Next in Tech | Ep. 219: Risk to Resilience

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Eric Hanselman: Welcome to Next in Tech, an S&P Global Market Intelligence podcast where the world of emerging tech lives. I'm your host, Eric Hanselman, Chief Analyst for Industry and Company Data at S&P Global Market Intelligence. And today, we're going to be talking about the journey from addressing risk to resilience. It's actually a preview of an upcoming webinar and an interesting topic, especially in light of what we've been looking at for overall risk from both climate and how municipalities are dealing with it. And joining me to discuss it are some of the folks who will be on the webinar, Therese Feng, Vice President of Climate Methodology of S&P Global Sustainable1; Zoe Roth, analyst at 451 Research Group from S&P Global Market Intelligence; and Johan Vermij, senior analyst, also a part of our 451 Research Group within S&P Global. Welcome to the podcast, all of you. 
 

Therese Feng: Thanks so much, Eric. 
 

Zoë Roth: Thank you. I'm looking forward to the conversation. 
 

Johan Vermij: Yes, me too, Eric. It's good to be back... 
 

Eric Hanselman: Great to have you all here. And I guess maybe to start off with, maybe we can describe what the nature of the challenges is that municipalities are facing. And when they look at a set of these risks, where are they today? And what's the nature of this? 
 

Zoë Roth: Yes, I can start with this one and level set a bit. So, a little bit of background on me. I lead our smart cities coverage here. So, when we think about the challenges that municipalities and cities are facing, it's pretty multifaceted and complex. So, there's challenges in climate change and extreme weather, so more frequent floods, wildfires, heat waves, storms. There's also the challenge of aging infrastructure, so roads and bridges. There's a bit of a digital infrastructure challenge as cities try to get those systems up and running to support things like IoT sensors and AI that we'll get to later in the podcast. But there's also things like population growth, budget constraints, reductions in forces, data silos. So, it's more like what challenges aren't cities facing. They're certainly kind of on the front lines trying to deal with just a multitude of factors. And I think that climate resilience and sustainability are kind of some of the main areas that they're looking to tackle. 
 

Therese Feng: That's a really great summary of the challenges they face. And at Sustainable1, I'm in the climate methodology group, and we're looking at how to characterize what cities face in terms of climate events. And the new normal is really for cities and towns across the U.S. to increasingly experience these extreme events and the intensification of kind of these slower burn chronic hazards like extreme heat and drought and water stress. And since 2020, we've had $115 billion extreme weather events at an estimated cost of about $750 billion, which is certainly an underestimate, which is more than twice for the comparable period 10 years ago. And so, in the last 2 years, we've seen like extreme heat waves in the Southwest, drought and water stress in many different places, the wildfire in LA, river flooding and tropical cyclones. And it's really challenging not only because of the frequency and intensity, but even the nature of climate extreme hazards is changing. We've seen wildfires on the West getting larger and more frequent. And of course, the wildfire in L.A. was kind of an extreme event. We're seeing hurricanes slow down as well. So, they'll hit the -- they'll make landfall and then just linger, and extreme amounts of rainfall are coming down. And there is also just that many places are facing increasingly compound events. So, you're getting 2 different hazards. It can be extreme heat and drought and wildfire or extreme rainfall and coastal and flu or flooding. And this is just really, as Zoe mentioned, just happening at the same time as we're seeing an expansion in densities of population and wildfire urban interface on coastal populations and so on. And this really exacerbates the damages and the challenges that cities and towns are facing. 
 

Eric Hanselman: Yes. If you think about that integration, not only of population growth, density of build, again, looking at the impacts there, a whole set of things that we've got more than enough headlines to identify. 
 

Therese Feng: Definitely true. 
 

Eric Hanselman: So, what are the aspects of technology that are being applied? I guess, to begin with, just to help identify some of these challenges and look at really how we get a better view into how we're understanding what the current state is and potentially generate early warnings for some of these events. 
 

