Along with priceless levels of aggravation and inconvenience, electric power outages and blackouts cost America around $80 billion annually, according to a study conducted by researchers at Lawrence Berkeley National Laboratory.
Researchers Kristina Hamachi-LaCommare and Joe Eto of the U.S. Department of Energys Office of Electric Transmission and Distribution found the costs of power interruptions, which can last from just seconds to days, is a key missing element from recent discussions to modernize the nation's power grid. The big blackout that hit the northeast in the summer of 2003 really focused attention on the state of the electric power grid, says Hamachi-LaCommare, who, like Eto, is a staff scientist with Berkeley Labs Environmental Energy Technologies Division. Immediately after the blackout, there were calls for investments to modernize the grid ranging from $50 and 100 billion. We wanted to add a key missing piece of information to these discussions, namely, the value these investments might bring in the form of improved reliability or fewer or shorter power interruptions.
The starting point lies in establishing a baseline on how much these interruptions cost businesses and consumers today. After reviewing the literature and finding significant gaps in previous estimates, Hamachi-LaCommare and Eto began to systematically assess and fill these gaps.
The Berkeley Lab study aggregates the best available data from three sources: surveys on the value electricity customers place on uninterrupted service, information recorded by electric utilities on power interruptions, and information from the U.S. Energy Information Administration on the number, location and type of U.S. electricity customers. Based on the data available, the researchers divided power interruptions into those that last less than five minutes, and those that are longer. The longer interruptions are generally characterized by their duration (length of time of each interruption), and frequency (number of interruptions per service territory).
The researchers caution that there are uncertainties in the available data on power interruptions, and these gaps could mean that the true costs of interruptions could be higher or lower by tens of billions of dollars. They have called for a national effort to collect better information on these costs.
Costs by Sector The study estimates the total cost to the U.S. of power interruptions at about $80 billion per year. Of this, $57 billion (73 percent) is from losses in the commercial sector and $20 billion (25 percent) in the industrial sector. The reason for the commercial sectors high share of these cost is the large number of commercial sector customers, which includes small as well as large businesses, and the high cost per outage per customer, notes Hamachi-LaCommare. The industrial sectors cost per outage per customer is significantly higher than those of the commercial customers, but there are only 1.6 million industrial customers, compared to 14.9 million commercial customers.
The authors estimate residential losses at $1.5 billion, or only about 2 percent of the total. Yet, Eto notes, It is difficult to put a dollar value on the inconvenience or hassle associated with power interruptions affecting residential electricity customers. In addition, our method did not take into account the effects on residential customers of extended outages lasting many hours or days, since these are very rare occurrences, according to the data we were able to collect. A problem with the data is that some utilities, by convention, do not include outages caused by major natural events, such as hurricanes or ice storms, in their statistics.
Another important conclusion of the study is that momentary interruptions, which are more frequent, have a bigger impact on the total cost of interruptions than sustained interruptions, which are less frequent. Momentary interruptions were responsible for two-thirds of the cost, at $52 billion, while sustained interruptions of five minutes or more caused $26 billion. This finding underscores that fact that, for many commercial and industrial customers, it is the length of the down-time resulting from a loss of power that determines the cost of interruption, not necessarily the length of interruption itself, according to Eto.
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