Economic impact of electricity supply interruptions in South Africa

Abstract

In past studies on the costs of interruptions of electricity supply in South Africa, the concepts of sporadic and chronic interruptions were introduced. Cost was modelled using different parameters, and the measurement of customer interruption cost (CIC) was acquired through surveys. Rotational load shedding, as experienced during more than a decade in South Africa, shares many characteristics with chronic interruptions and large system collapse scenarios. Since CIC data are based on electricity customers' valuations of their impacts from electricity interruptions, and allow only for a bottom-up estimation of the economic cost of large electricity interruption events (without considering sectoral interdependencies), an alternative assessment of the cost using a suitable macroeconomic model that employs less subjective data allows for a validation of CIC-based results and a determination of a plausible range of estimates of the cost of large electricity interruptions. We test this proposition using a combination of a time-dependent probabilistic CIC model based on CIC survey data, and a dynamic inoperability input-output model (DIIM) that accounts for sectoral interdependencies, economic resilience and the temporal variation of electricity interruption impacts. The results lead to estimates of the costs of large interruptions of electricity supply in South Africa.