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The economic impact of electricity losses

Author

Listed:
  • Maria Teresa Costa-Campi

    () (University of Barcelona and Chair of Energy Sustainability, Barcelona Institute of Economics)

  • Daniel Daví-Arderius

    () (University of Barcelona and Chair of Energy Sustainability)

  • Elisa Trujillo-Baute

    () (University of Warwick and Chair of Energy Sustainability, Barcelona Institute of Economics)

Abstract

Although electricity losses constitute an important, but inevitable, amount of wasted resources (and a share that has to be funded), they remain one of the lesser known parts of an electricity system, and this despite the fact that the decisions of generators, transmission and distribution system operators and consumers all impact on them. In this paper we analyse the effects of such losses from two perspectives: from that of consumption or outflows and from that of generation or inflows. Given that end-user consumption varies across the day, consumption has direct implications for electricity losses. Indeed, demand-side management policies seek to encourage consumers to use less energy during peak hours and to reduce network congestion. At the same time, from the perspective of generation, the recent growth in distributed generation has modified the traditional, unidirectional, downward flows in electricity systems. This affects losses as energy is produced in the lower voltage network, which is closer to points of consumption. In this paper we evaluate the impact of consumption patterns and different generation technologies on energy losses. To do so, we draw on data from a real electricity system with a high level of renewable penetration, namely, that of Spain between 2011 and 2013. To the best of our knowledge, this is the first paper to analyse the real impact of consumption and the effect of each generation technology on energy losses, offering an opportunity to evaluate the potential benefits of demand-side management policies and distributed generation. Based on our results, we make a number of regulatory recommendations aimed at exploiting to the full these potential benefits. Our results should serve as a baseline for countries that are in the early stages of implementing these policies.

Suggested Citation

  • Maria Teresa Costa-Campi & Daniel Daví-Arderius & Elisa Trujillo-Baute, 2016. "The economic impact of electricity losses," Working Papers 2016/4, Institut d'Economia de Barcelona (IEB).
  • Handle: RePEc:ieb:wpaper:doc2016-4
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    References listed on IDEAS

    as
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    Cited by:

    1. Daví-Arderius, Daniel & Sanin, María-Eugenia & Trujillo-Baute, Elisa, 2017. "CO2 content of electricity losses," Energy Policy, Elsevier, vol. 104(C), pages 439-445.
    2. repec:eco:journ2:2019-04-49 is not listed on IDEAS

    More about this item

    Keywords

    Regulation; networks; energy losses; distributed generation;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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