What Happens When the Energy System Gets Stress Tested

For years, energy transition planning has largely focused on a familiar set of objectives – reliability, affordability, and decarbonization. But recent events have exposed a fourth requirement that is becoming impossible to ignore – resilience.

From the global crises of 2022 to ongoing geopolitical tensions affecting fuel markets and supply chains, the energy sector has received a stark reminder that the future rarely unfolds according to the base case. The question is no longer whether disruptions will occur. It is whether our energy systems are prepared when they do.

At Energy Exemplar’s Xcelerate conference, in Sydney, Mark Kowalczyk, Chief Analyst at Victoria’s Department of Energy, Environment, and Climate Action, discussed system resilience and stress-testing across the energy sector.

Why is planning for “normal” no longer enough?

Traditional energy market modeling excels at identifying least-cost pathways under expected conditions. These models help planners determine optimal generation mixes, transmission investments, and retirement schedules.

The challenge is that real-world energy systems do not operate in a steady state.

Weather patterns shift.
Supply chains tighten.
Commodity markets spike.
Infrastructure projects are delayed.
Demand forecasts change unexpectedly.
Geopolitical events send shockwaves.

“Stress testing and wargaming really helps you understand the reliability and total cost for the system that you’re trying to ascertain through energy market modeling,” said Kowalczyk in his keynote address.

The distinction matters. A system that appears balanced under normal conditions may reveal significant vulnerabilities once a major disruption is introduced.

How do geopolitical and fuel-supply risks affect energy planning?

The modern grid is more interconnected than ever.

Natural gas markets are increasingly global, critical minerals and equipment are sourced through international supply chains and data center growth is creating new demand pressures. Meanwhile, conflicts affecting major energy corridors can rapidly influence fuel availability and pricing across entire regions.

One example Kowalczyk highlighted was the potential impact of disruptions to the Strait of Hormuz, one of the world’s most important energy route. Combined with rising electricity demand from AI and data centers, such a scenario could place significant stress on energy systems already navigating the complexities of the transition.

The lesson is clear: energy planners cannot evaluate risks in isolation.

A delayed transmission project might be manageable on its own. A fuel supply shock might be manageable on its own. But when multiple events occur simultaneously, the outcome can be far more severe than the sum of its parts.

What is the difference between stress testing and wargaming?

This is where stress testing and wargaming are becoming increasingly valuable. Stress testing examines how a system responds to individual threats, such as:

• Gas supply disruptions
• Extreme weather years
• Faster-than-expected demand growth
• Delayed renewable generation projects
• Transmission outages

Wargaming takes the next step by combining multiple threats into a single scenario.

For example, what happens if data center demand accelerates at the same time as fuel markets tighten?

These exercises reveal not only where vulnerabilities exist, but also what level of additional infrastructure may be required to withstand them. As one slide from the presentation observed, stress testing can highlight areas that need attention, while wargaming can expose system fragility in ways that individual assessments cannot.

Model the Unexpected

PLEXOS® gives planners the tools to stress test assumptions and scenario model at scale. 

When can strategic overbuilding improve system resilience?

One of the more provocative ideas emerging from resilience-focused planning is that the least-cost system may not always be the most resilient system.

Capacity expansion models often deliver what could be described as a "minimum viable grid" that satisfies reliability requirements under expected conditions. The problem is that minimum-margin systems tend to have less flexibility when unexpected events occur.

The presentation argued that strategically bringing forward additional renewable generation, storage, and transmission can function as a form of insurance.

That insurance may carry a modest upfront cost, but it can help avoid the far larger economic consequences associated with energy crises and prolonged price spikes.

The Australian experience in 2022 offers a powerful example. Wholesale electricity costs increased dramatically as gas markets tightened, coal prices surged, and generation outages occurred simultaneously. The resulting cost impacts were measured in billions of dollars.

In other words, resilience investments should not be viewed solely as additional costs. They are also tools for reducing exposure to future volatility.

Why does resilience require integrated electricity and gas modelling? 

Another important takeaway from Kowalczyk’s keynote was that the electricity system cannot be analyzed in isolation.

As coal generation retires, gas-fired generation continues to play a critical role in providing firming capacity during periods of low renewable output. Yet gas availability itself is increasingly constrained and subject to competing demands.

This creates a growing need for integrated electricity and gas market modeling.

“To truly understand what the energy transition requires, one needs electricity and gas market models that talk to each other”

Without that integrated view, planners risk assuming generation assets can operate when the underlying fuel supply may not be available at the required time or location.

How should planners prepare for disruptions they cannot predict?

The energy transition is often framed as a pathway between today's fossil-fuel-dependent system and tomorrow's clean, electrified future.

In reality, the journey is unlikely to be linear.

Geopolitical tensions, supply chain disruptions, extreme weather, and demand shocks will continue to test energy systems along the way. The organizations best positioned to navigate those challenges will be those that move beyond forecasting and begin actively stress-testing their assumptions.

Because resilience is not built by planning for the future we expect.

It is built by preparing for the future we hope never arrives.

Turn Uncertainty Into Insight  

PLEXOS® helps you prepare for the future you hope never arrives.