Electric utility risk managers nationwide are confronting an escalating challenge: the low probability, high consequence wildfire event.
While predicting ignition points is a crucial first step, there is a dangerous misconception that preventing ignitions equates to mitigating overall wildfire risk. Focusing solely on where and if a fire might start ignores the critical question of what happens when it does. This gap leaves electric utilities vulnerable to catastrophic outcomes, even with robust ignition prevention efforts. It only takes one bad wildfire to change the entire future of a community and the utility that serves it.
As climate change fuels drought and increases energy demand, electric utilities in every state – this is no longer a problem of the West alone – face mounting pressure to explain to their communities, creditors and boards how they are mitigating wildfire risk and strengthening their reliability.
The Problem: Ignition Probability isn’t Actual Risk
The critical error many electric utilities make is equating ignition prediction with comprehensive risk assessment. Ignition prediction is essentially the probability that an ignition will occur at a point, but risk is typically measured as probability of an event multiplied with the consequences of that event. Wildfire risk is not merely about the likelihood of a fire starting; it’s about the magnitude of the potential consequences if one does. A small fire in a remote, sparsely populated area poses a drastically different risk than a faster spreading fire near a densely populated community or critical infrastructure.
Focusing solely on ignition prediction fails to account for the potential for widespread damage, loss of life, and economic disruption. This approach leads to a dangerous blind spot, where utilities may believe they have adequately mitigated risk by focusing on ignition prevention, while remaining dangerously exposed to the devastating consequences of a large-scale wildfire. Without understanding the potential consequence of a fire, prioritizing mitigation efforts becomes guesswork rather than a data-driven strategy.
The Challenge to Address
For this critical decision-making, electric utilities need to combine ignition probability with consequence analysis. This means:
- Quantifying Impact: Consequence modeling quantifies the potential damage of a fire, including impacts on human life, property, and infrastructure. This data is essential for prioritizing mitigation efforts and targeting asset-hardening under limited budgets and rate increase abilities.
- Forecasting Fire Spread: Advanced fire spread modeling, integrated with weather forecasts, can predict the path and impact of a fire originating from a specific asset. This allows utilities to identify the most dangerous potential ignitions.
- Understanding Asset-Specific Risk: Every asset has a unique ignition probability based on its condition, age, surrounding environment, and other factors. Electric utilities can analyze historical ignition data alongside potential fire spread models to understand the impact of a fire (ignition probability and consequence) originating from each asset.
Prioritizing Hardening with Risk Spend Efficiency (RSE)
With limited resources, electric utilities need to maximize the impact of their mitigation investments. Consequence-based risk modeling allows for the calculation of improved Risk Spend Efficiency (RSE). RSE measures the risk reduction achieved per dollar invested in hardening. By prioritizing assets with the highest RSE, utilities can achieve the greatest risk reduction for their budget.
The Bigger Picture: Moving from Planning to Operations
Safety and risk management are driving the adoption of consequence-based modeling, but the benefits extend beyond planning. Understanding wildfire risk improves operational efficiency and informs critical decisions like Public Safety Power Shutoffs (PSPS) during an extreme weather event. As wildfire severity and frequency increase, this data-driven approach has become essential for all electric utilities.
Looking Ahead
The future of wildfire risk management for electric utilities depends on moving beyond the limited scope of ignition prediction. By embracing consequence-based risk modeling, electric utilities can gain the critical insights needed to prioritize asset hardening, optimize mitigation strategies, and ultimately, protect communities and infrastructure from the devastating impacts of wildfire. The widening of risk management from solely preventing fires to understanding and mitigating their potential consequences is no longer optional, it is an imperative.
