The Cost of Power Outages in the Business and Public Sectors in Israel: Revealed Preference vs. Subjective Valuation

Abstract

Cross-section data on investment in back-up generators and uninterruptable power supplies (UPS) are used to infer the implied cost of electricity outages in the business and public sectors in Israel. Two-limit tobit models of the demand for back-up are estimated and used to simulate the mitigated and unmitigated cost of power outages. These "revealed preference estimates of outage costs are then compared with estimates based on the method of subjective evaluation.

Exploring Firm-Level Innovation and Productivity in Developing Countries: The Perspective of Caribbean Small States

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Assessing the options for a competitive electricity market in Israel

“…Our inclusion of a regulated Supra-Peak firm in the generation market reflects the need for a mechanism to maintain adequate capacity and service reliability (as well as avoiding excessive price spikes) because Israeli electricity consumers have large outage costs, comparable to those in a developed country (Beenstock et al, 1997;ERCG, 2007). In a competitive market (one without pivotal suppliers, usually the case for peak power); however, suppliers are paid only their average variable costs.…”

Power Outages and Production Efficiency of Firms in Africa

“…Therefore the need to explore the influence of power outages on firm production efficiencies cannot be overemphasized. Studies elsewhere on power outages focused on the impact of power outages on output of firms (Alam, 2013) and the costs of power outages (Adenikinju, 2005;Beenstock et al, 1997;Bernstein and Heganazy, 1988;Caves et al, 1992;Lee and Anas, 1992). Only few of these studies looked at the impact of the number of power outages on production efficiency of firms.…”