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Risk-Cost Tradeoffs in Power Sector Wildfire Prevention

Risk-Cost Tradeoffs in Power Sector Wildfire Prevention

Full Title: Risk-Cost Tradeoffs in Power Sector Wildfire Prevention
Author(s): Cody Warner, Duncan Callaway, and Meredith Fowlie
Publisher(s): Haas School of Business at University of California, Berkeley
Publication Date: February 16, 2024
Full Text: Download Resource
Description (excerpt):

Wildfires ignited by power system infrastructure tend to cause more damage than other ignition sources because they occur during high wind events when fire spreads rapidly. Utilities are exploring a range of approaches to mitigate these wildfire risks. This study evaluates the cost, reliability, and wildfire risk implications of measures recently deployed by the largest utility in the United States – Pacific Gas and Electric.
Using detailed data on weather, vegetation, and infrastructure conditions from over twenty-five thousand miles of high-risk distribution lines, they use a prediction model trained on pre-intervention outcomes to estimate highly granular measures of baseline ignition risk. Then they compare ignition outcomes in settings with similar baseline risk but different types of wildfire mitigation. They find that undergrounding powerlines, despite the higher investment cost, is more cost-effective than pruning and removing nearby vegetation, primarily because undergrounding fully and permanently eliminates ignition risk.
A new strategy that increases the sensitivity of protection equipment – known as “fast-trip” settings – does not completely eliminate risk on circuits but is significantly more cost-effective than undergrounding per avoided ignition and per avoided structure burned, even after accounting for outage impacts to customers. The analysis underscores the importance of carefully evaluating the social costs and benefits of alternative wildfire risk mitigation measures, particularly in cases where less cost-effective measures may be preferred by utilities due to regulated returns on capital investment and more certain risk reductions.

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