A stochastic model for the measurement of electricity outage costs
Journal Article
·
· Energy Journal; (United States)
- Tel Aviv Univ. (Israel)
The measurement of customer outage costs has recently become an important subject of research for electric utilities. This paper uses a stochastic dynamic model as the starting point in developing a market-based method for the evaluation of outage costs. Specifically, the model postulates that once an electricity outage occurs, all production activity stops. Full production is resumed once the electricity outage is over. This process repeats itself indefinitely. The business customer maximizes his expected discounted profits (the expected value of the firm), taking into account his limited ability to respond to repeated random electricity outages. The model is applied to 11 industrial branches in Israel. The estimates exhibit a large variation across branches. 34 refs., 3 tabs.
- OSTI ID:
- 6757357
- Journal Information:
- Energy Journal; (United States), Journal Name: Energy Journal; (United States) Vol. 14:2; ISSN ENJODN; ISSN 0195-6574
- Country of Publication:
- United States
- Language:
- English
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