Zoë Roth: I think the way that we think about it when we think about the role of Internet of Things is there's a few different areas in which technology can play a role. So, from a detection perspective, the role of IoT sensors doing things like monitoring water levels, air quality, seismic sensors. So, trying to identify anomalies before they turn into events is an area to kind of to look at things from a more predictive perspective. There's also sensing, so infrastructure sensing, things like vibration sensors, leak detectors. -- things like that. And then all of that just generally feeding this advanced warning and prediction system. So that's where digital twins and simulations, 3D modeling can kind of come in for disaster preparedness. So even if you don't know when a flood is going to happen, if you know that it is going to happen, you can understand where are the low-lying areas in our city, where would flood first, if we do need to make a plan, what -- we can kind of identify what might happen in advance so that we're responding more proactively than reactively 
 

Eric Hanselman: And if you take a look at some of where that's coming into play, it's not just the modeling. There's also real-time dynamic observability coming into that when those events happen because Johan, we've talked about the availability of new sensing technologies, whether or not that happens to be satellite, drones, a whole set of things could be deployed while events are taking place to better understand the nature of what's actually going on in the event itself. 
 

Johan Vermij: Yes, absolutely. When it comes to fire -- wildfire detection, for instance, you increasingly see the use of satellites to cover large parts of the earth and monitor. The only thing is that it's dependent on how often the satellite passes. So, you need a pretty big constellation to have 24/7 monitoring. And then obviously, it's all about the resolution of the satellite image as well. So, a pretty good chance that before a satellite detects a wildfire, it's already pretty big. There are some contests and start-ups working on ultra-early fire detection and one of the solutions is like with just smoke detectors in forests. So LoRa ON-based network somewhere because in a large forest, there is no connectivity. So, you have to solve that connectivity first. But there are solutions that can detect a smoldering tree within minutes. 
 

Eric Hanselman: That's actually instrumenting the forests themselves. It's an interesting area that we've talked about overall sensing and granted in urban areas. We've already got an array of sensors. I mean, we've talked about the smart spaces work that you've been doing. There's a lot that's taking place there that potentially helps to integrate existing infrastructure with municipal capabilities. 
 

Zoë Roth: I think cities are really looking at resilience as kind of the next frontier when they're thinking about adopting technologies. We've seen a variety of trends when it comes to smart city adoption. And I think looking forward, beyond transportation and making sure that they can address their transportation issues around traffic and mobility and congestion, I think that building resilient infrastructure and also providing like Wi-Fi and self-service is another big underpinning piece of all of this, making sure that when there is something that can affect a climate emergency that you do have those channels through which you can reach people and relay information and also infrastructure that can adapt in those cases. So, like traffic management systems that can dynamically reroute when there's something happening on a section of town like or on a stretch of the highway. It's all of these systems coming together and being able to share data in real time so that they can respond to these events when they do happen. 
 

Eric Hanselman: Yes. It's one of those challenges that we saw in the Southern California fires is that cell towers were taken out along with all the homes that were destroyed. And so actually reestablishing communications infrastructure winds up being a big challenge there. I'm curious, Therese, from your perspective, I'm sure that your team is leveraging a set of technical capabilities to be able to identify where those risks are and map some of the ways to actually mitigate them. 
 

Therese Feng: So, at Sustainable1, we look at the frequency of extreme climate developments, both chronic and acute, and we produce these forecasts of the frequency that we are expecting extreme climate developments to basically the trajectory over the 2020s through the 2090s. And I think for cities, it's really quite hard to get on their own a good picture of what they're facing, both in the near term and the long term and really plan for it and budget for it and understand which residents are most at risk and really provide for them. And I think this is unfortunately, it's going to be more and more of an issue as we see data being pulled offline and less data sharing. And this is a tremendous concern for those acute events, flooding and hurricane and so on, how to anticipate these, how to prepare for these and really how to basically provide for resilience across multiple dimensions, whether it's infrastructure, whether it's preparing communities or really to anticipate when their economies might come under some sort of acute stress from an event. So, we are looking at all those things, and it's quite a challenge. 
 

