they have a unique opportunity to reboot their risk approaches, and position themselves to outmanoeuvre future uncertainty.

To start with, utilities need to move from a tactical to strategic approach on risk mitigation in an integrated way across the functions. It’s essential to assess the current risk capabilities which the industry has, to model possible scenarios - including their potential effect on supply, demand, and cash. These scenarios need to be translated into risk mitigation plans that can close key gaps.

Secondly, it’s paramount to have a playbook ready in advance to take action when circumstances demand. This needs to have defined and detailed processes for how the plans will be implemented. The playbook must be thorough and be flexible for a “choose your own ending” scenario.

It’s also the time to rethink digital. During the pandemic, the industry has relied on virtual contact centres, based on cloud technology and using a remote workforce. This momentum is powerful and - if harnessed - can accelerate utilities’ recovery and future resilience. The industry would need to use this digital momentum and implement what’s been working.

Going forward, utilities will need to accelerate their move to holistic risk management - and pivot to digital as a way to fast-track progress.