The Value of Electricity Reliability: Evidence from Battery Adoption

David Brown and Lucija Muehlenbachs

No 2023-5, Working Papers from University of Alberta, Department of Economics

Abstract: To avoid electric-infrastructure-induced wildfires, millions of Californians have had their power cut for hours to days at a time. We show that rooftop solar-plus-battery storage systems increased in zip codes with the longest power outages. Rooftop solar panels alone will not help a household avert outages, but a solar-plus-battery-storage system will. Using this fact, we obtain a revealed preference estimate of the willingness to pay for electricity reliability, the Value of Lost Load, a key parameter for electricity market design. Our estimate, of around $4,300/MWh, suggests California's wildfire-prevention outages resulted in losses from foregone consumption of $322 million to residential electricity consumers.

Keywords: batteries; reliability; averting expenditures; power outages; Value of Lost Load (search for similar items in EconPapers)
JEL-codes: Q40 Q54 Q58 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2023-04-18, Revised 2024-07-26
New Economics Papers: this item is included in nep-dcm, nep-ene, nep-reg and nep-res
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Related works:
Journal Article: The value of electricity reliability: Evidence from battery adoption (2024)
Working Paper: The Value of Electricity Reliability: Evidence from Battery Adoption (2024)
Working Paper: The Value of Electricity Reliability: Evidence from Battery Adoption (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:albaec:2023_005

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