Reliability Technology Issues and Needs Assessment
The Economic Value of Reliability
A study conducted by Lawrence Berkeley National Laboratory researchers Kristina Hamachi-LaCommare and Joe Eto for the U.S. Department of Energy's Office of Electric Transmission and Distribution estimates that electric power outages and blackouts cost the nation about $80 billion annually.
The costs of these power interruptions, which can last from just seconds to days, is a key missing element from recent discussions to modernize the grid. "The big blackout that hit the northeast in the summer of 2003 really focused attention on the state of the electric power grid," says Hamachi-LaCommare. "Immediately after the blackout, there were calls for investments to modernize the grid ranging from $50 and 100 billion. We wanted to add a key missing piece of information to these discussions, namely, the value these investments might bring in the form of improved reliability or fewer or shorter power interruptions."
The starting point lies in establishing a baseline on how much these interruptions cost businesses and consumers today. After reviewing the literature and finding significant gaps in previous estimates, Hamachi-LaCommare and Eto began to systematically assess and fill these gaps.
The Berkeley Lab study aggregates the best available data from three sources: surveys on the value electricity customers place on uninterrupted service, information recorded by electric utilities on power interruptions, and information from the U.S. Energy Information Administration on the number, location and type of U.S. electricity customers. Based on the data available, the researchers divided power interruptions into those that last less than five minutes, and those that are longer. The longer interruptions are generally characterized by their duration (length of time of each interruption), and frequency (number of interruptions per service territory).
The researchers caution that there are uncertainties in the available data on power interruptions, and these gaps could mean that the true costs of interruptions could be higher or lower by tens of billions of dollars. They have called for a national effort to collect better information on these costs.
- Berkeley Lab Study Estimates $80 Billion Annual Cost of Power Interruptions
(February 2, 2005)
- Completed study of the economic value of reliability.
(581 KB PDF, 148 pp)
Lawrence Berkeley National Laboratory