Value of lost load for Georgian economy (დაკარგული დატვირთვის ღირებულება (Value of Lost Load – VoLL) საქართველოს ეკონომიკის სხვადასხვა დარგისთვის)

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.
• Agency for the Cooperation of Energy Regulators. (2020). Methodology for Calculating the Value of Lost Load, the Cost of New Entry and the Reliability Standard. • Beenstock M., Goldin E., Haitovsky Y. (1998). Response Bias in a Conjoint Analysis of Power Outages. Energy Economics, Vol. 20, 135-156. • Cambridge Economic Policy Associates. (2018). Study on the Estimation of The Value of Lost Load of Electricity Supply in Europe. • Commission Regulation (EU) No 431/2014. (2014). Annex A, 2.3. https://eur-lex.europa. eu/eli/reg/2014/431/oj /Last seen on June 24, 2021/ • Corwin J., Miles W. (1978). Impact Assessment of the 1977 New York City Blackout. • De Nooij M., Koopmans C., Bijvoet C. (2007). The Value of Supply Security: The Costs of Power Interruptions: Economic Input for Damage Reduction and Investment in Networks. Energy Economics, Vol. 29, 277–295 • Galt & Taggart. (2021). Auto Business in Georgia. sites/default/files/2021-05/17373.pdf /Last seen on 24 June, 2021/ • Georgian State Electro System. (2021). Ten-Year Network Development Plan of Georgia 2021-2031. NEW.pdf /Last seen on June 24, 2021/ • Kertesz D., Vokony I. (2019). Value of Lost Load Calculation and its Hungarian Aspect. Institute of Electrical and Electronics Engineers. • Leahy E., Tol S.J. R. (2011). An Estimate of the Value of Lost Load for Ireland. Energy Policy, Vol. 39, 1514-1520. • Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity. (2019). Article 2, 23, 25. https://eur-lex. /Last seen on June 24, 2021/. • National Statistics Office of Georgia. (2019a). Employment and Wages. https:// /Last seen on June 24, 2021/. • National Statistics Office of Georgia. (2019b). Energy Balance of Georgia. https:// / Last seen on June 24, 2021/. • Serra P., Fierro G. (1997). Outage Costs in Chilean Industry. Energy Economics, Vol. 19, 417-434.
Value of lost load, VoLL, unsupplied electricity, demand restraint, energy intensity
Economics and Business, №3, 2021, pp. 183-197