2021/117 K NKONW A A WELDEGDEG E OL N ONTOET E S ESREI R E ISE S F OFRO R P R&A C T HTEH E NEENREGRYG Y ETX ITCREA C T I V E S G L O B A L P R A C T I C E THE BOTTOM LINE Climate and Disaster Risk Screening: The power sector remains especially vulnerable to natural Making Energy Projects More Resilient disasters and extreme weather events exacerbated by climate change. Planning ahead and Why is it important to screen energy projects for Tropical cyclones Idai and Kenneth hit Mozambique’s coast just a few weeks apart in 2019, damaging an electricity transmission investing in resilience to mitigate climate and disaster risks? and distribution network that serves 570,000 people. The cost of the climate and disaster risks in the Screening power sector investment projects in physical damage was estimated at $133.3 million. power sector can help minimize infrastructure damage and yield the planning stage is a key step in identifying Damages from the 2018 wildfires in California, brought on resilience issues and embedding solutions in by extreme temperatures and drought conditions, amounted to $30 savings during recovery from a billion, enough to cause Pacific Gas and Electric to file for bankruptcy natural disaster. Conducting an the project’s design (Helman 2018). in-depth climate and disaster Natural disasters and extreme weather events of various types, In 2012, Hurricane Sandy inflicted major damage on New risk screening (CDRS) during the exacerbated by climate variability and are serious risks for the power York’s power infrastructure, leaving 1.1 million Con Edison customers planning and preparation stages sector. Disasters such as hurricanes, cyclones, floods, extreme without power (Con Edison 2017). The damage prompted the utility of energy infrastructure projects rainfall, droughts, and seasons of severe heat are imposing substan- to invest $1 billion in a storm-hardening program, which in five years is a crucial first step to building tial financial burdens on electric utilities and governments as they has reportedly prevented more than 250,000 electrical outages. resilience. Data sharing, knowledge deal with service interruptions (including sustained blackouts) and Planning ahead and investing in resilience measures to mitigate exchange, and awareness building the effects of those interruptions on the economy. The economic climate and disaster risks can minimize infrastructure damage and on CDRS can substantially improve impacts of the loss of electricity service and of damage to grid infra- yield impressive savings during recovery from a natural disaster. the screening process, while also structure can be catastrophic in some cases, leaving millions in the Resilience measures can be particularly cost-effective if risks are helping to bring resilience to the dark and costing the utility billions in lost revenue and recovery and identified early (during the planning stages) and measures to avoid or forefront of energy investment restoration expenses. Some recent examples are described below. manage them are “designed in.” discussions. in late 2017, Hurricane Maria, one of the deadliest Atlantic For example, a case study on integrating climate resilience in Eskedar Bahru Gessesse hurricanes on record, damaged much of Barbuda’s and Puerto Rico’s power system planning in Bangladesh found that a plan that consid- is an energy and climate electricity infrastructure. It took more than 10 months for the utility ers flood risks when identifying locations for power-plants—avoiding consultant at the World to restore full power throughout mainland Puerto Rico (Kwasinski et sites prone to such risks and focusing instead on cross-border power Bank. al. 2019). In September 2020, the United States Federal Emergency trade and renewables—could save from $0.2 billion to $3.3 billion Management Agency announced that it would provide $9.6 billion— over the planning period (Mukhi et al. 2017). Reaping those savings Supported by one the largest disaster relief grants in the agency’s history—to will require a change in project methodology to explicitly recognize repair and replace the power system affected by the hurricane flood risks during the planning stage. (Treisman 2020). Three years after Maria, Barbuda is still working to Other resilience measures can be considered in system planning. rebuild its shattered electricity grid. Transmission towers and distribution poles that are resilient to storms and conductors that can withstand heat waves can be built 2 C l i m a t e a n d D i s a st e r R i s k S cr e e n i n g : M a k i n g E n e r g y P r o j e cts M o r e R e s i l i e n t Figure 1. The process of managing climate risk Climate risk management Stage 1: Risk assessment CDRS is the process by which development Step 1. Climate risk Could climate change have an impact on the project? no/loW screening yeS practitioners, investors, and policy makers evaluate are there significant climate impacts? no/loW Step 2. initial impact yeS the degree of exposure estimates and potential impact of are plausible impacts unacceptable in the context of the project? no/loW Step 3. Detailed climate change and natural stress testing assess yeS disasters on proposed measures Stage 2: Risk management investment projects. Can the project cope