Journal
ENERGY ECONOMICS
Volume 52, Issue -, Pages 277-286Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.eneco.2015.11.008
Keywords
Self-generation; Outage loss; Firms; Value of lost load; Sub-Saharan Africa; South Asia
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Funding
- Engineering and Physical Sciences Research Council [1343766] Funding Source: researchfish
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This study examines the outage loss differential between firms that engage in backup generation and those that do not. Unmitigated outage losses were estimated to be US$2.01-23.92 per kWh for firms engaging in self-generation, and range from US$1.54 to 32.46 per kWh for firms without self-generation. We also find that firms engaging in self-generation would have suffered additional 1-183% outage losses had they not invested in self-generation. On the other hand, firms without self-generation would have reduced their outage losses by around 6-46% if they had engaged in self-generation. Further analyses, however, reveal that, although engagement in self-generation reduced outage losses, a firm engaging in self-generation may still suffer a greater unmitigated outage loss relative to a firm without a backup generator. The relative outage losses depend on the relative vulnerability of the operations of the two sets of firms to power interruption, and the relative generating capacity of a self-generating firm to its own required electricity loads. Policy reforms that allow firms, whose operations are highly vulnerable to outages, to make a binding contract with utilities in order to get preferential supply are recommended. (C) 2015 Elsevier B.V. All rights reserved.
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