Power outages are extremely disruptive for businesses and can have a significant impact on the economy as a whole. How can your company arm itself against a total blackout?
The recent power outage in Spain and Portugal has cost these countries approximately 0.1% of their gross national product, amounting to 1.6 billion euros. The number of interruptions in power supply, ranging from a fraction of a second to hours, is also increasing in these regions. This is evident from the figures of the grid operators. There are various causes, such as increasing demand for energy, physical and digital attacks on infrastructure, and extreme weather conditions.
The Dutch government already considers the risk so real that citizens and companies are being called upon to prepare for (long-term) outages. For companies, it is in any case vital to develop a strategy to ensure the continuity of their processes and services and to take steps to minimize the risks to their business.
Why is the risk increasing?
As mentioned, power outages have multiple causes. One of the main factors is aging infrastructure combined with insufficient maintenance. This makes the electricity system vulnerable to failures, especially during peak loads or external stress factors. Electrical networks consist of numerous components that wear out over time due to use, weather conditions, and aging. Wear and tear can result in defects in cables and transformers, causing a domino effect: a single failure can quickly spread and cause large-scale outages.
Regular maintenance and safe management of IT infrastructure are essential to prevent these problems. But that costs a lot of money and it’s not always available. Insufficient funding often leads to delayed maintenance, causing small defects to go unnoticed and increasing the chance of sudden, large-scale outages.
In addition, attacks on electricity infrastructure have increased significantly. The International Energy Agency warned in November 2023 that the average number of cyberattacks on utilities worldwide more than doubled between 2020 and 2022. Such attacks can shut down power supplies. Physical attacks have also increased by 70 percent during this period.
However, inadequate maintenance and attacks are not the main threats. Extreme weather conditions are the biggest culprit. Strong winds can blow down trees and damage power lines. Heavy rain or snowfall causes flooding at substations and other critical infrastructure. The number of these weather incidents has doubled over the past ten years compared to the previous decade.
Growing Demand for Energy – Thanks to AI
At the same time, the demand for electricity exceeds supply, exacerbating the already significant problems in the global energy supply. For a stable electricity grid, it is essential to maintain a balance between supply and demand. A sudden peak in consumption can exceed the available supply, leading to voltage drops, frequency fluctuations, and automatic shutdown of parts of the grid to prevent damage – resulting in power outages.
Peak moments in energy consumption put heavy pressure on the electricity grid and increase the risk of outages. Grids are designed for a certain demand capacity. If this capacity is exceeded, it can lead to malfunctions or defects in equipment. The rapid rise of AI has greatly increased the demand for energy. This is due to the enormous computing power required to train and use AI models. AI, particularly deep learning and generative AI, works with complex algorithms that require large amounts of data and computing power. This requires powerful hardware – and that hardware is often a major consumer of energy.
Moreover, these AI processes mainly take place in data centers, which require not only a lot of computing power but also intensive cooling. The growth of AI leads to the expansion of existing data centers and the construction of new facilities. Although efforts are being made to develop energy-efficient hardware and software, the development of AI technology in many cases outpaces these sustainability measures.
The Impact of Power Outages
The rising energy consumption due to AI, combined with challenges such as aging infrastructure, increasing cyber attacks, and extreme weather, explains why power outages are becoming more frequent. What are the consequences of these outages?
One of the most direct effects of a power outage is the disruption of business activities. Without electricity, operations at the vast majority of companies come to a halt, leading to loss of productivity and revenue. Factories must shut down production lines, causing delays in deliveries and customer dissatisfaction. Hospitality businesses and shops that rely on electricity for refrigeration and point-of-sale systems may lose perishable goods or be unable to process payments.
Power outages also cause major problems for servers and data centers. Even a brief interruption can lead to data loss and functional disruptions. Computers and network equipment are at risk, resulting in lost work hours and potentially damaged data. Online businesses, which depend on constant internet connections for sales and customer service, can also suffer significant financial damage.
The economic impact of power outages extends beyond these direct disruptions. Entire regions can suffer damage. Areas with frequent power outages are less attractive to investors, putting pressure on economic development and employment. New businesses prefer to establish themselves elsewhere, and existing companies may decide to leave, resulting in job losses and reduced tax revenues for local governments.
Solutions to Limit the Impact
Investing in reliable power supply is therefore essential to limit the impact of power outages for businesses and their surroundings. Fortunately, solutions that can limit the impact of power outages have become significantly more efficient and smarter in recent years.
For example, the integration of IoT technology now makes it possible to monitor power supply and quality in real-time and intervene immediately in case of disruptions. This can minimize downtime and costs. Out-of-Band management – management that is disconnected from the regular infrastructure – gives system administrators access to network equipment without using an IP connection. This allows them to perform basic operations, such as rebooting a router, even if the network is inaccessible due to an outage. IoT-driven power quality equipment also provides valuable analytics that help organizations optimize their energy consumption and improve management.
Another recent development is the deployment of smart grids, which increase the reliability and efficiency of electricity distribution. These networks use advanced equipment that continuously balances power supply and demand. They can detect and isolate faults, redirect energy if necessary, and spread peak loads. This contributes to a stable and high-quality power grid.
Whatever the cause, organizations cannot afford to ignore the risks of power outages. The damage and costs can be enormous and even jeopardize business continuity. In this era – where even stable European countries no longer guarantee uninterrupted electricity supply – it is more important than ever to explore high-quality power quality solutions. By taking timely measures, organizations can significantly limit the impact of power outages on their operations and the broader economy.
This is a contributed article by Danny Wessels, Product Marketing Manager at Eaton. Due to its current relevance, the article is published in full on ITdaily. The editorial team is not responsible for the content.