Latest news with #InfrastructureResilience
Yahoo
3 days ago
- Business
- Yahoo
HEI Reports Second Quarter 2025 Results
Utility Continues to Improve the Safety, Reliability and Resilience of Service to Our Communities Through Advancement of Wildfire Safety Strategy Legislation Signed Into Law by Governor Green Appropriates Funds for the State's Contribution to the Maui Wildfire Tort Litigation Settlement, Directs the Public Utilities Commission to Establish an Aggregate Liability Cap for Economic Damages from Future Wildfires, Authorizes Securitization for Infrastructure Resilience Investments and Supports Reliable, Affordable Clean Energy Procurement Continued Progress Toward a Simpler, More Focused Business With Sale of Pacific Current's Solar and Battery Storage Assets Quarter's Results Reflect $5 Million Earnings Impact from Asset Impairment and Tax Credit Recapture Related to Sale HONOLULU, August 07, 2025--(BUSINESS WIRE)--Hawaiian Electric Industries, Inc. (NYSE - HE) (HEI) today reported net income for the second quarter of 2025 of $26 million, or $0.15 per share. Excluding Maui wildfire-related expenses and expenses taken in connection with the review of strategic options for Pacific Current, Core1 income from continuing operations was $35 million, or $0.20 per share, compared to $28 million, or $0.26 per share in 2024. "Our core operations performed as expected in the second quarter, with the utility progressing measures to protect our communities against the risks posed by extreme weather events. We've also continued to make the changes necessary to move forward as a simpler, more focused company best positioned to serve our communities for the long term. This includes our sale of Pacific Current's solar and battery storage assets and the expected divestiture of our remaining stake in American Savings Bank over the next year," said Scott Seu, HEI president and CEO. "Last month, Governor Josh Green signed legislation passed by the Hawaii State Legislature directing the Public Utilities Commission to establish a liability cap for future wildfires, and authorizing securitization to finance $500 million in wildfire safety improvements, helping customer affordability. Legislation to reduce risk to independent power producers and support the utility's ability to procure reliable, affordable clean energy was also signed into law, along with legislation appropriating funds for the State of Hawaii's contribution to the settlement, ensuring the settlement is able to move forward." ___________________ Note: Throughout this release, per share values are calculated based on diluted shares. 1 Measures described as "Core" for the periods in this news release are non-GAAP measures which exclude Maui wildfire-related costs and expenses taken in connection with the strategic review of Pacific Current. See the "Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures" and the related GAAP reconciliation at the end of this release. HAWAIIAN ELECTRIC COMPANY (HAWAIIAN ELECTRIC) EARNINGS Hawaiian Electric's net income for the second quarter of 2025 was $39 million compared to a net loss of $1,229 million in the second quarter of 2024, with the increase primarily driven by the following pre-tax items: The $1,712 million loss recorded in the second quarter of 2024 due to the accrual of estimated wildfire liabilities related to tort-related legal claims and cross claims as of June 30, 2024; $7 million in higher revenues, primarily from the annual revenue adjustment mechanism, but also including $1 million of demand response revenues (offset by expenses included in O&M); and $4 million impact from better heat rate performance. These items were partially offset by the following: $11 million in higher O&M, driven by $7 million in higher wildfire mitigation program expenses, $4 million of higher legal and consulting costs (which were previously deferred), $2 million in higher property and general liability insurance costs and $1 million in higher demand response expenses (offset by demand response revenues). Higher O&M expenses were partially offset by the absence of costs related to the settlement of indemnification claims asserted by the state (recorded