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Press Release

El Niño could have a significant impact on renewable energy production, says new WTW Natural Catastrophe Review

August 7, 2023

Climate|Environmental Risks

SINGAPORE, August 7, 2023 – The emerging El Niño could cause wind drought and storms in Asia Pacific (APAC) countries, which would have a significant effect on renewable energy production, such as wind and solar resources in the region. This is according to a new report launched by WTW (NASDAQ: WTW), a leading global advisory, broking, and solutions company.

The review highlights how different 2023 has been to date with five Category 5 storms in the first five months. This includes Extremely Severe Cyclonic Storm Mocha, which caused widespread coastal flooding in Myanmar and Bangladesh, as well as Super Typhoon Mawar, the most powerful storm of 2023, which passed through Philippines, Taiwan and Japan.

New Zealand has also declared only its third-ever national state of emergency in February following Cyclone Gabrielle, which costed economic losses amounting to NZ$13.5 billion (US$8.4 billion). The most damaging feature of the storm was heavy rainfall, which was exacerbated by large woody debris from forestry operations clogging rivers and destroying buildings and infrastructure.

The combination of El Niño and exceptional Atlantic warmth this year is expected to have significant impact on weather patterns and temperatures across the globe.

The review outlines key perils which need to be monitored as well as explores the reasons why those natural catastrophes turned into disasters, going beyond the severity of the event, and incorporating insights into exposure and vulnerabilities of the regions affected. The report also delves into the science behind those events and provides insights on what to watch for in the second half of the year.

Key findings include:

  • As the world warms, we continue to see natural catastrophes, such as the unprecedented Canadian wildfires that began in May and have burned over 11 million hectares to date.
  • In APAC, Malaysia’s monsoon flooding and landslides in March have led to 61 fatalities and the displacement of over 46,000 people.
  • Human activities, such as land use, often exacerbate the impacts of disasters as we saw with Cyclone Gabrielle in New Zealand, as well as floods in Italy and wildfires in Chile.
  • During an El Niño event, the atmosphere absorbs more heat while the ocean takes up less, and so two to three months after the event begins, global surface temperatures increase.
  • For three years in a row, Earth’s largest ocean has been stuck in its La Niña configuration. Should the Pacific flip to El Niño, businesses should prepare for record-high temperatures, unusual weather, and slower economic growth.

Sam Liu, Head of Renewable Energy, Asia at WTW said: “Understanding the factors that contribute to the variability in extreme weather is crucial for the industry to be better prepared to explore and implement mitigating solutions to ensure a continuous, cost-effective and reliable supply of power generation with the aim to minimise the disruption to the end consumers. Developers must carefully plan and factor the various worst-case scenarios into their risk model to ensure new projects are commercially viable going forward. There are also innovative insurance tools available such as parametric solutions that can provide revenue protection caused by low output due to extreme weather patterns.”

Helene Galy, Managing Director of the WTW Research Network, said “Our direct links and close collaboration with the scientific community through the WTW Research Network enables us to provide deeper insights into key natural catastrophes as well as lessons learned. When quantifying natural catastrophe risks, it is crucial to incorporate in-depth scientific analysis in our modelling. As we are seeing with the current wildfires and extreme weather across Europe, APAC and North America, the business impact of these disasters means it is crucial that risk managers understand their potential consequences, as well as learn lessons from previous events and the value and limits of seasonal forecasting. We are delighted to be introducing this latest bi-annual scientific review to help our clients understand and mitigate natural catastrophe risks.”

More on the report can be found here.

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.

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