Lloyds of London, one of the world’s largest insurance companies, is today reporting that “A large solar storm could leave tens of millions of people in North America without electrical power for several months, if not years, potentially costing trillions of dollars, according to Lloyd’s latest emerging risks report: Solar Storm Risk to the North American Electric Grid.
The report, which is being launched at the Electric Infrastructure Security Summit in London, was produced in co-operation with US-based Atmospheric Environmental Research.
Large geomagnetic storms, while relatively rare, can create a massive surge of current, potentially overloading the electric grid system and damaging expensive, and critical, transformers.
A large solar storm in 1989 triggered the collapse of Quebec’s electrical power grid– leaving six million Canadians without power for nine hours – while a smaller storm in 2003 caused blackouts in Sweden as well as damage to transformers in South Africa (transformers at that latitude were previously thought to be immune from such damage).
However, much bigger and potentially more disruptive events are possible.
The Carrington Event of 1859 is widely regarded as the most extreme space weather event on record. It is thought that such an event today would affect between 20-40 million people in the US with power cuts lasting from several weeks to 1-2 years. The economic costs would be catastrophic – estimated at between $0.6 and $2.6trn.
That’s TRILLIONS of dollars.
Aging power infrastructure and increasing reliance on electricity make the world more vulnerable, especially at times of heightened solar activity – 2013 is a solar maximum, the peak of the sun’s eleven year cycle of activity.
Damage to a small number of transformers in the densely populated US Atlantic coast is particularly concerning, according to the report. Physical and technological risk factors along the East Coast – such as magnetic latitude, distance to the coast and ground conductivity– make it a high risk for power outages, although the Midwest and the Gulf Coast states are also at risk, it says.
In April the White House Office of Science and Technology Policy released a report assessing US capacity to monitor and forecast space weather, while the UK added space weather to its National Risk Register in 2012.
Most space satellites, that can provide warnings of incoming geomagnetic storms, are past their mission lives and replacements will soon be needed.
Power infrastructure can also be hardened against geomagnetically induced currents in regions with the highest risk of outage. While these measures come at a cost, prevention is much more cost effective than paying for huge damages caused by a severe storm
(Note: The US Government has not allocated enough money to harden all electrical grid systems sufficiently to prevent widespread power outages).
A space weather event could disrupt supply chains, lead to wide scale cancellation of major events and conceivably result in liability claims if employee or public safety was compromised, or if directors failed to take necessary steps to limit damage.
A major event would have wider implications for the insurance industry and society in general, potentially causing widespread disruption to infrastructure, social unrest and disruption to financial markets.