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The Costs of Power Interruptions in Germany: A Regional and Sectoral Analysis

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  • Christian Growitsch
  • Raimund Malischek
  • Sebastian Nick
  • Heike Wetzel

Abstract

type="main" xml:id="geer12054-abs-0001"> A high standard of security of electricity supply comes at serious electricity system costs. However, these system costs have to be balanced with the economic costs induced by an insecure supply of electricity. Following a macroeconomic approach, we analyze the economic costs imposed by potential power interruptions in Germany. Using an extensive dataset on industries and households, we estimate both Values of Lost Load and the associated hourly costs of power interruptions for different German regions and sectors. We find that interruption costs vary significantly over time, between sectors and regions. Peaking at midday on a Monday in December at 750 Mio € per hour, the average total national outage costs amount to approximately 430 Mio € per hour. A missing gigawatt hour creates average outage costs of about 7.6 Mio €.

Suggested Citation

  • Christian Growitsch & Raimund Malischek & Sebastian Nick & Heike Wetzel, 2015. "The Costs of Power Interruptions in Germany: A Regional and Sectoral Analysis," German Economic Review, Verein für Socialpolitik, vol. 16(3), pages 307-323, August.
    • Handle: RePEc:bla:germec:v:16:y:2015:i:3:p:307-323
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    File URL: http://hdl.handle.net/10.1111/geer.2015.16.issue-3
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    2. Bertsch, Joachim & Brown, Tom & Hagspiel, Simeon & Just, Lisa, 2016. "The relevance of grid expansion under zonal markets," EWI Working Papers 2015-7, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    3. Göke, Leonard & Madlener, Reinhard, 2017. "High Taxes on Cloudy Days: Dynamic State-Induced Price Components in Power Markets," FCN Working Papers 18/2017, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN), revised 01 May 2020.
    4. Aaron Praktiknjo, 2016. "The Value of Lost Load for Sectoral Load Shedding Measures: The German Case with 51 Sectors," Energies, MDPI, vol. 9(2), pages 1-17, February.
    5. Göke, Leonard & Kendziorski, Mario, 2022. "Adequacy of time-series reduction for renewable energy systems," Energy, Elsevier, vol. 238(PA).
    6. Wolf, André & Wenzel, Lars, 2015. "Welfare implications of power rationing: An application to Germany," Energy, Elsevier, vol. 84(C), pages 53-62.
    7. Hagspiel, Simeon, 2016. "Supply Chain Reliability and the Role of Individual Suppliers," EWI Working Papers 2016-5, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    8. Leonard Goke & Mario Kendziorski, 2021. "Adequacy of time-series reduction for renewable energy systems," Papers 2101.06221, arXiv.org, revised Aug 2021.
    9. Keles, Dogan & Bublitz, Andreas & Zimmermann, Florian & Genoese, Massimo & Fichtner, Wolf, 2016. "Analysis of design options for the electricity market: The German case," Applied Energy, Elsevier, vol. 183(C), pages 884-901.
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    11. Gunduz, N & Kufeoglu, S. & Winzer, C. & Lehtonen, M., 2018. "Regional Differences in Economic Impacts of Power Outages in Finland," Cambridge Working Papers in Economics 1841, Faculty of Economics, University of Cambridge.
    12. Hagspiel, Simeon, 2018. "Reliability with interdependent suppliers," European Journal of Operational Research, Elsevier, vol. 268(1), pages 161-173.
    13. Minnaar, U.J. & Visser, W. & Crafford, J., 2017. "An economic model for the cost of electricity service interruption in South Africa," Utilities Policy, Elsevier, vol. 48(C), pages 41-50.
    14. Ovaere, Marten & Heylen, Evelyn & Proost, Stef & Deconinck, Geert & Van Hertem, Dirk, 2019. "How detailed value of lost load data impact power system reliability decisions," Energy Policy, Elsevier, vol. 132(C), pages 1064-1075.
    15. Többen, Johannes & Schröder, Thomas, 2018. "A maximum entropy approach to the estimation of spatially and sectorally disaggregated electricity load curves," Applied Energy, Elsevier, vol. 225(C), pages 797-813.
    16. Frondel Manuel & Sommer Stephan, 2017. "Der Wert von Versorgungssicherheit mit Strom: Evidenz für deutsche Haushalte," Zeitschrift für Wirtschaftspolitik, De Gruyter, vol. 66(3), pages 294-317, December.
    17. Becker, Sophia & Schober, Dominik & Wassermann, Sandra, 2016. "How to approach consumers’ nonmonetary evaluation of electricity supply security? The case of Germany from a multidisciplinary perspective," Utilities Policy, Elsevier, vol. 42(C), pages 74-84.
    18. Guo, Dongmei & Li, Qin & Liu, Peng & Shi, Xunpeng & Yu, Jian, 2023. "Power shortage and firm performance: Evidence from a Chinese city power shortage index," Energy Economics, Elsevier, vol. 119(C).
    19. Wolf, André & Wenzel, Lars, 2016. "Regional diversity in the costs of electricity outages: Results for German counties," Utilities Policy, Elsevier, vol. 43(PB), pages 195-205.
    20. Abuzayed, Anas & Hartmann, Niklas, 2022. "MyPyPSA-Ger: Introducing CO2 taxes on a multi-regional myopic roadmap of the German electricity system towards achieving the 1.5 °C target by 2050," Applied Energy, Elsevier, vol. 310(C).
    21. Joachim Bertsch, & Tom Brown & Simeon Hagspiel & Lisa Just, 2017. "The relevance of grid expansion under zonal markets," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5).
    22. Landegren, Finn & Johansson, Jonas & Samuelsson, Olof, 2019. "Quality of supply regulations versus societal priorities regarding electricity outage consequences: Case study in a Swedish context," International Journal of Critical Infrastructure Protection, Elsevier, vol. 26(C).
    23. Castro, Rui & Faias, Sérgio & Esteves, Jorge, 2016. "The cost of electricity interruptions in Portugal: Valuing lost load by applying the production-function approach," Utilities Policy, Elsevier, vol. 40(C), pages 48-57.

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    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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