Global Catastrophe Monitoring Biweekly Report (Late August)

IV. Linkages with the Energy Sector This period’s disasters impacted energy assets along two primary axes: damage to hydropower infrastructure in the Himalayan region and typhoon-related stress on offshore wind farms and port facilities along China’s eastern coast—both underscoring the vulnerability of energy infrastructure under intensifying extreme weather events. • Hydropower (Nepal, glacial lake outburst): This constituted the most direct blow to energy infrastructure this period. Nepal Electricity Authority confirmed damage to six major hydropower and transmission facilities—including Rasuwagadhi, Chilime, Trishuli 3A, Trishuli 3B Hub 220kV substation, Trishuli Power Station, and Devighat Power Station. At least 933 workers were trapped inside tunnels across approximately half a dozen hydropower projects, including three interns from Tribhuvan University’s Upper Trishuli 3B project. The Trishuli River forms a core hydropower corridor along the China–Nepal border; destruction of 42 km of road severed land access to multiple power stations, disrupting the entire generation–transmission–distribution chain and directly undermining Nepal’s hydropower-dependent energy structure. This event also reveals how, against the backdrop of accelerating Himalayan glacial retreat, high-altitude hydropower projects are becoming systematically more exposed to ‘glacial hazards’. • Reservoirs and hydropower stations (Guangxi, China; Typhoon Narra): In Guangxi, 18 reservoirs and two hydropower stations operated continuously above flood-control water levels yet remained stable; however, flooding blocked or submerged 30 county-level roads—some serving as access routes for power transmission lines. Though no dam breaches or blackouts occurred, extreme rainfall placed intense pressure on the safety operation of large reservoir clusters, highlighting tensions between reservoir scheduling and flood control capacity during southern China’s monsoon season. • Offshore wind farms and coastal port zones (Zhejiang, China; Typhoon Saudel): Typhoon Saudel made dual landfalls in Yuhuan and Wenzhou, Zhejiang, with maximum sustained winds of Category 12 (126 km/h) and gusts reaching 35 m/s on land. Zhejiang and Fujian provinces constitute China’s core offshore wind development zone; such typhoons pose direct threats to both under-construction and operational wind turbine units, offshore substations, and construction vessel fleets—the financial losses associated with curtailment and grid reconnection remain pending assessment. Meanwhile, Ningbo and Shanghai ports elevated emergency response protocols, and Ningbo airport suspended all flights, reflecting the dual pressure exerted by typhoons on eastern China’s ‘energy + logistics’ systems. This marked the second typhoon-scale system to strike China’s eastern coast within eight days of Narra—extending the exposure window for energy assets consecutively. • Power grids (Peru earthquake; Southeast Asia/Europe): The M6.7 Ayacucho earthquake in Peru left approximately 9,000 households without electricity and damaged 12 medical facilities; the Central-Southern European heat dome sharply increased grid cooling loads while drought suppressed hydropower output—creating a ‘dual squeeze’ on generation and supply; floods across mainland Southeast Asia (e.g., Myanmar, Thailand) damaged distribution networks. Multiple incidents collectively indicate insufficient redundancy in power grids against seismic, extreme-heat, and heavy-rainfall hazards. • Oil, gas, and fuel supply (Flores Island, Indonesia): Following the earthquake, Pertamina restored fuel and LPG supplies to Flores Island—a positive example of petroleum companies ensuring critical post-disaster commodity continuity. • Resilience observations: Two structural signals emerged this period: First, high-altitude glacial hazards (in Nepal) struck large-scale hydropower infrastructure directly for the first time—signaling a new phase in which ‘climate–geographic hazards’ are inflicting tangible damage on clean-energy assets. Second, back-to-back typhoons hitting China’s East Coast (Narra + Saudel) have shifted offshore wind disaster preparedness from ‘point-defense’ toward ‘continuous-window management.’ If no major omissions exist in this report, the energy sector’s summary for this period is: hydropower endured a ‘glacial-scale’ shock, while wind power underwent an intensive ‘typhoon-scale’ test.

- - As of April 2026: Oil price shock: Baseline budget oil price is USD 70 per barrel; each USD 1 increase adds IDR 6–10 trillion (USD 350 million–600 million) in fiscal expenditure. A USD 90 oil price would push the fiscal deficit ratio beyond the 3% red line. Exchange rate risk: Rising U.S. Dollar Index coupled with rupiah depreciation increases import costs for refined petroleum products, exacerbating subsidy pressures (imports settled in USD; subsidies disbursed in local currency). As of January 2026: Coal allocation and energy dependence: Indonesia plans to approve a 600-million-ton coal production quota for 2026. As the world’s third-largest coal producer and largest thermal coal exporter, Indonesia remains highly coal-dependent—coal accounts for one-third of total energy supply, and coal-fired power generated two-thirds of electricity in 2021. Since 2005, Indonesia has been a net oil importer; coal and natural gas export revenues fail to offset oil import expenditures. Coal consumption and power generation capacity: Domestic coal consumption growth may exceed 7% annually from 2023 to 2026. Plans call for adding 28.7 GW of new coal-fired generation capacity—an increase of 63% over 2023 levels. Nickel, aluminum, and steel smelting industries will continue driving private-sector coal-fired capacity additions and coal demand. Coal taxation and corporate profitability: The government plans to raise export taxes on gold and coal. Low-calorific-value coal producers face margin pressure; exporters believe related policies may be revised. Coal production restrictions only affect small, inefficient enterprises—leading firms’ 2026 profitability and dividends may exceed expectations. Power regional and policy characteristics: Java and Sumatra enjoy sufficient electricity supply, whereas islands hosting concentrated aluminum smelting capacity in eastern Indonesia suffer severe power shortages. The government has halted approvals for new public utility power plants, permitting only captive coal-fired plants built by smelters. Chinese power equipment costs have risen by 30%, with delivery lead times extended from 18 to 21 months. Energy economics and fiscal sustainability: Natural gas remains about 15% less competitive than coal-fired power; poor economic viability constrains rapid expansion of renewables. In 2024, energy and mineral resources tax revenue accounted for 10% (USD 17 billion) of total government revenue; total mining revenue reached USD 22 billion. The government has already reduced fuel subsidies. January 2026: Gold market: Ninety percent of domestic gold demand relies on imports. A proposed gold export tax aims to reduce import dependency; domestic gold and silver prices currently trade at low single-digit discounts. Gold taxation is unlikely to materially impact leading miners’ profitability. Petroleum refining: Pertamina—the national oil company—plans only limited expansion of refined fuel capacity by 2030, prioritizing biofuels instead. This contradicts market expectations of three new refinery expansions and may further tighten global refined fuel supply. Mining equipment competition: Komatsu continues gaining market share in mining equipment, while facing intense competition from China’s SANY in construction equipment. Fuel consumption: After cutting fuel subsidies, gasoline and diesel consumption growth has slowed to roughly half the overall fuel consumption growth rate. As of April 2026: Political core: Conservative President Prabowo Subianto will launch autonomous reforms—scaling back ambitious infrastructure projects (including the new capital city plan) and building a locally rooted, family-based co-governance political system focused on grassroots welfare programs like student meal subsidies, balancing bottom-up assistance with top-level political coordination. Economic core: Reform financing depends on two main sources: foreign direct investment (FDI) attracted by resource nationalism, and fiscal revenue from commodity exports. The central bank and commercial banks operate professionally but conservatively, exhibiting strong pro-cyclical behavior; FDI prospects are tightly linked to commodity prices and resource-nationalist policies.

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