Frontier analyses value of electricity supply security on behalf of RWE
The reliability of electricity supply in Germany is high by international standards. Looking ahead, though, it is unclear whether current market incentives will ensure the sufficient level of infrastructure investment required to maintain this high quality level. A lack of investment might cause bottlenecks both in the network and in generation and hence jeopardize the future level of reliability. A decline in infrastructure investment activity could lead to more frequent interruptions in power supply, which could create additional costs elsewhere in the economy. In the case of a shortage of generation capacity, the resultant high power prices might place a financial burden on consumers.
Frontier (Europe) assessed this “value of lost load” for Germany in a recently completed study commissioned by the German power company RWE. Through an analysis of 25 international surveys the economic costs of each non-supplied kWh of electricity due to interruptions were estimated as falling within the range 8 – 16 €. Therefore, a reliable power supply has a value that exceeds the price of electricity typically by a factor between ten and one hundred.
Based on these results Frontier has derived the potential economic costs for different scenarios of deterioration in the reliability of Germany’s power supply. A fall in reliability to a level similar to that of Spain, for instance, would give increase the cost of interruptions in the German economy by 1.5 – 3.2 billion € per year.
Versión para imprimir