Eric Hanselman: Well, yes, the data issues, of course, are a whole set of challenges in and of themselves. But being able to have those insights and at least directional guidance can help to not only deploy physical defenses, but also looking at technical capabilities. And I'm curious about your thoughts about the technical tools and how they can be used to build resilience. I'll throw that out to the team at large. 
 

Johan Vermij: Yes, I can take that one, Eric. Looking from a technology perspective, looking at sensors, et cetera, you can monitor real time what's going on and you can anticipate a little on what's happening. One of the things that we've talked about so far is municipalities and towns and cities. But there's something else that's really important in these situations, and that's beyond the municipality itself. It's a power grid, which plays a fairly decent role in events like this, whether it's a hurricane and you are with power. We talked about the cell towers, but if the power is down, the cell towers don't work either. And obviously, the digital twin that Zoe already mentioned, utilities increasingly build digital twins of their power grid as well. And they can start simulating for events what would happen if a hurricane would hit and some of my poles are down and how do I reroute my power through certain areas. So that's one of the things they can do in preparedness. The other thing is in preparing for resilience is again, satellites, which are increasingly being used not only to detect wildfires, but also to do vegetation observation. And other power companies utilize drones for power line inspections and do vegetation analysis and seeing how that grows and how close it gets to the power lines. With AI, ML, you can start recognizing the type of vegetation and identify and predict how fast it will grow, so you can prioritize your maintenance because utilities are often short on labor, skilled labor and sending out field crews. So, they need to prioritize where to cut vegetation. A couple of years ago, the PG&E fire -- well, it was caused by vegetation touching the power lines and that got fire. Another thing, of course, is that utilities have to match demand and supply of power to maintain its stability. And if we're getting into heat waves and it gets hot, people turn on their air conditioning and they start sucking in all that energy to power those air conditioning units. Utilities are moving from like the general weather forecast to real-time weather measurements on the ground to fine-tune that load and demand and do their forecasting. 
 

Eric Hanselman: So, there's the follow-on effect that we haven't really touched on, which is what happens during those extreme events and granted, there's a lot of damage and destruction. But in those events that can also have significant impacts, just simply extended heat starts to become a problem as -- or cold for that matter, where you've now got additional energy demand to cool or heat the various environments, that puts additional stress on the grid. That starts to create some challenges in and of itself. 
 

Zoë Roth: Yes. I think the 2 issues are definitely inherently intertwined energy demand and climate risk as we have more demand for energy, both from buildings and from our transportation systems like EV infrastructure, I think the challenge of climate risk definitely does grow when we're thinking about renewable integration, it seems like it could be a solution. But until that infrastructure and the regulatory environment can support the more wide-scale integration of renewables, I think that will continue to be a challenge even though renewables and battery energy storage systems definitely do present an opportunity to address some of these acute energy shortage issues. I think something definitely to think about here, too, is just the unequal burden of climate risk. The people that are affected by this in each community are going to be different and vulnerable communities definitely tend to face energy and security and outages at a higher rate that can exacerbate existing inequities and inequalities. So as cities plan for these events, I think putting the vulnerable people in their community first and also using data to understand who those people are and how they can address that need is something that's really important in thinking about climate risk going forward. 
 

Therese Feng: I think that's such a great point. And I'll just sort of add to that also, we're seeing the proliferation of data centers adding additional kind of basically demand for energy. And although many of them are planning for how they will themselves power their data centers, this is a very dynamic kind of environment in terms of demand and supply for electricity going forward. And just taking into account all these different factors, especially the ones that Zoe mentioned, I think it's just a tremendous kind of challenge as well that we will need to consider in this context of increasing climate challenges. 
 

