Systemic changes in the global power sector mean that there is increasing fragility surrounding supply security and end users should not expect the future continuity of supply to be guaranteed, warns Marsh.
Speaking at the risk advisory and insurance broking group’s 2013 Power Forum in Istanbul, Mark Pollard, leader of Marsh’s European power practice, said: “The global power sector is increasingly vulnerable to a new series of threats, which is in turn creating uncharted risk management issues.
“In the past, power sector policymakers have had to find a balance between the two objectives of supply security and maintaining a cost structure that enables end-users to have access to electricity to promote economic development. Over the last decade great attention has been paid to a third imperative which the global power sector cannot ignore: environmental sustainability.
“The balance between these competing objectives is delicate and amid the uncertainty investors are holding back, just as technological and socio-economic developments are calling for renewed infrastructure. Ageing plant is not being renewed, nuclear power is unpopular and the demand for intermittent renewable power is growing. Cyber and terrorist threats – even geomagnetic vulnerability – also pose serious threats to power generation and distribution.
“Urban populations cannot survive without power, even for a short time, due to our reliance on it for water, sanitation, communication and food. Sustained disruption could quickly lead to economic, political and social collapse. The world simply cannot afford to get it wrong.”
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