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The value of electricity reliability: Evidence from battery adoption

David Brown and Lucija Muehlenbachs

Journal of Public Economics, 2024, vol. 239, issue C

Abstract: To avoid electric-infrastructure-induced wildfires, millions of Californians 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, with an average of $4,980/MWh, suggests California’s wildfire-prevention outages resulted in losses from foregone consumption of $406 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)
Date: 2024
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Working Paper: The Value of Electricity Reliability: Evidence from Battery Adoption (2024) Downloads
Working Paper: The Value of Electricity Reliability: Evidence from Battery Adoption (2024) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:239:y:2024:i:c:s004727272400152x

DOI: 10.1016/j.jpubeco.2024.105216

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