Value of lost load for Georgian economy (დაკარგული დატვირთვის ღირებულება (Value of Lost Load – VoLL) საქართველოს ეკონომიკის სხვადასხვა დარგისთვის)
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Date
2021
Journal Title
Journal ISSN
Volume Title
Publisher
Ivane Javakhishvili Tbilisi State University Press
Abstract
The article estimates the economic loss caused by electricity supply
inteTrruption for Georgian economy. To do so, the Value of Lost Load (VoLL) is
used, which is an internationally accepted economic indicator that estimates the
average cost of 1 kilowatt-hour (kWh) of unsupplied electricity. Since electricity is
an intermediate commodity, the effect of supply interruption varies for categories
of consumers. Therefore, it is necessary to estimate this loss by sectors. Although
the data needed to estimate VoLL according to the methodology proposed for
European Union is not available in Georgia, we use another methodology for
which the reliable data is available.
With the data collected by the National Statistics Office of Georgia (Geostat),
the production function approach is used to estimate VoLL for different sectors,
divided according to the NACE Rev.2 classification. According to 2019 data, 1 kWh
of undelivered electricity, on average, causes an overall loss of 3.6 GEL for different
sectors of the economy. These values range from 0.32 GEL/kWh (basic metals,
mining, and quarrying) to 23.19 GEL/kWh (construction sector). The median value
for 14 estimated sectors is 3.65 GEL. As for households, 1 kWh of unsupplied
electricity costs 5.24 GEL, which is quite high compared to other sectors.
Electricity supply interruptions harm industrial, commercial, and household
sectors. In case of any capacity shortages, the transmission system operator is obliged to efficiently redistribute resources to minimize the overall loss to the
economy. The results of our calculation shall be used for optimization of load
shedding and system restoration procedures by transmission system operator and
should be used for calculation of single VoLL for reliability standard derivation.
Description
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Keywords
Value of lost load, VoLL, unsupplied electricity, demand restraint, energy intensity
Citation
Economics and Business, №3, 2021, pp. 183-197