Power outages now cost Swedish factories 23 times more than lost electricity alone
A new analysis of Swedish manufacturing reveals that the true cost of electricity disruptions has nearly doubled since 2004, driven by production shutdowns and restart expenses. As grids shift toward renewable energy and face growing reliability risks, these findings suggest companies and policymakers dramatically underestimate the economic stakes of power failures.
Originaltitel: Values and metrics of lost load in the Swedish manufacturing industry: a conceptual and empirical analysis
<p>The power system is undergoing a transition toward more intermittent energy sources alongside rising electricity demand, both of which increase the risk of supply disruptions. In this context, understanding the societal value of reliable electricity is critical. The standard metric for outage costs is the value of lost load (VoLL), which reflects the economic loss per unit of unserved electricity. However, VoLL varies widely across firms and sectors, making cross-industry comparisons challenging. A more operational measure is the cost per hour (CpH) of interruption, which expresses outage costs in time-equivalent terms and is often more intuitive for practical decision-making. Our analysis, based on firm-level data on electricity use and economic output, shows that the cost of power disruptions has increased significantly over time. In 2016, the estimated cost of a 1-h outage for a typical Swedish industrial facility was 23 times the value of the lost electricity—up from 13 times in 2004. These figures account for factors such as permanent production losses and substantial restart costs, both of which vary significantly by industry. To reflect this heterogeneity, we provide theoretical bounds for VoLL and CpH, capturing differences in input flexibility, process characteristics, and exposure. For the empirical estimates, this is addressed through upper- and lower bounds The approach underscores the importance of selecting appropriate metrics when assessing the economic impact of outages or evaluating investments in grid reliability.</p>