A back of the envelope estimate of the average non-residential outage cost in the US

Chi Keung WOO, A. TISHLER, J. ZARNIKAU, Y. CHEN

Research output: Contribution to journalArticlespeer-review

Abstract

Using the Envelope Theorem, this paper derives a simple formula for market-based estimation of an average non-residential outage cost. Its key finding is that the 2019 estimate for the US is about US$10 per kWh unserved, below the regional estimates of approximately US$20 to US$40 per kWh unserved previously found by a large national study that uses contingent valuation (CV) survey data. This finding’s policy implication is reductions in marginal-cost-based electricity prices, an electric grid’s need for transmission and generation capacity and demand response resources, a local distribution company’s reliability-related investment, an independent system operator’s cap for wholesale prices, and a regulator’s penalty for reliability deterioration under performance-based regulation. Copyright © 2021 Elsevier Inc.
Original languageEnglish
Article number106930
JournalThe Electricity Journal
Volume34
Issue number4
Early online date17 Feb 2021
DOIs
Publication statusPublished - May 2021

Citation

Woo, C. K., Tishler, A., Zarnikau, J., & Chen, Y. (2021). A back of the envelope estimate of the average non-residential outage cost in the US. The Electricity Journal, 34(4). Retrieved from https://doi.org/10.1016/j.tej.2021.106930

Keywords

  • Non-residential electricity outage cost
  • Envelope theorem
  • Market-Based estimation
  • US$ per kWh unserved
  • USA

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