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The Economic Benefits of Mitigating the Risk of Unplanned Power Outages

Author

Listed:
  • Majid Hashemi
  • Glenn Jenkins

    (Queen's University)

Abstract

This paper takes on a novel perspective to the overloading of distribution substations by considering the common-pool characteristics of electric infrastructure capacity. Using firm- and substation-level data from a sample of Nepalese firms, the results provide evidence of common-pool resource (CPR) problems across substations’ ownership boundaries: firms with captive substations experience fewer and shorter unplanned outages than firms connected to shared substations. Based on these findings, private investments in captive substations emerge as a coping mechanism against unreliable electricity supply. Lastly, an appraisal framework for such investments is developed and used to quantify the economic benefits to Nepal’s economy.

Suggested Citation

  • Majid Hashemi & Glenn Jenkins, 2021. "The Economic Benefits of Mitigating the Risk of Unplanned Power Outages," Working Paper 1468, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:1468
    as

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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/wpaper/qed_wp_1468.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Electricity reliability; Opportunity cost of power outages; Common-pool resource;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H4 - Public Economics - - Publicly Provided Goods
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation

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