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Evaluating the Cost to Industry of Electricity Outages

Majid Hashemi (), Glenn Jenkins (), Jyoti Roop and Aygul Ozbafli ()
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Majid Hashemi: Department of Economics, Clemson University, Clemson, SC, USA
Jyoti Roop: Vice-Chairman of Jyoti Group of Companies, Nepal
Aygul Ozbafli: Senior Financial Analyst, African Development Bank

No 2018-14, Development Discussion Papers from JDI Executive Programs

Abstract: The unreliability of electricity supplies is a major cause of the high cost of manufacturing in developing countries. In this paper we propose a more accurate approach, the contribution method, to measure the cost imposed by power outages. We employ a rich, if not unique, set of data from the detailed operating accounts of three large manufacturing enterprises in Nepal. Estimating the true opportunity costs to the enterprises from lost production caused by power outages sheds light on the issue of cost measurement that is critical for the determination of the feasibility of mitigating measures. Furthermore, having such micro-based information on the value of lost load per kWh by firm or sector is critical for reducing the economic costs of planned outages by the electric utility.

Keywords: Electricity; Reliability; Outages; Opportunity Costs; Industry. (search for similar items in EconPapers)
JEL-codes: L94 Q41 Q48 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-reg
Date: 2018
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