in 2024). Hawaiian Electric's Core net income for the second quarter of 2025 was $42 million compared to $44 million in the same quarter last year. Pre-tax wildfire-related expenses of $11 million were partially offset by $10 million of costs deferred pursuant to the Public Utilities Commission's decision allowing Hawaiian Electric to defer these costs. Utility Dividend Update The Hawaiian Electric Board of Directors declared a $10 million cash dividend payable to HEI for the second quarter of 2025. HOLDING AND OTHER COMPANIES The holding and other companies' net loss was $13 million in the second quarter of 2025 compared to $20 million in the second quarter of 2024. The lower net loss for the quarter was primarily due to lower wildfire expenses, partially offset by expenses taken in relation to the strategic review of Pacific Current. Excluding these expenses, Core net loss for the quarter was $7 million compared to $15 million in the second quarter of 2024. EARNINGS RELEASE, WEBCAST AND CONFERENCE CALL TO DISCUSS EARNINGS HEI will conduct a webcast and conference call to review its second quarter 2025 consolidated financial results today at 10:30 a.m. Hawaii time (4:30 p.m. Eastern). To listen to the conference call, dial 1-888-660-6377 (U.S.) or 1-929-203-0797 (international) and enter passcode 2393042. Parties may also access presentation materials (which include reconciliation of non-GAAP measures) and/or listen to the conference call by visiting the conference call link on HEI's website at under "Investor Relations," sub-heading "News and Events — Events and Presentations." A replay will be available online and via phone. The online replay will be available on HEI's website about two hours after the event. The audio replay will also be available about two hours after the event through August 14, 2025. To access the audio replay, dial 1-800-770-2030 (U.S.) or 1-647-362-9199 (international) and enter passcode 2393042. HEI and Hawaiian Electric Company, Inc. (Hawaiian Electric) intend to continue to use HEI's website, as a means of disclosing additional information; such disclosures will be included in the Investor Relations section of the website. Accordingly, investors should routinely monitor the Investor Relations section of HEI's website, in addition to following HEI's and Hawaiian Electric's press releases, HEI's and Hawaiian Electric's Securities and Exchange Commission (SEC) filings and HEI's public conference calls and webcasts. Investors may sign up to receive e-mail alerts via the "Investor Relations" section of the website. The information on HEI's website is not incorporated by reference into this document or into HEI's and Hawaiian Electric's SEC filings unless, and except to the extent, specifically incorporated by reference. Investors may also wish to refer to the Public Utilities Commission of the State of Hawaii (PUC) website at to review documents filed with, and issued by, the PUC. No information on the PUC website is incorporated by reference into this document or into HEI's and Hawaiian Electric's SEC filings. ABOUT HEI The HEI family of companies provides the energy services that empower much of the economic and community activity of Hawaii. HEI's electric utility, Hawaiian Electric, supplies power to approximately 95% of Hawaii's population and is undertaking an ambitious effort to decarbonize its operations and the broader state economy, and modernize and harden the grid to ensure resilience and public safety. For more information, visit NON-GAAP MEASURES Measures described as "Core" are non-GAAP measures which exclude Maui wildfire-related costs, and expenses taken in connection with HEI's ongoing review of strategic options for Pacific Current. See "Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures" and the related GAAP reconciliations at the end of this release. This release may contain "forward-looking statements," which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as "will," "expects," "anticipates," "intends," "plans," "believes," "predicts," "estimates" or similar expressions. In addition, any statements concerning future financial performance, ongoing business strategies or prospects or possible future actions are also forward-looking statements. