Extended Power Outages Threaten Business Continuity: Enhanced Contingency Planning Needed

Recent widespread power disruptions underscore the critical need for businesses across Hawaii to bolster their operational resilience. Following a period of strong winds, a significant outage impacted numerous areas, leading to a day without electricity for many. While Hawaiian Electric has since restored power to most affected regions, this event serves as a stark reminder of the ongoing vulnerability of the state's power grid to weather-related events.

The Change

A recent weather event caused a widespread power outage across parts of Hawaii, leading to significant operational disruptions. While Hawaiian Electric's response efforts have largely restored power, the incident highlights the fragility of the grid and the potential for future, prolonged interruptions due to increasingly severe weather patterns.

Who's Affected

Small Business Operators (small-operator): Businesses relying on continuous power, such as restaurants, retail shops, and service providers, faced immediate revenue loss and increased operating expenses due to spoiled inventory, lack of climate control, and inability to process transactions. For operators in sectors with low margins, extended outages can be financially ruinous.

Tourism Operators (tourism-operator): Hotels, tour companies, and vacation rentals depend heavily on reliable electricity for guest comfort, operations, and communication. Outages can lead to guest dissatisfaction, cancellations, and significant damage to brand reputation, particularly in a competitive global market.

Healthcare Providers (healthcare): Clinics, private practices, and hospitals are critically dependent on uninterrupted power for life-support systems, diagnostic equipment, and data management. Even short outages can disrupt patient care, compromise sensitive medical supplies, and necessitate the activation of costly backup generators.

Agriculture & Food Producers (agriculture): Farms and food processing facilities often rely on power for irrigation, refrigeration, and machinery. Prolonged outages can lead to crop spoilage, loss of livestock due to lack of climate control, and disruptions in food production supply chains.

Real Estate Owners (real-estate): Property managers and landlords need to consider the impact of power outages on tenant operations and the structural integrity of their properties. Tenants in commercial spaces may demand lease clauses that address business interruption and power resilience.

Entrepreneurs & Startups (entrepreneur): For startups, particularly those in tech or light manufacturing, a significant power outage can halt operations, disrupt data services, and impact product development timelines. Investors may view resilience to such disruptions as a key indicator of a company's long-term viability.

Second-Order Effects

Frequent or prolonged power outages can trigger a cascade of economic impacts within Hawaii's island economy. Increased reliance on backup generators, for instance, leads to higher operating costs for businesses. These increased costs may be passed on to consumers through higher prices, particularly in the tourism and food service sectors. This can reduce consumer spending power and diminish Hawaii's competitiveness as a tourist destination. Furthermore, unreliable infrastructure can deter potential new businesses and remote workers from relocating to the islands, impacting economic diversification efforts. The strain on the grid also necessitates significant investment in upgrades, potentially leading to increased utility rates or special assessments for property owners.

What to Do

Businesses should use this recent event as a catalyst to review and enhance their current business continuity plans. The aim is not to overreact to a single event, but to build systemic resilience to predictable threats.

For the next 60 days, all impacted roles should:

• Assess current business continuity and disaster recovery plans. Identify critical operational dependencies on electricity and evaluate the adequacy of existing backup systems (e.g., generators, battery storage).
• Evaluate single points of failure. Determine how a prolonged outage would impact key business functions, supply chains, and revenue streams.
• Explore alternative power solutions. Research options such as mobile power units, portable generators, or investments in solar with battery storage, considering cost-benefit analyses and long-term operational needs.
• Review insurance policies. Ensure adequate coverage for business interruption, equipment breakdown, and potential inventory loss due to power failures.

Specific role-based actions within 60 days:

• Small Business Operators: Prioritize affordable backup solutions for immediate operational needs (e.g., POS systems, refrigeration). Develop clear communication protocols for staff and customers during outages.
• Tourism Operators: Invest in backup power for essential guest services and communications. Train staff on emergency procedures and customer management during disruptions.
• Healthcare Providers: Conduct regular drills to test backup power systems. Ensure redundant systems for critical medical equipment and patient data.
• Agriculture & Food Producers: Secure backup power for cold storage and essential processing equipment. Develop protocols for managing perishable inventory during extended outages.
• Real Estate Owners: Evaluate the power resilience of properties, particularly those with commercial tenants. Explore opportunities for shared backup power solutions.
• Entrepreneurs & Startups: Implement cloud-based data backup and remote access solutions. Assess the feasibility of portable power for critical equipment during short-term outages.

Monitoring Trigger Conditions:

Businesses should monitor Hawaiian Electric's outage alerts and grid reliability reports for recurring issues or significant planned maintenance impacting grid stability. Additionally, track weather forecasts for the onset of severe weather events. If there are multiple unpredicted outages exceeding 12 hours within a 12-month period, or if extended weather advisories indicate a heightened risk of severe storms, it signals an increased probability of future disruptions, triggering a more aggressive review of contingency investments.