A firm level analysis of outage loss differentials and self-generation: evidence from African business enterprises


Change log
Authors
Oseni, MO 
Pollitt, MG 
Abstract

This study examines the outage loss differential between firms that engage in backup generation and those that do not. Unmitigated outage losses were estimated to be US$2.01–US$23.92 per kWh for firms engaging in self-generation, and range from US$1.54–US$32.46 per kWh for firms without self-generation. We also find that firms engaging in self-generation would have suffered additional 1–183% outage losses had they not invested in self-generation. On the other hand, firms without self-generation would have reduced their outage losses by around 6–46% if they had engaged in selfgeneration. Further analyses however reveal that, although engagement in selfgeneration reduced outage losses, a firm engaging in self-generation may still suffer a greater unmitigated outage loss relative to a firm without a backup generator. The relative outage losses depend on the relative vulnerability of the operations of the two sets of firms to power interruption, and the relative generating capacity of a selfgenerating firm to its own required electricity loads. Policy reforms that allow firms, whose operations are highly vulnerable to outages, to make a binding contract with utilities in order to get preferential supply are recommended.

Description
Keywords
Self-generation, Outage loss, Firms, Value of lost load, Sub-Saharan Africa, South Asia
Journal Title
Energy Economics
Conference Name
Journal ISSN
1873-6181
1873-6181
Volume Title
52B
Publisher
Elsevier BV