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and the accuracy of assumptions concerning HEI and its subsidiaries, the performance of the industries in which they do business and economic, political and market factors, among other things. These forward-looking statements are not guarantees of future performance. Forward-looking statements in this release should be read in conjunction with the "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" discussions (which are incorporated by reference herein) set forth in HEI's Annual Report on Form 10-K for the year ended December 31, 2024 and HEI's other SEC periodic reports and filings that discuss important factors that could cause HEI's results to differ materially from those anticipated in such statements. These forward-looking statements speak only as of the date of the report, presentation or filing in which they are made. Except to the extent required by the federal securities laws, HEI, Hawaiian Electric, and their subsidiaries undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited) Three months endedJune 30 Six months endedJune 30 (in thousands, except per share amounts) 2025 2024 2025 2024 Revenues Electric utility $ 742,482 $ 792,331 $ 1,480,848 $ 1,580,909 Other 3,910 3,086 9,614 6,522 Total revenues 746,392 795,417 1,490,462 1,587,431 Expenses Electric utility (includes $1,712 million of Wildfire tort-related claims in three and six months ended June 30, 2024) 677,938 2,436,771 1,340,367 3,161,994 Other 14,707 20,235 33,928 36,139 Total expenses 692,645 2,457,006 1,374,295 3,198,133 Operating income (loss) Electric utility 64,544 (1,644,440 ) 140,481 (1,581,085 ) Other (10,797 ) (17,149 ) (24,314 ) (29,617 ) Total operating income (loss) 53,747 (1,661,589 ) 116,167 (1,610,702 ) Retirement defined benefits credit—other than service costs 919 1,001 1,836 2,002 Interest expense, net (27,256 ) (32,400 ) (61,468 ) (63,991 ) Allowance for borrowed funds used during construction 1,462 1,344 2,879 2,730 Allowance for equity funds used during construction 3,702 3,336 7,287 6,976 Interest income 7,579 3,134 20,202 6,267 Loss on sale of a subsidiary and impairment loss on assets held for sale (178 ) — (13,389 ) — Income (loss) from continuing operations before income taxes 39,975 (1,685,174 ) 73,514 (1,656,718 ) Income tax expense (benefit) 13,417 (435,950 ) 19,812 (429,155 ) Income (loss) from continuing operations 26,558 (1,249,224 ) 53,702 (1,227,563 ) Preferred stock dividends of subsidiaries 473 473 946 946 Income (loss) from continuing operations for common stock 26,085 (1,249,697 ) 52,756 (1,228,509 ) Loss from discontinued operations — (45,787 ) — (24,853 ) Net income (loss) for common stock $ 26,085 $ (1,295,484 ) $ 52,756 $ (1,253,362 ) Continuing operations - Basic earnings (loss) per common share $ 0.15 $ (11.33 ) $ 0.31 $ (11.14 ) Discontinued operations - Basic loss per common share — (0.42 ) — (0.23 ) Basic earnings (loss) per common share $ 0.15 $ (11.74 ) $ 0.31 $ (11.37 ) Continuing operations - Diluted earnings (loss) per common share $ 0.15 $ (11.33 ) $ 0.31 $ (11.14 ) Discontinued operations - Diluted loss per common share — (0.42 ) — (0.23 ) Diluted earnings (loss) per common share $ 0.15 $ (11.74 ) $ 0.31 $ (11.37 ) Weighted-average number of common shares outstanding 172,496 110,303 172,487 110,260 Weighted-average shares assuming dilution 172,655 110,303 172,832 110,260 Income (loss) from continuing operations for common stock by segment Electric utility $ 39,150 $ (1,229,394 ) $ 86,966 $ (1,190,173 ) Other (13,065 ) (20,303 ) (34,210 ) (38,336 ) Income (loss) from continuing operations for common stock $ 26,085 $ (1,249,697 ) $ 52,756 $ (1,228,509 ) Comprehensive income (loss) attributable to HEI $ 25,779 $ (1,293,890 ) $ 51,990 $ (1,261,569 ) This information should be read in conjunction with the consolidated financial statements and the notes thereto in HEI filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year. Hawaiian Electric Company, Inc. (Hawaiian Electric) and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME DATA (Unaudited) Three months endedJune 30 Six months