with potential changes and remain viable? assessment of adaptation measures yeS adjust Stage 3: monitoring and evaluation measures are measures continuing to be effective over time? ongoing adaptive management Source: World Bank 2019. into the design of an investment project if the relevant risks are step, CDRS identifies short- and long-term risks to development deemed high. projects, policies, and programs (figure 1). It also makes it possible to Conducting an in-depth climate and disaster risk screening determine if additional analysis through site-specific risk assessment (CDRS) during the planning and preparation stage is a critical is needed. CDRS becomes even more essential in countries that are first step in building resilience into plans, project design, and making large investments in new energy infrastructure to increase implementation. As one of the World Bank Group’s five corporate access to electrification. climate commitments, CDRS is the process by which development The World Bank’s support for on- and off-grid projects to close practitioners, investors, and policy makers evaluate the degree of the energy access gap presents an opportunity to mainstream exposure and potential impact of climate change and natural disas- the practice of CDRS across all new energy investments and build ters on proposed investment projects.1 Usually a quick and simple resilience in the power sector. To exploit this opportunity, the Bank has developed CDRS tools to allow project teams to take the first step to identify key climate and disaster risks to proposed projects.2 1. CDRS is required for World Bank (IDA and IBRD) operations under IDA-17, -18, and -19 policy commitments, and under the World Bank Group’s Climate Change Action Plan and 2025 Targets and Actions. 2. https://climatescreeningtools.worldbank.org. 3 C l i m a t e a n d D i s a st e r R i s k S cr e e n i n g : M a k i n g E n e r g y P r o j e cts M o r e R e s i l i e n t How can project teams use the Bank’s CDRS tools to can preemptively consider and integrate measures that enhance improve project design? project-level and systemwide resilience is by conducting a screening to identify: Awareness of key disaster risks and climate trends enables project managers to make informed • Potential natural hazards and climate trends that directly In December 2020, decisions during the design of energy infrastructure threaten the physical components of the proposed project—now the World Bank Group and over its lifetime; projects • Events related to climate variability and change that may reduce announced that, on The World Bank developed its CDRS tools to provide a structured the performance of the project—now and over its lifetime; average, 35 percent of approach to risk assessment of proposed projects in various sectors. • Non-physical aspects of the proposed project that may its financing would offer The tools use quality-controlled global climate data (historical and enhance or reduce the sector’s adaptive capacity and affect its climate co-benefits over projected) to help teams make informed project design decisions. vulnerability. Some of the questions to which the tools provide answers are the the next five years (World following (Clement, Siddiqi, and Winglee 2020): In addition to the factors listed above, the CDRS tools enable Bank 2020). Half of that teams to conduct a high-level qualitative assessment of external will support adaptation • What have been the historical trends in temperature, precipita- factors, such as socio-economic issues, governance and institutional and resilience. CDRS is a tion, flooding, and drought conditions? capacity, and sector-wide challenges, that may raise or lower project • How are these trends projected to change in terms of intensity, risks. key step in meeting that frequency, and duration? commitment. As teams • Has the location experienced sea-level rise, wildfires, or geophys- What are the current challenges and limitations in prepare project appraisal ical hazards (earthquakes, landslides, tsunamis) that may recur? documents, they can • Given climate projections and geophysical hazards, is the conducting screenings? rely on results from risk location appropriate for the project? Good screenings depend on good staff skills, good • How can the project adapt to the risks found? data, and, often, socio-economic data screenings and assessment of potential vulnerabilities In December 2020, the World Bank Group announced that, on Good skills. The Bank’s CDRS tools are designed to support different to describe and average, 35 percent of its financing would offer climate co-benefits user needs and levels of experience. These can range from high- over the next five years (World Bank 2020). Half of that will support level, quick overviews to more detailed projections across a wide substantiate the adaptation adaptation and resilience. CDRS is a key step in meeting that variety of indicators, sectors, and sub-sectors. However, users should co-benefits of their project. commitment. As teams prepare project appraisal documents, they have a solid understanding of climate risks and system vulnerabilities can rely on results from risk screenings and assessments of potential if they are to accurately assess risks for a proposed