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Relationship between the economic cost and the reliability of the electric power supply system in city: A case in Shanghai of China

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  • Sun, Tianqing
  • Wang, Xiaohua
  • Ma, Xianguo

Abstract

This paper presents a model to quantify the impact of electric power outages on GDP by using Cobb-Douglas production function to develop an economic relationship between the reliability of the electric power supply system and the cost of electric energy unserved. Our findings show that average costs for providing a stable power supply are much lower than disruption costs, which is supported by recurring to the data available of Shanghai. Estimated by using Shanghai's macroeconomic data of 1990-2006, this relationship indicates that the impact of electricity service disruption on Shanghai's GDP is about 48.18 x 108 CNY in 2006, matching an alternative "back-of-envelope" estimate of 50.91 x 108 CNY. The estimated costs per kWh unserved are 1.81-10.26 CNY in 1990-2006, mirroring the increasing importance of electricity in the period's economic development. These results demonstrate the usefulness of our approach for quantifying the reliability benefits of investments in electricity infrastructure.

Suggested Citation

  • Sun, Tianqing & Wang, Xiaohua & Ma, Xianguo, 2009. "Relationship between the economic cost and the reliability of the electric power supply system in city: A case in Shanghai of China," Applied Energy, Elsevier, vol. 86(10), pages 2262-2267, October.
    • Handle: RePEc:eee:appene:v:86:y:2009:i:10:p:2262-2267
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    References listed on IDEAS

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    Cited by:

    1. Yuan, Peng & Pu, Yuran & Liu, Chang, 2021. "Improving electricity supply reliability in China: Cost and incentive regulation," Energy, Elsevier, vol. 237(C).
    2. Taro Ohdoko & Satoru Komatsu & Shinji Kaneko, 2013. "Residential preferences for stable electricity supply and a reduction in air pollution risk: a benefit transfer study using choice modeling in China," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(3), pages 309-328, July.
    3. Drouineau, Mathilde & Maïzi, Nadia & Mazauric, Vincent, 2014. "Impacts of intermittent sources on the quality of power supply: The key role of reliability indicators," Applied Energy, Elsevier, vol. 116(C), pages 333-343.
    4. 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.
    5. Bambawale, Malavika Jain & Sovacool, Benjamin K., 2011. "China's energy security: The perspective of energy users," Applied Energy, Elsevier, vol. 88(5), pages 1949-1956, May.
    6. Boyan Zhang & Mingming Wang, 2021. "How Will the Improvements of Electricity Supply Quality in Poor Regions Reduce the Regional Economic Gaps? A Case Study of China," Energies, MDPI, vol. 14(12), pages 1-18, June.
    7. Cheng, Y.S. & Wong, W.K. & Woo, C.K., 2013. "How much have electricity shortages hampered China's GDP growth?," Energy Policy, Elsevier, vol. 55(C), pages 369-373.
    8. Peng Ou & Ruting Huang & Xin Yao, 2016. "Economic Impacts of Power Shortage," Sustainability, MDPI, vol. 8(7), pages 1-21, July.
    9. Inna Čábelková & Wadim Strielkowski & Frank-Detlef Wende & Raisa Krayneva, 2020. "Factors Influencing the Threats for Urban Energy Networks: The Inhabitants’ Point of View," Energies, MDPI, vol. 13(21), pages 1-19, October.
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