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An estimate of the value of lost load for Ireland

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  • Leahy, Eimear
  • Tol, Richard S.J.

Abstract

This paper estimates the value of short term lost load in the all island electricity market, which includes the Republic of Ireland and Northern Ireland. The value of lost load (VoLL) is the average willingness of electricity consumers to pay to avoid an additional period without power. VoLL is also known as the value of security of electricity supply and is inferred using a production function approach. Detailed electricity use data for the Republic of Ireland allows us to estimate the value of lost load by time of day, time of week and type of user. We find that the value of lost load is highest in the residential sector in both the Republic of Ireland and Northern Ireland. Our results can be used to advise policy decisions in the case of supply outages and to encourage optimum supply security. In the context of this study short term is taken to be a matter of hours rather than days or weeks.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 39 (2011)
Issue (Month): 3 (March)
Pages: 1514-1520

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Handle: RePEc:eee:enepol:v:39:y:2011:i:3:p:1514-1520

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: Value of lost load Ireland Security of electricity supply;

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References

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  1. Lyons, Sean & FitzGerald, John & McCarthy, Niamh & Malaguzzi Valeri, Laura & Tol, Richard S. J., 2007. "Preserving Electricity Market Efficiency While Closing Ireland's Capacity Gap," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2007(3-Autumn), pages 62-82.
  2. Zephyr, 2010. "The city," City, Taylor & Francis Journals, vol. 14(1-2), pages 154-155, February.
  3. Frances Ruane & Xiaoheng Zhang, 2007. "Location Choices of the Pharmaceutical Industry in Europe after 1992," The Institute for International Integration Studies Discussion Paper Series iiisdp220, IIIS.
  4. Malaguzzi Valeri, Laura & Tol, Richard S. J., 2006. "Electricity Shortages in Ireland: Probability and Consequences," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI), vol. 2006(4-Winter), pages 1-7.
  5. de Nooij, Michiel & Koopmans, Carl & Bijvoet, Carlijn, 2007. "The value of supply security: The costs of power interruptions: Economic input for damage reduction and investment in networks," Energy Economics, Elsevier, vol. 29(2), pages 277-295, March.
  6. Beenstock, Michael & Goldin, Ephraim & Haitovsky, Yoel, 1998. "Response bias in a conjoint analysis of power outages," Energy Economics, Elsevier, vol. 20(2), pages 135-156, April.
  7. Richard S.J. Tol, 2007. "The Value of Lost Load," Papers WP214, Economic and Social Research Institute (ESRI).
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Citations

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Cited by:
  1. Pedro Linares & Luis Rey, 2012. "The costs of electricity interruptions in Spain. Are we sending the right signals?," Working Papers fa05-2012, Economics for Energy.
  2. Piaszeck, Simon & Wenzel, Lars & Wolf, André, 2013. "Regional diversity in the costs of electricity outages: Results for German counties," HWWI Research Papers 142, Hamburg Institute of International Economics (HWWI).
  3. Myunghwan Kim & Seung-Hoon Yoo, 2012. "The Economic Cost of Unsupplied Diesel Product in Korea Using Input-Output Analysis," Energies, MDPI, Open Access Journal, vol. 5(9), pages 3465-3478, September.
  4. Musiliu 0. Oseni & Michael G. Pollitt, 2013. "The Economic Costs of Unsupplied Electricty: Evidence from Backup Generation among African Firms," Cambridge Working Papers in Economics 1351, Faculty of Economics, University of Cambridge.
  5. Luis M. Abadie & José M. Chamorro, 2011. "Valuing Expansions of the Electricity Transmission Network under Uncertainty: The Binodal Case," Energies, MDPI, Open Access Journal, vol. 4(10), pages 1696-1727, October.
  6. Leahy, Eimear & Devitt, Conor & Lyons, Seán & Tol, Richard S. J., 2011. "The Cost of Natural Gas Shortages in Ireland," Papers WP397, Economic and Social Research Institute (ESRI).
  7. Wenzel, Lars & Wolf, André, 2014. "Welfare implications of power rationing: An application to Germany," HWWI Research Papers 148, Hamburg Institute of International Economics (HWWI).
  8. growitsch, christian & Malischek, Raimund & Nick, Sebastian & Wetzel, Heike, 2013. "The Costs of Power Interruptions in Germany - an Assessment in the Light of the Energiewende," EWI Working Papers 2013-7, Energiewirtschaftliches Institut an der Universitaet zu Koeln.

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