Valuing blackouts and lost leisure: Estimating electricity interruption costs for households across the European Union

Abstract

Security of power supply is a crucial element of energy system planning and policy. However, the value that society places on it is not clearly known. Several previous studies estimate the cost of electricity interruptions for individual European Union (EU) Member States – as the Value of Lost Load (VoLL). In this paper, we use a production-function approach to estimate the average annual VoLL for households in all twenty-eight EU Member States. This is the first time that a unified approach has been applied for a single year across the EU. VoLL is further presented on an hourly basis to better understand the impact of the time at which the interruption occurs. Finally, we analyse the impact of ‘substitutability factor’ – the proportion of household activities that are electricity-dependent – on the VoLL. Results from this study show that the differences in VoLL between EU Member States is significantly large, ranging from 3.2 €/kWh in Bulgaria to 15.8 €/kWh in the Netherlands. The annual average VoLL for the EU was calculated to be 8.7 €/kWh. Results from this study can be used to inform key areas of European energy policy and market design.