endedJune 30 ($ in thousands, except per barrel amounts) 2025 2024 2025 2024 Revenues $ 742,482 $ 792,331 $ 1,480,848 $ 1,580,909 Expenses Fuel oil 210,587 258,652 449,308 542,948 Purchased power 174,963 181,328 321,680 341,145 Other operation and maintenance 158,217 147,561 301,325 291,451 Wildfire tort-related claims — 1,712,000 — 1,712,000 Depreciation 63,974 62,812 127,993 125,624 Taxes, other than income taxes 70,197 74,418 140,061 148,826 Total expenses 677,938 2,436,771 1,340,367 3,161,994 Operating income (loss) 64,544 (1,644,440 ) 140,481 (1,581,085 ) Allowance for equity funds used during construction 3,702 3,336 7,287 6,976 Retirement defined benefits credit—other than service costs 1,052 1,072 2,103 2,144 Interest expense and other charges, net (21,706 ) (21,417 ) (44,158 ) (41,402 ) Allowance for borrowed funds used during construction 1,462 1,344 2,879 2,730 Interest income 1,215 1,452 3,196 2,884 Income (loss) before income taxes 50,269 (1,658,653 ) 111,788 (1,607,753 ) Income tax expense (benefit) 10,620 (429,758 ) 23,824 (418,578 ) Net income (loss) 39,649 (1,228,895 ) 87,964 (1,189,175 ) Preferred stock dividends of subsidiaries 229 229 458 458 Net income (loss) attributable to Hawaiian Electric 39,420 (1,229,124 ) 87,506 (1,189,633 ) Preferred stock dividends of Hawaiian Electric 270 270 540 540 Net income (loss) for common stock $ 39,150 $ (1,229,394 ) $ 86,966 $ (1,190,173 ) Comprehensive income (loss) attributable to Hawaiian Electric $ 39,103 $ (1,229,440 ) $ 86,872 $ (1,190,268 ) OTHER ELECTRIC UTILITY INFORMATION Kilowatthour sales (millions) Hawaiian Electric 1,509 1,470 2,962 2,882 Hawaii Electric Light 257 254 512 508 Maui Electric 266 247 523 487 2,032 1,971 3,997 3,877 Average fuel oil cost per barrel $ 100.40 $ 120.12 $ 102.56 $ 121.01 Return on average common equity (%) (twelve months ended)1 3.7 NM 1 Simple average. NM Not meaningful. This information should be read in conjunction with the consolidated financial statements and the notes thereto in Hawaiian Electric filings with the SEC. Results of operations for interim periods are not necessarily indicative of results to be expected for future interim periods or the full year. Explanation of HEI's Use of Certain Unaudited Non-GAAP Measures HEI management uses certain non-GAAP measures to evaluate the performance of HEI. Management believes these non-GAAP measures provide useful information and are a better indicator of the companies' core operating activities. Core earnings and other financial measures as presented here may not be comparable to similarly titled measures used by other companies. The accompanying tables provide a reconciliation of reported GAAP1 earnings to non-GAAP Core earnings. The reconciling adjustments from GAAP earnings to Core earnings are limited to the costs related to the Maui wildfires and costs related to HEI's ongoing review of strategic options for Pacific Current. Management does not consider these items to be representative of the company's fundamental core earnings. Reconciliation of GAAP1 to non-GAAP Measures Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries Unaudited Three months endedJune 30 Six months endedJune 30 (in thousands) 2025 20242 2025 20242 Maui windstorm and wildfires related costs Pretax expenses: Legal expenses $ 5,888 $ 24,181 $ 14,738 $ 39,125 Outside services expense 11 1,396 135 2,518 Wildfire tort-related claims — ... 1,712,000 — 1,712,000 Other expense 5,859 6,880 11,787 16,216 Interest expense 870 3,386 2,901 8,211 Pretax expenses 12,628 1,747,843 29,561 1,778,070 Insurance recoveries3 2,418 (18,875 ) (4,304 ) (31,452 ) Deferral of cost (9,889 ) (7,656 ) (15,572 ) (15,554 ) Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment 5,157 1,721,312 9,685 1,731,064 Pretax loss on sale of a subsidiary — — 13,211 — Pretax asset impairment 178 — 178 — Income tax expense (benefit)4 3,936 (443,238 ) (632 ) (445,749 ) After-tax adjustments $ 9,271 $ 1,278,074 $ 22,442 $ 1,285,315 1 Accounting principles generally accepted in the United States of America. 2 Excludes Maui wildfire-related costs of discontinued operations. 