RREB 2 Estimating the socio-economic costs of electricity supply interruptions

Authors: Manuel Welsch, Constantinos Taliotis, Mark Howells (KTH); Dražen Jakšić, Tomislav Baričević (EIHP) with Claude Ayache from KIC InnoEnergy as reviewer

Language: English Year: November 2014
Topics: Electricity supply interruptions Weblink
Energies: electricity  Type: Rapid Response Energy Brief

Summary: Security of power supply is a crucial element of energy system planning and policy. However, the value that society places on it is not clearly known. Assessing the socio-economic costs of interruptions is an important first step to determining socially optimal levels of interruptions. Such an assessment needs to go beyond a pure focus on economic losses, but needs to include the costs of inconvenience for consumers. Available methods to quantitatively and qualitatively evaluate the effects of a supply interruption are discussed and compared. The importance of considering specificities of geographical location and time of interruptions is highlighted through case studies. Decentralised generation through renewables may help minimise the costs of interruptions by reducing the number of consumers affected. The role of decentralised storage options, demand response, and prioritisations of loads is discussed in this context. Since end-user preferences are not an integral part of a utility’s planning process, expenses to avoid interruptions are disconnected from what end-users would be willing to pay for. This is economically inefficient for the society as a whole.




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