The Economies of Alternative Levels of Reliability for Electric Power Generation Systems

Michael L. Telson

Bell Journal of Economics, 1975, vol. 6, issue 2, 679-694

Abstract: Providing excess electrical generation capacity for reliability purposes has an economic cost; it is also true that higher reliability adds to the value of electric service. After some point, however, the additional benefits do not warrant the additional cost. In this paper we examine the considerations that should determine sensible reliability levels for electric generation systems. We construct a cost/benefit argument which suggests -- subject to various provisos that we make -- that the present "1-day-in-10-year" loss of load probability target reliability planning criterion may be uneconomically high and that these targets might reasonably be reduced to at least a "5-day-in-10-year" level.

Date: 1975
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