3 Includes adjustments related to costs that are no longer probable of recovery under the insurance policies. For the three and six months ended June 30, 2025, adjustments amount to $6.6 million, of which, $4.0 million was deferred to a regulatory asset and is reported on line "Deferral of cost". 4 Current year composite statutory tax rate of 25.75% and includes expected investment tax recapture. Note: Other segment (Holding and Other Companies) wildfire-related expenses (legal, outside services and other) are included in "Expenses-Other" and interest expense is included in "Interest expense, net" on the HEI and subsidiaries' Consolidated Statements of Income Data. See Electric Utilities' and Holding and Other Companies' tables below for more detail. Reconciliation of GAAP to non-GAAP Measures (continued) Hawaiian Electric Industries, Inc. (HEI) and Subsidiaries Unaudited Three months endedJune 30 Six months endedJune 30 (in thousands) 2025 20241 2025 20241 HEI Consolidated - Continuing Operations GAAP2 income (loss) - continuing operations (as reported) $ 26,085 $ (1,249,697 ) $ 52,756 $ (1,228,509 ) Excluding special items related to the Maui windstorm and wildfires (after tax)3: Legal expenses 4,372 17,955 10,943 29,051 Outside services expense 8 1,035 100 1,868 Wildfire tort-related claims — 1,271,160 — 1,271,160 Other expense 4,350 5,109 8,752 12,041 Interest expense 646 2,515 2,154 6,097 After tax expenses 9,376 1,297,774 21,949 1,320,217 Insurance recoveries4 1,795 (14,015 ) (3,196 ) (23,353 ) Deferral of cost (7,342 ) (5,685 ) (11,562 ) (11,549 ) Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment (after tax) 3,829 1,278,074 7,191 1,285,315 Loss on sale of a subsidiary (after tax)3 — — 9,809 — Asset impairment (after tax)3 5,442 — 5,442 — Non-GAAP (Core) income - continuing operations $ 35,356 $ 28,377 $ 75,198 $ 56,806 GAAP Diluted earnings (loss) per share - continuing operations (as reported) $ 0.15 $ (11.33 ) $ 0.31 $ (11.14 ) Non-GAAP (Core) Diluted earnings per share - continuing operations $ 0.20 $ 0.26 $ 0.44 $ 0.52 1 Excludes Maui wildfire-related costs of discontinued operations. 2 Accounting principles generally accepted in the United States of America. 3 Current year composite statutory tax rate of 25.75% and includes expected investment tax recapture. 4 Includes adjustments related to costs that are no longer probable of recovery under the insurance policies Reconciliation of GAAP to non-GAAP Measures (continued) Hawaiian Electric Company, Inc. and Subsidiaries Unaudited Three months endedJune 30 Six months endedJune 30 (in thousands) 2025 2024 2025 2024 Maui windstorm and wildfires related costs Pretax expenses: Legal expenses $ 4,304 $ 17,613 $ 8,153 $ 28,348 Outside services expense — 997 — 1,781 Wildfire tort-related claims — 1,712,000 — 1,712,000 Other expense 5,792 5,741 11,487 14,882 Interest expense 660 2,524 2,412 6,431 Pretax expenses 10,756 1,738,875 22,052 1,763,442 Insurance recoveries1 3,620 (16,379 ) 556 (26,348 ) Deferral of cost (9,889 ) (7,656 ) (15,572 ) (15,554 ) Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment 4,487 1,714,840 7,036 1,721,540 Income tax benefits2 (1,156 ) (441,572 ) (1,812 ) (443,297 ) After-tax adjustments $ 3,331 $ 1,273,268 $ 5,224 $ 1,278,243 Hawaiian Electric consolidated net income GAAP3 net income (loss) (as reported) $ 39,150 $ (1,229,394 ) $ 86,966 $ (1,190,173 ) Excluding special items related to the Maui windstorm and wildfires (after tax)2: Legal expenses 3,195 13,078 6,053 21,049 Outside services expense — 740 — 1,322 Wildfire tort-related claims — 1,271,160 — 1,271,160 Other expense 4,300 4,263 8,529 11,050 Interest expense 490 1,874 1,791 4,775 After tax expenses 7,985 1,291,115 16,373 1,309,356 Insurance recoveries (after tax)1 2,688 (12,162 ) 413 (19,564 ) Deferral of cost (after tax) (7,342 ) (5,685 ) (11,562 ) (11,549 ) Total Maui windstorm and wildfires related expenses, net of insurance recoveries and approved deferral treatment (after tax) 3,331 1,273,268 5,224 1,278,243 Non-GAAP (Core) net income $ 42,481 $ 43,874 $ 92,190 $ 88,070 1 Pretax insurance recoveries includes adjustments related to costs that are no longer probable of recovery under the insurance policies. For the three and six months ended June 30, 2025, adjustments amount to $6.6 million, of which, $4.0 million was deferred to a regulatory asset and is reported on line "Deferral of cost". 