Johan Vermij: Yes. I'd like to add to that from the utility perspective as well. Theresa, you mentioned data centers and Zoe, you mentioned equity, energy equity. looking at our own research, obviously, data center power demand is a challenge in the regions where you see high AI data center growth. But beyond the data center energy demand, utilities expect a lot of low demand growth from electrification of transport, electrification of industries and obviously, organic growth just because population keeps growing. In the energy industry, we're looking at that and been calling that the energy trilemma. So, it's -- on the one hand, it's trying to achieve more sustainable power generation, so phasing out coal and gas-fired power plants and replacing them with renewables. The other thing is equity as Zoe mentioned. And the other thing is resilience and particularly the last one is getting a lot of focus these days because if you add more renewable energy to the grid and you take away the traditional coal plants, it does affect the stability of the grid. And you can see that, for example, in the recent blackout in Spain and Portugal, which pretty much kicked out power generation for the entire country for a day because at that point in time, it was at the afternoon, I think, that suddenly there was 15 gigawatts of power missing and that caused a ripple in the power grid, which caused a cascading shutdown. So that's one thing that we're likely to see happening more often because if we're moving towards more renewables, we're missing kind of that stable base load. 
 

Eric Hanselman: Well, and for those of our listeners who weren't aware or haven't read about it, it's a situation where if you look at traditional generation with turbine systems, whether or not they're coal-fired, gas-fired, what have you, the synchronous systems have the ability to absorb variation in ways that at least at this point, most renewable infrastructure doesn't. And the way we've been operating grids has come to depend on that flexibility, that buffer basically that turbine -- synchronous turbine generation can wind up managing. That's something where we need to start thinking in different ways as renewable... 
 

Johan Vermij: You're absolutely right. So, one of the things that the utilities do is that maintain that stability at 50 hertz and it allows for a 0.2 variation. If it drops more than 0.2, the spinning reserve, as they call it, kicks in. So that's the residual energy of those spinning turbines. And currently, I think utilities are primarily doing fast voltage stability index predictions or voltage collapse proximity index, just to guess where that point is. If you see the blackout in Spain, it was a 0.0 drop in frequency. So that's like 5x what is allowed. And the ripples of that were felt in the power grids as far north as the Netherlands and Denmark. there are things emerging technologies that can help utilities address this issue a little bit better. So, it's high impedance switches that can react faster. Most of the solar plants and batteries, which can provide that static or synthetic inertia are equipped with inverters, but they're grid following inverters, which means they need to be attached to a working grid in order to function. But if you're switching to grid forming inverters, they can operate again in a microgrid, and they can reboot that part of the grid itself and from there, start delivering back to other segments in the grid. 
 

Eric Hanselman: So, beyond a lot of the grid resilience pieces, and clearly, that's a big part of all of these equations we start looking at it. What do you think municipalities need to look forward towards in terms of how they look to become more resilient? What are the kind of things that they need to look at? And Therese, you talked about the potential planning capabilities and some of the challenges there. How should municipalities start looking at this to be able to expand and up-level their resilience capabilities? 
 

Therese Feng: Yes, that is a key question. I think about this in terms of basically these different infrastructure systems and the potential -- obviously, the grid is a major one, but there are other elements, obviously, the transport system, water management, a range of different kind of services that exist -- that exist to provide infrastructure services to the population. And so, I think cities and towns will be facing these increasing challenges. They really have to think very strategically about how -- what vulnerabilities they face. In other words, to identify where these vulnerabilities are and then also think in terms of how do we provide for resilience within the infrastructure because they have such systemic effects. And there are a range of different options that they have. And I think Zoe and Johan have talked about the importance of data. And I would even extend that to some really basic kinds of sort of data services, which include more sophisticated early warning systems that can basically inform residents of actions they need to take to be safe. But then even like lower key, more simple, affordable approaches like building codes and ensuring that those are implemented so that we have more resilient buildings and spaces. So, I think cities definitely are facing these real challenges to the -- to both hazard mitigation and ensuring that adaptation proceeds. They need to understand the trajectory of the climate developments and the range of options that they really have and just expect that this is really need -- this is something that they start need to do now as well as looking at how other cities and countries are proactively preparing for potential events. So, I think there's a range of different strategies that they need to consider, but just anticipating that climate is going to be becoming more -- climate events are going to be becoming more frequent, more severe alongside these chronic kind of hazards that we're seeing of extreme heat and drought and water stress. kind of coming to understanding where these are most acute, looking at their total infrastructure and the vulnerabilities and then understanding all the different options and what might be most cost effective for them going forward. 
 

