Trade-offs between system cost and supply security in municipal energy system design: An analysis considering spatio-temporal disparities in the Value of Lost Load

Febin Kachirayil, David Huckebrink, Valentin Bertsch and Russell McKenna

Applied Energy, 2025, vol. 381, issue C, No S0306261924022797

Abstract: The Value of Lost Load is a key metric to assess the economic impact of power supply interruptions and establish supply security standards within the European Union. Current EU regulations recommend a single average value per country, even though welfare losses from supply interruptions vary significantly across time and space. This study investigates the implications of this simplification by deriving county-level Value of Lost Load estimates at an hourly resolution for the residential sector in Germany through a production function approach. Load curtailment options at different costs are integrated into an urban energy system optimization model to evaluate their effects on system cost and reliability indicators. The findings demonstrate that load curtailment of 0.12% can yield outsized benefits and reduce system costs by 3%, primarily by decreasing storage requirements, thereby alleviating the pressure that is put on the municipal energy systems. Regions with cheaper load curtailment can obtain larger cost reductions, but only at the expense of a disproportionate reduction in supply security. Introducing temporal detail on the other hand results in lower system costs while mitigating customer impacts through fewer curtailed hours and a notable shift towards nighttime periods. Empowering customers through smart infrastructure deployment and tariff reforms to take energy conservation measures is crucial to maximize these benefits.

Keywords: Value of Lost Load; Security of electricity supply; Urban energy systems; Demand reduction; Power interruption characteristics; Energy system optimization (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0306261924022797
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:appene:v:381:y:2025:i:c:s0306261924022797

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/bibliographic
http://www.elsevier. ... 405891/bibliographic

DOI: 10.1016/j.apenergy.2024.124896

Access Statistics for this article

Applied Energy is currently edited by J. Yan

More articles in Applied Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().