The Impact of Power Outages in the Literature

Microeconomic analyses of the impact of power outages do not suffer from the oversimplifying assumptions that macroeconomic analyses do, but microeconomic analyses relying on firm-level surveys are constrained by the accuracy of answers given by respondents. Research has found that power outages adversely impact productivity, but that the impact on manufacturing subsectors is not equal, and that neither is the downstream impact of an affected sector. Research has found that firms would be willing to shift their work timings if lower off-peak tariffs were offered, thus abating peak demand. Fewer long-duration interruptions are less damaging than several very short outages. Firms have multiple coping mechanisms, of which using backup diesel generation is one. Characteristics that predict whether firms use backup diesel generation are firm size, age, export orientation and sector. With fewer outages, firms were less equipped to respond to them, and so the bigger the individual cost when they did occur. Zambia experienced power outages prior to 2015, but not to the same extent, as demand caught up with Zambia’s supply. Manufacturing growth slowed. Lafarge in Zambia attributed its reduced revenues and profits from 2014 to 2016 to outages. Backup diesel generation accounted for about 10% of Zambia’s emissions in some months of 2019.