Why we are bullish on technology solutions that support Power Generation adaptation efforts

Power generation is one of the most water-dependent sectors in the global economy—and one of the most exposed to climate-driven water risk. While it overlaps with other asset categories such as Linear Assets (transmission corridors), Coastal Infrastructure (coastal plants, cooling intakes), and even the FIRE sector (asset financing and insurance), power generation warrants its own category due to its critical role in national security, economic stability, and public safety. Climate change is reshaping hydrology and thermal patterns in ways that threaten both water quantity and quality—and, by extension, the reliability of the power grid.

Thermoelectric Power: Coal, Gas, and Nuclear’s Cooling Challenge

Thermoelectric plants—which include coal, natural gas, and nuclear—depend heavily on large volumes of water for cooling. Extreme heatwaves and prolonged droughts are reducing water availability and raising intake water temperatures, which can force plants to reduce output or shut down to stay within environmental discharge limits. Flooding can inundate critical infrastructure like cooling towers and electrical systems, while sediment and debris from storm events can impair cooling efficiency.

Industry 4.0 solutions—such as IoT-enabled flow and temperature sensors, AI-driven plant optimization models, and predictive maintenance tools—can help operators manage water constraints in real time. Advanced cooling technologies, like hybrid wet–dry systems, can also reduce water dependency. Leveraging these innovations allows thermoelectric generators to meet production targets, maintain compliance, and protect profitability in a climate where water is no longer guaranteed.

Hydropower: Precipitation as a Feedstock

Hydropower is entirely reliant on precipitation—especially seasonal snowpack that melts into steady river flows. Climate change is altering this input in two ways: reducing snowpack in many regions and shifting melt timing earlier in the year, leaving reservoirs undersupplied during peak summer demand. Prolonged drought can shrink generation capacity for years, while extreme rainfall events can overwhelm dam safety systems and force emergency water releases, disrupting downstream communities.

The Industry 4.0 toolbox for hydropower includes high-resolution hydrological forecasting, remote sensing for snowpack and watershed health, and digital twins of dam infrastructure for stress testing under future climate scenarios. These tools enable operators to anticipate water supply constraints, optimize generation schedules, and safeguard both asset integrity and downstream safety.

Why This Sector’s Water Risk Matters

For both thermoelectric and hydropower, water risk is no longer a peripheral concern—it is a central operational constraint. Reduced water availability, degraded water quality, and more volatile hydrology all threaten capacity, revenues, and grid stability. In turn, these risks ripple into electricity markets, industrial productivity, and public safety.

By adopting Industry 4.0 technologies—including AI analytics, IoT sensing, satellite monitoring, and advanced materials—power generators can move from reactive crisis management to proactive adaptation. For investors, this is a high-impact opportunity: supporting innovations that not only protect asset performance but also safeguard the energy systems that every other sector depends on.