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Optimal blackouts: Empirical results on reducing the social cost of electricity outages through efficient regional rationing


  • de Nooij, Michiel
  • Lieshout, Rogier
  • Koopmans, Carl


The demand and supply of electricity must always balance. If supply falls short of demand, then price increases or voluntary demand reductions might help to maintain the balance in the system. Should these prove insufficient, then rationing is necessary. Rationing means interrupting the electricity delivery to certain areas or specific electricity users in order to preserve system stability. Since the cost of an interruption differs among electricity users, the social cost of different rationing mechanisms varies. This paper explores the cost difference between efficient regional rationing (minimizing social costs by rationing regions with low costs first) and random rationing (not taking into account social costs). For this the value of lost load calculations of De Nooij et al. [De Nooij, M., Bijvoet, C.C., Koopmans, C.C., (2007). The value of supply security: The costs of power interruptions: Economic input for damage reduction and investment in networks. Energy Economics, 29 (2), 277-295.] are refined. For the Netherlands, it is shown that efficient rationing can reduce social costs by 42 to 93%.

Suggested Citation

  • de Nooij, Michiel & Lieshout, Rogier & Koopmans, Carl, 2009. "Optimal blackouts: Empirical results on reducing the social cost of electricity outages through efficient regional rationing," Energy Economics, Elsevier, vol. 31(3), pages 342-347, May.
  • Handle: RePEc:eee:eneeco:v:31:y:2009:i:3:p:342-347

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    References listed on IDEAS

    1. Mohan Munasinghe & Mark Gellerson, 1979. "Economic Criteria for Optimizing Power System Reliability Levels," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 353-365, Spring.
    2. 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.
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    Cited by:

    1. Alastaire Sèna ALINSATO, 2015. "Economic Valuation of Electrical Service Reliability for Households’ in Developing Country: A Censored Random Coefficient Model Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 5(1), pages 352-359.
    2. Lachman, Daniël A., 2011. "Leapfrog to the future: Energy scenarios and strategies for Suriname to 2050," Energy Policy, Elsevier, vol. 39(9), pages 5035-5044, September.
    3. Mubashir Qasim & Koji Kotani, 2014. "An empirical analysis of energy shortage in Pakistan," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 21(1), pages 137-166, June.
    4. Aaron Praktiknjo, 2016. "The Value of Lost Load for Sectoral Load Shedding Measures: The German Case with 51 Sectors," Energies, MDPI, Open Access Journal, vol. 9(2), pages 1-17, February.
    5. de Nooij, Michiel & Baarsma, Barbara & Bloemhof, Gabriël & Slootweg, Han & Dijk, Harold, 2010. "Development and application of a cost-benefit framework for energy reliability: Using probabilistic methods in network planning and regulation to enhance social welfare: The N-1 rule," Energy Economics, Elsevier, vol. 32(6), pages 1277-1282, November.
    6. repec:eee:appene:v:212:y:2018:i:c:p:141-150 is not listed on IDEAS
    7. Marcos Perroni & Luciano Luiz Dalazen & Wesley Vieira da Silva & Sergio Eduardo Gouvêa da Costa & Claudimar Pereira da Veiga, 2015. "Evolution of Risks for Energy Companies from the Energy Efficiency Perspective: The Brazilian Case," International Journal of Energy Economics and Policy, Econjournals, vol. 5(2), pages 612-623.
    8. repec:eee:eneeco:v:64:y:2017:i:c:p:272-285 is not listed on IDEAS
    9. repec:gam:jeners:v:9:y:2016:i:2:p:116:d:64126 is not listed on IDEAS
    10. Zachariadis, Theodoros & Poullikkas, Andreas, 2012. "The costs of power outages: A case study from Cyprus," Energy Policy, Elsevier, vol. 51(C), pages 630-641.
    11. Zhang, Lijun & Xia, Xiaohua & Zhang, Jiangfeng, 2014. "Improving energy efficiency of cyclone circuits in coal beneficiation plants by pump-storage systems," Applied Energy, Elsevier, vol. 119(C), pages 306-313.
    12. Lamessa Tariku ABDISA, 2018. "Power Outages, its Economic Cost and Firm Performance: Evidence from Ethiopia," Departmental Working Papers 2018-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    13. 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.
    14. Wolf, André & Wenzel, Lars, 2015. "Welfare implications of power rationing: An application to Germany," Energy, Elsevier, vol. 84(C), pages 53-62.
    15. 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).
    16. Johansson, Bengt, 2013. "A broadened typology on energy and security," Energy, Elsevier, vol. 53(C), pages 199-205.
    17. Kim, Kayoung & Nam, Heekoo & Cho, Youngsang, 2015. "Estimation of the inconvenience cost of a rolling blackout in the residential sector: The case of South Korea," Energy Policy, Elsevier, vol. 76(C), pages 76-86.
    18. 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.


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