project. A rapid vulnerabilities to describe and substantiate the adaptative co-bene- or high-level CDRS may not always reveal the extent to which the fits of their project. project location is exposed to natural disasters, especially if the The CDRS tools are especially valuable for infrastructure invest- screening is conducted by someone with limited experience. ments in the power sector, where projects may face multiple climate Furthermore, lack of awareness of the potential impacts of risks and uncertainties. For example, sites for generation plants climate change on both the physical components and lifetime may be prone to flooding; transmission and distribution towers and performance of the proposed infrastructure may also prevent project wires may be susceptible to high winds or drought-induced wildfires; teams from using the CDRS tools optimally. In the case of the World and higher temperatures may affect the efficiency of solar PV and Bank, to support teams during project preparation, each regional or substation capacity (World Bank 2019). The only way project teams subregional energy unit should ideally have two members who are 4 C l i m a t e a n d D i s a st e r R i s k S cr e e n i n g : M a k i n g E n e r g y P r o j e cts M o r e R e s i l i e n t Box 1. Climate and disaster risk screening for energy sector project in Zanzibar The World Bank is currently preparing the Zanzibar Energy Sector Impact and resilience. The climate risks that have been identified could Transformation and Access Project, its first engagement in the energy have a significant impact on the proposed project. For example, more- sector of Zanzibar.a The purpose of the project is to finance the country’s frequent flooding could compromise the distribution network’s tower The quality of the CDRS first grid-connected solar PV plant, modernize the grid, and scale up and pole foundations and damage the solar PV farm (through erosion). Drought, extreme heat, and dust spread by wind could lower solar panel access. The grid-modernization efforts will include development of a for a proposed project output by up to 20 percent and increase the risk of panel hotspots, new high-voltage transmission line; upgrades to the distribution grid; limiting their performance. Given the level of exposure and potential in a particular location installation of a battery energy storage system; and capacity building impact on project performance, the project team will account for these depends to some extent on for the utility, the Ministry of Water, Energy and Minerals, and other key risks in the technical design of physical components and integrate stakeholders. resilience into the technical assistance and capacity building components the quality of climate data aimed at enabling the utility to improve its operation and maintenance Exposure. The CDRS conducted for Zanzibar reveals that both islands, available for that location. practices. Unguja and Pemba, are expected to face extreme weather events and The World Bank’s CDRS effects of climate change with increased frequency and severity. Floods Challenges and next steps. One of the key constraints during the CDRS and droughts have been identified as the two prominent climate risks was the limited high-resolution climate data available for Zanzibar. In some tools draw on multiple affecting the proposed project, stemming from a projected increase instances, the screening had to be based on data for mainland Tanzania, particularly coastal areas close to Zanzibar, to get the best possible quality-controlled climate in rainfall during the wet season and more frequent and severe estimates of risk exposure for the two islands. The project team will thunderstorms. Zanzibar has experienced extreme flooding in the past data sources. conduct a site-specific climate risk assessment (focusing on flood risk) to and is expected to experience similar events in the future with greater ensure that project design decisions are based on the best available data. intensity, frequency, and duration. Both islands have been affected by multiple droughts over the past 50 years; the assessment of the pattern Source: World Bank 2019; climate data from Climate Change Knowledge Portal (https:// of precipitation indicates that the number of dry days is expected to climateknowledgeportal.worldbank.org/) and ThinkHazard! (https://thinkhazard.org/en/). increase. a. https://projects.worldbank.org/en/projects-operations/project-detail/P169561. proficient with the CDRS tools and well-versed in climate risk and vul- source is ThinkHazard!, which provides information into current nerability of energy infrastructure. These team members help screen country hazard contexts at subnational scale.4 proposed projects, conduct feasibility studies, and liaise with global Although the CCKP and ThinkHazard! are excellent resources, facilities to identify resources for integrating resilience in planning even greater granularity of climate data would improve screenings and design stages. for energy infrastructure projects, where information for a very Good data. The quality of the CDRS for a proposed project in a specific location is often needed. Additionally, key climate indicators particular location depends to some extent on the quality of climate