2 Current year composite statutory tax rate of 25.75%. 3 Accounting principles generally accepted in the United States of America. Note: Legal, outside services and other are included in "Other operation and maintenance" and interest expense is included in "Interest expense and other charges, net" on the Hawaiian Electric and subsidiaries' Consolidated Statements of Income Data. Reconciliation of GAAP to non-GAAP Measures (continued) Holding and Other Companies Unaudited Three months endedJune 30 Six months endedJune 30 (in thousands) 2025 2024 2025 2024 Maui windstorm and wildfires related costs Pretax expenses: Legal expenses $ 1,584 $ 6,568 $ 6,585 $ 10,777 Outside services expense 11 399 135 737 Other expense 67 1,139 300 1,334 Interest expense 210 862 489 1,780 Pretax expenses 1,872 8,968 7,509 14,628 Insurance recoveries (1,202 ) (2,496 ) (4,860 ) (5,104 ) Total Maui windstorm and wildfires related expenses, net of insurance recoveries 670 6,472 2,649 9,524 Pretax loss on sale of a subsidiary — — 13,211 — Pretax asset impairment 178 — 178 — Income tax expense (benefits)1 5,092 (1,666 ) 1,180 (2,452 ) After-tax adjustments $ 5,940 $ 4,806 $ 17,218 $ 7,072 Holding and Other Companies net loss GAAP2 net loss (as reported) $ (13,065 ) $ (20,303 ) $ (34,210 ) $ (38,336 ) Excluding special items related to the Maui windstorm and wildfires (after tax)1: Legal expenses 1,177 4,877 4,890 8,002 Outside services expense 8 295 100 546 Other expense 50 846 223 991 Interest expense 156 641 363 1,322 Maui windstorm and wildfires related expenses (after tax) 1,391 6,659 5,576 10,861 Insurance recoveries (after tax) (893 ) (1,853 ) (3,609 ) (3,789 ) Total Maui windstorm and wildfires related expenses, net of insurance recoveries (after tax) 498 4,806 1,967 7,072 Loss on sale of a subsidiary (after tax)1 — — 9,809 — Asset impairment (after tax)1 5,442 — 5,442 — Non-GAAP (Core) net loss $ (7,125 ) $ (15,497 ) $ (16,992 ) $ (31,264 ) 1 Current year composite statutory tax rate of 25.75%. 2 Accounting principles generally accepted in the United States of America. Note: Holding and Other Companies wildfire-related expenses (legal, outside services and other) are included in "Expenses-Other" and interest expense is included in "Interest expense, net" on the HEI and subsidiaries' Consolidated Statements of Income Data. View source version on Contacts Mateo GarciaDirector, Investor RelationsTelephone: (808) 543-7300E-mail: ir@ Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
The Australian
6 days ago
- Business
- The Australian
AI can future-proof infrastructure against natural disasters
Natural disasters are becoming more frequent, more intense, and more costly. AI could be our best defence — but only if we know how to use it wisely. A recent Deloitte report, AI for Infrastructure Resilience, warns that by 2050, the world could face up to the equivalent of $A705 billion in annual infrastructure damage from climate-related events. However, with smart implementation and timely action, AI could help prevent up to 15 per cent of these losses. The urgency is especially clear in Australia. From bushfires and floods to coastal storm surges, extreme weather is already taking a toll on communities and critical infrastructure. As the government prepares to deliver a $120 billion infrastructure investment pipeline over the next decade, resilience can't be an afterthought — it needs to be embedded at every stage of the lifecycle. That's where AI comes in. When applied strategically through each stage of the infrastructure lifecycle, from planning to response and recovery, AI has the potential to radically strengthen infrastructure systems. In the design phase, for example, AI-powered digital twins enable planners to simulate climate scenarios and assess vulnerabilities to proactively prevent infrastructure failures. Lisbon is already leading the way. The city used AI-enhanced modelling to simulate long-term flood risks and built a highly resilient drainage system designed to handle future climate conditions — helping to mitigate