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Assessing the business interruption costs from power outages in China

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  • Chen, Hao
  • Yan, Haobo
  • Gong, Kai
  • Geng, Haopeng
  • Yuan, Xiao-Chen

Abstract

With the increasing frequency of extreme weather events, cyber attacks and natural disasters, power system reliability is facing unprecedented challenges. To contribute to a more targeted electricity reliability policy in China, this study develops a Dynamic Inoperability Input-output Model to assess the business interruption costs (BICs) from a provincial extremely big electricity outage event. The time-varying inoperability is first simulated for different sectors over the recovery period with consideration of the sectoral interdependencies. Then, the BICs are estimated for different sectors and the most vulnerable sectors to power outages are identified. At last, the impacts of four influencing factors on the estimated BICs are explored in the sensitivity analysis section. Our major findings are that: (1) The total BIC of an outage event is about 1.44 billion yuan, and the first 24 h of the recovery period account for about 70% of the total BICs. (2) 2% of a sector's inoperability caused by power outages will, on average, be transmitted to other sectors due to their interdependencies. (3) The chemical sector has the biggest economic losses from power outages, while water supply sector has the largest peak inoperability from power outages.

Suggested Citation

  • Chen, Hao & Yan, Haobo & Gong, Kai & Geng, Haopeng & Yuan, Xiao-Chen, 2022. "Assessing the business interruption costs from power outages in China," Energy Economics, Elsevier, vol. 105(C).
    • Handle: RePEc:eee:eneeco:v:105:y:2022:i:c:s0140988321006010
    DOI: 10.1016/j.eneco.2021.105757
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