useful for energy assessments—surface wind, surface radiation (long data available for that location. The World Bank’s CDRS tools draw and short-wave fluxes), and surface pressure—are currently not on multiple quality-controlled climate data sources. One of these is robust enough for deployment at global scale.5 the Bank’s Climate Change Knowledge Portal (CCKP), which provides These challenges become even more apparent when evaluating 1° x 1° gridded data (100 kilometers square) for historical and future projects in small-island nations such as Zanzibar (see box 1 for climate projections at national, regional, and watershed aggregation a case study) and when dealing with extensive transmission and scales.3 The portal includes dynamic map presentations to demon- distribution projects, where country-level climate data may not be strate change over both spatial and temporal scales. It also allows representative of some of the locations or topographies within the users to select a geo-location so as to extract information (and downloadable data) for that location from the gridded data. Another 4. https://thinkhazard.org/en/. 5. New global climate models (CMIP6) are expected to be released following peer review in sum- 3. https://climateknowledgeportal.worldbank.org/. mer 2021. If they prove sufficiently robust at global scale, they will be incorporated into the CCKP. 5 C l i m a t e a n d D i s a st e r R i s k S cr e e n i n g : M a k i n g E n e r g y P r o j e cts M o r e R e s i l i e n t project’s geographic boundaries. In such cases, project teams may Data sharing becomes even more important in cases where have to consult national hydrological and meteorological agencies project teams conduct site-specific climate risk assessment or apply for historical data covering the project area. Depending on the level downscaling methods to improve spatial resolution. Sharing can save of investment under consideration and the costs of rebuilding, proj- time and money for future infrastructure projects proposed in the ect teams may also consider going beyond risk screening to conduct same location. The repository may also include previous case studies Project teams may an on-site climate risk assessment, particularly for projects in areas and methodologies compiled to incorporate CDRS results into project consider going beyond that have experienced severe disasters in the recent past. design. With these caveats, a basic CDRS is still worthwhile as a first-cut Beyond data sharing, exchanging knowledge and building risk screening to conduct assessment of potential risks. Even if such risks are not fully quantifi- awareness about CDRS can advance the screening process and an on-site climate risk able, the screening can help identify projects clearly at high risk and bring resilience to the forefront of infrastructure investment dis- assessment, particularly warranting more detailed analysis to determine project feasibility. cussions. Active engagement with country clients on climate risk for projects in areas that Integration of socio-economic data into climate models. screening and vulnerability assessments will also improve the quality Many power sector investment projects have long lifespans, locking of screenings, particularly in cases where project teams must work have experienced severe in policy and planning decisions for three to four decades. The with national agencies to obtain historical climate data. Knowledge- disasters in the recent past. uncertainties in forward-looking climate data make it challenging sharing and dialogue on climate risk exposure and vulnerabilities in to evaluate exposure and potential impacts in the long term, which the energy sector can also help project teams obtain client buy-in on in turn makes it difficult to value the cost and benefit of integrating resilience measures. In low-income countries with limited resources resilience into the proposed project. The heightened uncertainty and competing development priorities it may be particularly chal- associated with projects with long lifespans can potentially be lenging to persuade governments or utilities to invest in costlier mitigated by investments that improve the adaptive capacity of the options based on a probabilistic analysis of climate impacts. Building sector in general. Fortunately, several ongoing research initiatives awareness about CDRS and resilience at high levels of government have focused on improving the ability of global climate models to may help boost commitments on resilience at the project level. integrate socio-economic data into global climate models, thereby Development agencies, including the World Bank, are facilitating improving the accuracy and utility of climate risk screenings (Evans knowledge sharing and capacity building on climate risk and and Hausfather 2018). resilience. The World Banks’ Global Facility for Disaster Reduction and Recovery (GFDRR) houses a knowledge hub on resilience How can we improve the CDRS process? and disaster risk management to facilitate knowledge and data sharing and help development practitioners understand the value Sharing knowledge and data can significantly of building resilience.6 The Bank’s “Good Practice Note for Energy improve the screening process while also Sector