up to 20 floods over the next century. This is the kind of forward-looking approach Australia and other climate-exposed countries can learn from. During a disaster, AI also plays a critical role. Advanced early warning systems (EWS), powered by real-time data and AI, can detect wildfires, floods and other hazards earlier and more accurately. According to the Australian National University, faster bushfire detection could help avoid between $A150 million and $A460 million in direct losses each year, depending on detection and response times. Faster detection also reduces knock-on effects. The longer a fire burns undetected, the more it spreads — compounding the damage and increasing risks to human health from prolonged smoke exposure. AI can help contain these risks sooner, leading to better outcomes for people, ecosystems and public health systems alike. AI's value doesn't stop when the emergency ends. In the post-disaster phase, AI can be applied to accelerate recovery. AI systems analyse satellite imagery and sensor data to pinpoint damage hotspots, prioritise repair efforts, and guide decision-making in real time. By enabling faster, more targeted responses, it helps communities rebuild stronger and faster, and ensures limited resources are deployed where they're needed most. But as powerful as AI is, unlocking its full potential requires bold leadership and the removal of practical barriers like legacy infrastructure, regulatory gaps and financial constraints. Policymakers have a pivotal role to play here. With AI evolving rapidly, regulatory frameworks must be flexible enough to keep pace. Prescriptive rules won't work in an environment where use cases are still emerging, and risks continue to evolve. Principles-based, flexible AI policy can provide the guardrails to foster innovation while ensuring safety, privacy, and trust. Infrastructure owners and operators also need to take the lead — but not by rushing into large-scale AI overhauls. Instead, starting with targeted, high-impact projects like predictive maintenance, asset management improvements, or faster emergency response creates room to test, learn, and scale successful solutions. Much of AI's potential hinges on the systems beneath the surface. Many legacy infrastructures lack the flexibility needed for real-time data, cross-platform integration, and AI interoperability. Upgrading to modular, adaptable IT frameworks is essential to unlock smarter, more resilient operations across the entire infrastructure landscape. The financial sector and insurers share a key role in advancing AI-enabled infrastructure. Innovative financing tools like resilience bonds and targeted credit lines can unlock funding for these projects. At the same time, insurers can integrate AI into their offerings — creating products for AI-enabled assets, offering premium reductions for systems that help integrate trusted AI solutions, and improving risk models through advanced analytics. Together, they reduce investment risks, encourage AI adoption, and build more climate-resilient portfolios. Behind it all are the technology providers themselves — the engine room of AI innovation. Their role goes well beyond algorithms. To make a measurable difference, they'll need to deliver integrated, scalable solutions that combine AI with other critical technologies, like the Internet of Things and digital twins. Ultimately, this isn't just about rebuilding after disasters. It's about fundamentally rethinking how we prepare for them. If we want to protect lives, preserve ecosystems, and maintain the critical systems our society depends on, we can't afford to wait. By applying AI to our infrastructure ecosystems today, we can not only reduce risk but actively build smarter, stronger, and more resilient communities ready to face a future that's anything but predictable. Luke Houghton is Deloitte Australia Partner and National Leader, Infrastructure Sector. - Disclaimer This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ('DTTL'), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. Please see to learn more. Copyright © 2025 Deloitte Development LLC. All rights reserved. - Read related topics: Climate Change
