The Economic Benefits of Mitigating the Risk of Unplanned Power Outages

Majid Hashemi () and Glenn Jenkins ()

No 1468, Working Paper from Economics Department, Queen's University

Abstract: This paper takes on a novel perspective to the overloading of distribution substations by considering the common-pool characteristics of electric infrastructure capacity. Using firm- and substation-level data from a sample of Nepalese firms, the results provide evidence of common-pool resource (CPR) problems across substations’ ownership boundaries: firms with captive substations experience fewer and shorter unplanned outages than firms connected to shared substations. Based on these findings, private investments in captive substations emerge as a coping mechanism against unreliable electricity supply. Lastly, an appraisal framework for such investments is developed and used to quantify the economic benefits to Nepal’s economy.

Keywords: Electricity reliability; Opportunity cost of power outages; Common-pool resource (search for similar items in EconPapers)
JEL-codes: D61 H4 L43 Q41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2021-10
New Economics Papers: this item is included in nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1468

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