Adaptation” (World Bank 2019) outlines the direct and indirect encouraging investments in resilience impacts of climate change on all segments of the power sector, including renewable generation. The CCKP team has developed To optimize the CDRS process, all available data and resources must multiple resources and guidance documents to support project be readily accessible to project teams. A one-stop repository of teams conducting screenings (box 2) and is constantly working to essential climate data (as well as past risk screenings that specifically update and improve the information, visualizations, and applications address risks faced by energy projects) will reduce the amount of available to project teams. Climate data are also continuously time teams must spend on screening while also creating a platform updated to reflect the most recent global datasets. for sharing valuable resources among teams across sectors. *** 6. https://www.gfdrr.org/en/knowledge-hub. 6 C l i m a t e a n d D i s a st e r R i s k S cr e e n i n g : M a k i n g E n e r g y P r o j e cts M o r e R e s i l i e n t MAKE FURTHER Recommended next steps for World Bank project teams are: CONNECTIONS Box 2. CDRS resources available to World Bank Live Wire 2015/43. “Integrating Climate • Explore the various climate data and risk screening resources project teams Model Data into Power System Planning,” available. • CCKP Climate Meta Data • Climate Risk Country Profiles by Debabrata Chattopadhyay and Rhonda • Discuss CDRS within regional and subregional energy units and L. Jordan. outline possible ways to streamline the screening process during • CCKP Tutorial Videos • CCKP Energy Sector Dashboard Live Wire 2016/59. “Are Power Utilities project preparation, including identifying dedicated staff well- in Tonga and New Zealand Resilient? versed in climate and disaster risk and the vulnerability of energy : Human and Organizational Factors infrastructure. in Disaster Response,” by Ray Brown, Kwasinski, A., F. Andrade, M.J. Castro-Sitiriche, and E. O’Neill- Xiaoping Wang, and Christopher Page. • Engage with country clients to identify opportunities to build Carrillo. 2019. “Hurricane maria effects on Puerto Rico electric awareness about CDRS and the importance of considering Live Wire 2016/60. “Toward Climate- power infrastructure.” IEEE Power and Energy Technology resilience when planning infrastructure investments. Resilient Hydropower in South Asia,” Systems Journal 6:1, 85-94. https://ieeexplore.ieee.org/ by Pravin Karki, Laura Bonzanigo, Haru document/8644031. Ohtsuka, and Sanjay Pahuja. This Live Wire was developed as part of ongoing work on energy sector Mukhi, N., B. Hobbs, D. Chattopadhyay, and E. Spyrou. 2017. “Building Live Wire 2017/84. “Disaster resilience funded by the Global Facility for Disaster Reduction and Recovery climate resilience into power system planning: The case of Preparedness Offers Big Payoffs for Bangladesh.” Working Paper, World Bank, Washington, DC. http:// (GFDRR). The author thanks Debabrata Chattopadhyay, Bipul Singh, Kenta Utilities,” by Samuel Oguah and Sunil Khosla. Usui, and Coleen MacKenzie Dove for their helpful feedback on an earlier documents.worldbank.org/curated/en/296731513710765160/ draft. Building-climate-resilience-into-power-system-planning-the-case- Find these and the entire Live Wire of-Bangladesh. archive at www.worldbank.org/energy/ livewire. References Treisman, R. 2020. “Trump administration announces nearly Clement, V., S. Siddiqi, and M. Winglee. 2020. “Climate and disaster $13 billion in aid for Puerto Rico.” NPR. https://www.npr. risk screening—Guidance note: Energy.” Internal document of the org/2020/09/18/914466896/trump-administration-announces- World Bank Climate Change Group, World Bank, Washington, DC. nearly-13-billion-in-aid-for-puerto-rico. Con Edison. 2017. “Con Edison’s Post-Sandy Fortifications Prove Wise World Bank. 2019. “Good practice note for energy sector adaptation.” $1 Billion Investment for Customers.” https://www.coned.com/ Internal document of the Energy and Extractives Global Practice, en/about-us/media-center/news/20171019/post-sandy-fortifica- Washington, DC. Available to those with a World Bank e-mail tions-prove-wise-1-billion-investment-customers. address at https://worldbankgroup.sharepoint.com.mcas.ms/ Evans, S., and Z. Hausfather. 2018. “Q&A: How ‘integrated assessment sites/Climate/Knowledge%20Base/Energy%20Resilience%20 models’ are used to study climate change.” CarbonBrief. https:// Good%20Practice%20Note.pdf?McasCtx=4. www.carbonbrief.org/qa-how-integrated-assessment-models- World Bank. 2020. “World Bank Group announces ambitious 35% are-used-to-study-climate-change. finance target to support countries’ climate action.” Press Helman, C. 2018. “California’s electricity giant faces possible $30 release, December. https://www.worldbank.org/en/news/ billion in damages for fires that have killed 100.” Forbes. https:// press-release/2020/12/09/world-bank-group-announces-ambi- www.forbes.com/sites/christopherhelman/2018/11/15/californi- tious-35-finance-target-to-support-countries-climate-action as-electric-giant-faces-possible-30-billion-in-damages-for-fires- that-have-killed-more-than-100/?sh=76a9247d38c2. 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