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

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Oseni, MO 
Pollitt, MG 

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.

Self-generation, Outage loss, Firms, Value of lost load, Sub-Saharan Africa, South Asia
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Energy Economics
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Elsevier BV