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The Costs of Power Interruptions in Germany: A Regional and Sectoral Analysis

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Abstract

A high standard of security of electricity supply comes at serious electricity system costs. However, these system costs have to be balanced with the economic costs induced by an insecure supply of electricity. Following a macroeconomic approach, we analyze the economic costs imposed by potential power interruptions in Germany. Using an extensive dataset on industries and households, we estimate both Values of Lost Load and the associated hourly costs of power interruptions for different German regions and sectors. We find that interruption costs vary significantly over time, between sectors and regions. Peaking at midday on a Monday in December at 750 Mio € per hour, the average total national outage costs amount to approximately 430 Mio € per hour. A missing gigawatt hour creates average outage costs of about 7.6 Mio €.

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