Onshore Energy Conference — Dubai Onshore Energy Conference — Dubai 01 | Page 40

PLUNGED
INTO THE

DARKNE$$
O

By Eireann
Leverett

40

ften potential cyber attacks
on energy infrastructures
are discussed as an all or
nothing proposition, without
detail or understanding of
power outages. Either the
power is out, or it isn’t, and I can’t count the
number of policy makers I’ve seen assume
that a blackout affects everyone. Such
scenarios were presumed to be fanciful and
inventions of paranoid nerds, unlikely ever
to come true, and certainly not something
for insurance companies to worry about.
Existing analysis often lacks something
to be desired. It often doesn’t even take
into account the length of an outage.
The academic literature shows however,
that the first few minutes and hours of an
outage cost more than the rest. Essentially,
power outages are a ticking meter with
decreasing costs over time. The first few
minutes cause you to reboot everything, and
work and productivity are lost. After a couple
hours though, you send employees home, and
people find ways of coping. In the coming
days or weeks organisations find ways of

getting things done without electricity, and a
blitz spirit kicks in. For real world examples,
just read about the Auckland, New Zealand
power crisis of 1998, where a small area of
the city went without power for five weeks.
tinyurl.com/Aukland98
It’s not just time that matters in costing
outages, it is space too. The geographic
footprint of an outage is very important to
the cost. A small populated area can cost
much more than a large unpopulated one.
Additionally, industrial customers lose more
money from power outages, but are also much
more likely to have backup generation (and
insurers should verify industrial clients do
that as part of their disaster recovery plans).
Distribution networks are broken
down into regions, and their atom of
interaction is the substation. The number
of customers at a substation varies, and
thus so does the cost. This kind of analysis
provides nuance and detail that is useful
and provides a stark contrast to hairon-fire reportage usually employed.
It is important to understand that the
scenario we wrote is hypothetical, but allows