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A choice experiment on the willingness of households to accept power outages

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  • Abrate, Graziano
  • Bruno, Clementina
  • Erbetta, Fabrizio
  • Fraquelli, Giovanni
  • Lorite-Espejo, Azahara

Abstract

Outage cost estimation is particularly important for investment decisions related to the security and reliability of electricity supply. The heterogeneity in approaches and findings calls for more research on this topic. This paper presents a model for evaluating household Willingness to Accept (WTA) power outages in relation to expected compensation for an electricity interruption. Using a choice experiment, applied to a test sample of Italian households, we evaluate the effect of different interruption scenarios based on duration and proposed discount. The results postulate an average value of 25.37 euro/kWh of lost load for a typical Italian household. Based on survey data, the value of lost load is correlated to a set of household characteristics as well as to different durations of the hypothetical interruption.

Suggested Citation

  • Abrate, Graziano & Bruno, Clementina & Erbetta, Fabrizio & Fraquelli, Giovanni & Lorite-Espejo, Azahara, 2016. "A choice experiment on the willingness of households to accept power outages," Utilities Policy, Elsevier, vol. 43(PB), pages 151-164.
    • Handle: RePEc:eee:juipol:v:43:y:2016:i:pb:p:151-164
    DOI: 10.1016/j.jup.2016.09.004
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    9. 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.
    10. Majid Hashemi, 2021. "The Effect of Reliability Improvements on Household Electricity Consumption and Coping Behavior: A Multi-dimensional Approach," Working Paper 1469, Economics Department, Queen's University.
    11. Paul Nduhuura & Matthias Garschagen & Abdellatif Zerga, 2021. "Impacts of Electricity Outages in Urban Households in Developing Countries: A Case of Accra, Ghana," Energies, MDPI, vol. 14(12), pages 1-26, June.
    12. Sinan Küfeoğlu & Niyazi Gündüz & Hao Chen & Matti Lehtonen, 2018. "Shadow Pricing of Electric Power Interruptions for Distribution System Operators in Finland," Energies, MDPI, vol. 11(7), pages 1-14, July.
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