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Evaluating the Cost to Industry of Electricity Outages

Author

Listed:
  • Majid Hashemi

    (Department of Economics, Clemson University, Clemson, SC, USA)

  • Glenn P. Jenkins

    (Department of Economics, Queen's University, Kingston, Canada and Eastern Mediterranean University, North Cyprus)

  • Roop Jyoti

    (Vice-Chairman of Jyoti Group of Companies, Nepal)

  • Aygul Ozbafli

    (Senior Financial Analyst, African Development Bank)

Abstract

The unreliability of electricity supplies is a major cause of the high cost of manufacturing in developing countries. In this paper we propose a more accurate approach, the contribution method, to measure the cost imposed by power outages. We employ a rich, if not unique, set of data from the detailed operating accounts of three large manufacturing enterprises in Nepal. Estimating the true opportunity costs to the enterprises from lost production caused by power outages sheds light on the issue of cost measurement that is critical for the determination of the feasibility of mitigating measures. Furthermore, having such micro-based information on the value of lost load per kWh by firm or sector is critical for reducing the economic costs of planned outages by the electric utility.

Suggested Citation

  • Majid Hashemi & Glenn P. Jenkins & Roop Jyoti & Aygul Ozbafli, 2018. "Evaluating the Cost to Industry of Electricity Outages," Development Discussion Papers 2018-14, JDI Executive Programs.
    • Handle: RePEc:qed:dpaper:4523
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    References listed on IDEAS

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    Cited by:

    1. Naghmeh Niroomand & Glenn P. Jenkins, 2018. "Estimation of Households’ and Businesses’ Willingness to Pay for Improved Reliability of Electricity Supply in Nepal," Development Discussion Papers 2018-05, JDI Executive Programs.
    2. Hashemi, Majid & Jenkins, Glenn, 2022. "Can privatization of distribution substations improve electricity reliability for non-residential customers? An application to Nepal," Utilities Policy, Elsevier, vol. 74(C).
    3. Muhammad Luqman & Mirajul Haq & Iftikhar Ahmad, 2021. "Power Outages and Technical Efficiency of Manufacturing Firms: Evidence from Selected South Asian Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 133-140.
    4. Chen, Hao & Chen, Xi & Niu, Jinye & Xiang, Mengyu & He, Weijun & Küfeoğlu, Sinan, 2021. "Estimating the marginal cost of reducing power outage durations in China: A parametric distance function approach," Energy Policy, Elsevier, vol. 155(C).
    5. Boyan Zhang & Mingming Wang, 2021. "How Will the Improvements of Electricity Supply Quality in Poor Regions Reduce the Regional Economic Gaps? A Case Study of China," Energies, MDPI, vol. 14(12), pages 1-18, June.
    6. Hashemi, Majid, 2021. "The economic value of unsupplied electricity: Evidence from Nepal," Energy Economics, Elsevier, vol. 95(C).
    7. Majid Hashemi & Glenn Jenkins, 2021. "The Economic Benefits of Mitigating the Risk of Unplanned Power Outages," Working Paper 1468, Economics Department, Queen's University.
    8. Hasan M. Salman & Jagadeesh Pasupuleti & Ahmad H. Sabry, 2023. "Review on Causes of Power Outages and Their Occurrence: Mitigation Strategies," Sustainability, MDPI, vol. 15(20), pages 1-34, October.
    9. Ebrahim Karan & Sadegh Asgari, 2021. "Resilience of food, energy, and water systems to a sudden labor shortage," Environment Systems and Decisions, Springer, vol. 41(1), pages 63-81, March.

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    More about this item

    Keywords

    Electricity; Reliability; Outages; Opportunity Costs; Industry.;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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