Eric Hanselman: Well, and you make an important point, which is these various aspects don't operate in isolation either. 
 

Therese Feng: That's definitely true. 
 

Johan Vermij: Adding to that, if you look at how other cities and countries are dealing with it, one of the suggestions for utilities might be to look at how Ukraine is dealing with the attacks on its power grid. Obviously, a Russian missile is different from a hurricane. But to some extent, it's quite comparable if you look at how they deal with it. If they have a warning of an incoming missile, they can pretty much figure out which part of the grid is possibly hit -- and as a precaution, they're lowering the load on that segment of the grid so that if it is hit, the drop to 0 isn't that big as it was with the full load. So that prevents cascading blackouts. And that could be a similar approach for utilities when facing hurricanes, for instance, if you're seeing, okay, a hurricane is passing this segment of my grid, maybe I should lower the load a little to prevent it from cascading through to other segments of the grid. 
 

Eric Hanselman: An unfortunate way to learn some lessons, but certainly, I guess, some potential applicability there. And Zoe, you've been talking about a lot of the smart spaces integration. How do you see that playing out in terms of where municipalities should be going? 
 

Zoë Roth: Yes. I think just to kind of wrap up what everybody has been saying, there's a lot of knowledge sharing and learning that can be done between cities. A lot of cities, cities like New York, Miami have published their climate adaptation and resilience strategy. So understanding how other cities of the same size or in the same region or even the same like sort of climate or weather patterns, how they've adapted to different issues to make investments in things like flood defenses, heat mitigation, energy infrastructure hardening, but also initiatives like C40 cities or Race to Zero, bringing a lot of private public organizations together to understand how they can collaborate because it's a challenge that no city is able to do on its own. It becomes a regional imperative. It becomes a public-private partnership imperative. So, bringing a lot of cities together to learn from one another and kind of prioritize because it is a matter of prioritization, you're not able to solve all of these challenges at once. In most cases, it's going to be an investment in one sort of system, whether it's something like threat modeling or automated alerts for something like a hurricane. So, understanding what your biggest risk is and kind of the low-hanging fruit in terms of what can make the biggest impact in your city. 
 

Eric Hanselman: It's a set of challenges that are certainly complex to master even individually. But when you bring them all together, there are a set of significant hurdles to have to be overcome. Well, I appreciate all 3 of your insights. There's so much more that we could discuss on this topic. Unfortunately, we are at time. But I want to thank you all for joining me today. 
 

Zoë Roth: Thank you. 
 

Therese Feng: Thank you so much, and thanks to Johan and Zoe for their great insights. 
 

Johan Vermij: Thank you, too. 
 

Eric Hanselman: Well, and I will point out to our listeners that there is a much more in-depth discussion that will be taking place on the webinar itself. So, there is a link in the show notes to point you toward it. I hope you get a chance to join and hear from all 3 of my guests today in being able to dive even deeper into what is a very complex but critically important conversation. But that is it for this episode of Next in Tech. Thanks to our audience for staying with us. And thanks to our production team, including Sophie Carr, Feranmi Adeoshun, Kyra Smith, and Adam Kovalsky on our marketing and events teams. I hope you'll join us for our next episode where we're going to be talking about some of the additional aspects of personal data privacy, what that means in enterprise settings and some of the legal ramifications that we start thinking about. I hope you'll join us because there is always something Next in Tech.