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Electricity Supply Interruptions: Sectoral Interdependencies and the Cost of Energy Not Served for the Scottish Economy

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  • Rahmatallah Poudineh and Tooraj Jamasb

Abstract

Modern economies and infrastructure sectors rely upon secure electricity supplies. Due to sectoral interdependencies, major interruptions cause cascading effects in the economy. This paper investigates the economic effects of major power supply disruptions taking such interdependencies into account. We apply a dynamic in-operability input-output model (DIIM) to 101 sectors, including households, of the Scottish economy in 2009 to explore the direct, indirect, and induced effects of supply interruptions. We estimate the societal cost of energy not supplied (SCENS) due to an interruption. The results show that the most economically affected industries, following an outage, are different from the most inoperable ones. The results also indicate that SCENS varies with the duration of a power cut, ranging from £4,300/MWh for a one-minute outage to £8,100/MWh for a three-hour (and higher) interruption. The results can be used to design policies for contingencies and preventive investments in the power sector.

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  • Rahmatallah Poudineh and Tooraj Jamasb, 2017. "Electricity Supply Interruptions: Sectoral Interdependencies and the Cost of Energy Not Served for the Scottish Economy," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    • Handle: RePEc:aen:journl:ej38-1-poudineh
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    Cited by:

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    3. Wang, Qianzi & Zhou, Qi & Lin, Jin & Guo, Sen & She, Yunlei & Qu, Shen, 2024. "Risk assessment of power outages to inter-regional supply chain networks in China," Applied Energy, Elsevier, vol. 353(PB).
    4. Sinan Küfeoğlu & Niyazi Gündüz & Hao Chen & Matti Lehtonen, 2018. "Shadow Pricing of Electric Power Interruptions for Distribution System Operators in Finland," Energies, MDPI, vol. 11(7), pages 1-14, July.
    5. Pradeep V. Mandapaka & Edmond Y. M. Lo, 2023. "Assessing Shock Propagation and Cascading Uncertainties Using the Input–Output Framework: Analysis of an Oil Refinery Accident in Singapore," Sustainability, MDPI, vol. 15(2), pages 1-24, January.
    6. Apergis, Nicholas & Polemis, Michael, 2018. "Electricity supply shocks and economic growth across the US states: evidence from a time-varying Bayesian panel VAR model, aggregate and disaggregate energy sources," MPRA Paper 84954, University Library of Munich, Germany.
    7. Chen, Hao & Yan, Haobo & Gong, Kai & Geng, Haopeng & Yuan, Xiao-Chen, 2022. "Assessing the business interruption costs from power outages in China," Energy Economics, Elsevier, vol. 105(C).
    8. Gunduz, N & Kufeoglu, S. & Winzer, C. & Lehtonen, M., 2018. "Regional Differences in Economic Impacts of Power Outages in Finland," Cambridge Working Papers in Economics 1841, Faculty of Economics, University of Cambridge.

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    • F0 - International Economics - - General

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