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Solar storms could take down electricity grids and cost trillions of dollars - report

20 October 2016

The University of Cambridge Centre for Risk Studies (CCRS) has released a report, the Helios Solar Storm Scenario, exploring the potential impact a massive solar flare could have on the US economy and insurance industry. The report includes three stress test variations gauging different damage distribution and restoration timeframes, forecasting total

A coronal mass ejection - Image: NASA
A coronal mass ejection - Image: NASA

The report considers three scenario variants, S1, S2 and X1, with S1 being considered the baseline scenario, involving limited damage to large transformers in the US, with only 5% of those units suffering any damage, and restoration periods of moderate length.

S2 assumes increased damage levels but similar restoration times, while the X1 scenario is “deliberately extreme,” has similar damage levels to S2 but a longer restoration duration. The report suggests that a severe space weather event could be responsible for the largest insured loss in history.

Total direct and indirect costs for the three scenarios are estimated at $474 billion, $1.53 trillion and $2.7 trillion respectively, with US insurance industry losses at $55 bn, $173 bn and $334 bn.

To put the above figures in context, the report notes that the lower end of the loss estimates, $55 bn, would represent a large portion of the $85 bn overall insured loss from all global catastrophes in 2015. The worst affected sectors, according to the report, would be manufacturing, finance, insurance and government.

The Helios Solar Storm Scenario, prepared for the AIG insurance group, is primarily intended as a risk assessment and estimate of the insurance exposure from a massive solar flare or coronal mass ejection (CME) on the level of the 1859 Carrington event, the most severe CME on record to strike the Earth. That event caused widespread damage to telegraph systems around the globe, in some cases starting fires and delivering electric shocks to telegraph operators.

CMEs, which are associated with solar flares, are releases of charged particles from the sun that can cause disruptions when they impact the Earth’s magnetic field. Although most such impacts are minor—they are the cause of the aurora borealis and aurora australis effects in the upper atmosphere—severe events can induce electric currents in the Earth’s surface, currents that can enter electrical systems and cause voltage fluctuations.

A CME in 1989, far smaller than the Carrington event, tripped Hydro-Québec’s La Grande high-voltage transmission network in Canada and caused widespread power outages and damage up and down the US East Coast. Here, geomagnetically induced currents caused transformer failures leading to a general blackout that lasted more than 9 hours and affected over 6 million people.

A prolonged blackout would have a profound effect on modern society, affecting fuel pipelines, water pumps, ATMs, and other systems dependent on electricity and information technology. It would seriously hinder the administration’s ability to govern the affected areas of the country.

The risk of another Carrington-class CME striking the Earth is not clear, though it is thought to be around once every 100 to 200 years. A CME of at least that magnitude was observed in 2012, but it missed striking the Earth by about nine days because the solar flare was oriented in a different direction.

The primary variable between the three Helios scenarios would be the degree of damage to Extra High Voltage (EHV) transformers and how long it would take to replace them.  Peter Pry, a congressional homeland security advisor, has called EHV transformers connecting grids and sub-systems "the foundations of our modern society".

In the least serious scenario, only a few sustain significant damage. In the more serious scenarios, roughly one-fifth of the nation’s EHV transformers are damaged, with about 80 sustaining major to fatal damage. Repair times are assumed to range from a few days for transformers tripped offline to up to a year for those that are destroyed.

Even under the least severe scenario, limited areas totalling around 15 million people are without power for up to six months. Under the most extreme scenario, outages affecting 40 to 50 million people persist for four to six months, and many areas—up to 10 million people—suffer outages of up to a year because of the time required to replace severely damaged EHV transformers.

Damage from a CME would not be evenly distributed across the US because of differences in ground conductivity and concentrations of EHV equipment. The most severe effects would occur in Illinois and New York, with other Eastern and Midwestern states suffering significant damage. Relatively little damage would occur in the Western US.

A similar study prepared in 2013 by Lloyd’s suggested damages could reach $1.2 trillion and outages could extend up to two years.

The authors of the Helios report emphasise that it is a stress test rather than a prediction.
"It does not predict when a catastrophe may unfold. Indeed, it does not also provide definitive economic and insurance loss estimates, as there is still widespread disagreement between different schools of thought. It does however provide insight into the range of exposure that may be experienced based on different expert opinions of extreme space weather events," they conclude.

But the North American Electric Reliability Corporation (NERC), the international regulatory authority tasked with assuring the reliability of the bulk power system in North America, cautions against overly pessimistic analyses and insists it is taking steps to strengthen the resilience of the North American electricity grids.

The proposed NERC TPL-007-1 standard tasks utilities with conducting initial and ongoing assessments of the potential impact of a 1-in-100-year benchmark geomagnetic disturbance event on their equipment and the bulk power system as a whole. The standard also requires corrective action to protect against instability and cascading failures.


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