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Providing Limited Local Electric Service During a Major Grid Outage: A First Assessment Based on Customer Willingness to Pay

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  • Sunhee Baik
  • M. Granger Morgan
  • Alexander L. Davis

Abstract

While they are rare, widespread blackouts of the bulk power system can result in large costs to individuals and society. If local distribution circuits remain intact, it is possible to use new technologies including smart meters, intelligent switches that can change the topology of distribution circuits, and distributed generation owned by customers and the power company, to provide limited local electric power service. Many utilities are already making investments that would make this possible. We use customers' measured willingness to pay to explore when the incremental investments needed to implement these capabilities would be justified. Under many circumstances, upgrades in advanced distribution systems could be justified for a customer charge of less than a dollar a month (plus the cost of electricity used during outages), and would be less expensive and safer than the proliferation of small portable backup generators. We also discuss issues of social equity, extreme events, and various sources of underlying uncertainty.

Suggested Citation

  • Sunhee Baik & M. Granger Morgan & Alexander L. Davis, 2018. "Providing Limited Local Electric Service During a Major Grid Outage: A First Assessment Based on Customer Willingness to Pay," Risk Analysis, John Wiley & Sons, vol. 38(2), pages 272-282, February.
    • Handle: RePEc:wly:riskan:v:38:y:2018:i:2:p:272-282
    DOI: 10.1111/risa.12838
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    References listed on IDEAS

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    1. Talukdar, Sarosh N. & Apt, Jay & Ilic, Marija & Lave, Lester B. & Morgan, M. Granger, 2003. "Cascading Failures: Survival versus Prevention," The Electricity Journal, Elsevier, vol. 16(9), pages 25-31, November.
    2. Anu Narayanan & M. Granger Morgan, 2012. "Sustaining Critical Social Services During Extended Regional Power Blackouts," Risk Analysis, John Wiley & Sons, vol. 32(7), pages 1183-1193, July.
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    Cited by:

    1. Dmitry Borisoglebsky & Liz Varga, 2019. "A Resilience Toolbox and Research Design for Black Sky Hazards to Power Grids," Complexity, Hindawi, vol. 2019, pages 1-15, June.
    2. Botelho, Vinícius, 2019. "Estimating the economic impacts of power supply interruptions," Energy Economics, Elsevier, vol. 80(C), pages 983-994.
    3. Rosales-Asensio, Enrique & de Simón-Martín, Miguel & Borge-Diez, David & Blanes-Peiró, Jorge Juan & Colmenar-Santos, Antonio, 2019. "Microgrids with energy storage systems as a means to increase power resilience: An application to office buildings," Energy, Elsevier, vol. 172(C), pages 1005-1015.
    4. Kaczmarski, Jesse I., 2022. "Public support for community microgrid services," Energy Economics, Elsevier, vol. 115(C).
    5. Hotaling, Chelsea & Bird, Stephen & Heintzelman, Martin D., 2021. "Willingness to pay for microgrids to enhance community resilience," Energy Policy, Elsevier, vol. 154(C).
    6. Sunhee Baik & Alexander L. Davis & M. Granger Morgan, 2019. "Illustration of a Method to Incorporate Preference Uncertainty in Benefit–Cost Analysis," Risk Analysis, John Wiley & Sons, vol. 39(11), pages 2359-2368, November.
    7. Ikramullah Khosa & Naveed Taimoor & Jahanzeb Akhtar & Khurram Ali & Ateeq Ur Rehman & Mohit Bajaj & Mohamed Elgbaily & Mokhtar Shouran & Salah Kamel, 2022. "Financial Hazard Assessment for Electricity Suppliers Due to Power Outages: The Revenue Loss Perspective," Energies, MDPI, vol. 15(12), pages 1-24, June.

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