To read the full version of this content please select one of the options below:

Valuing security of supply: does experience matter?

Alexander von Selasinsky (Department of Business Management and Economics, Technische Universität Dresden, Dresden, Germany)
Daniel Kurt Josef Schubert (Department of Business Management and Economics, Technische Universität Dresden, Dresden, Germany)
Thomas Meyer (Faculty of Arts, Humanities and Social Science, Technische Universität Dresden, Dresden, Germany)
Dominik Möst (Department of Business Management and Economics, Technische Universität Dresden, Dresden, Germany)

International Journal of Energy Sector Management

ISSN: 1750-6220

Article publication date: 5 June 2017

Abstract

Purpose

The paper aims to analyse whether experiencing a supply interruption affects the valuation of security of electricity supply.

Design/methodology/approach

A blackout in Munich, Germany, in November 2012 is utilised as a natural experiment by conducting a contingent valuation survey around two months after the event. The characteristics of the supply interruption allow for distinguishing between households that were affected by the blackout and those who were not. This provides the opportunity to compare the willingness to pay (WTP) for avoiding and the willingness to accept (WTA) for enduring a supply interruption between affected and non-affected Munich households.

Findings

The results show that households who were affected by the outage had a higher WTP for avoiding a hypothetical supply interruption. Although affected households also had a higher WTA for enduring an outage, the WTA-differences between the two groups are not statistically significant. Furthermore, the results indicate that experience with power outages can increase the perceived relevance of the policy objective “security” at the expense of the objective “environmental sustainability”.

Originality/value

The paper contributes to the literature in three general respects. First, the assessment of the relationship between outage experience and the valuation of supply security is based on a natural experiment which avoids most of the shortcomings of previous studies. Second, the paper uses both the WTP and the WTA measure to approximate the valuation of supply security and discusses the differences in their outcomes. Third, these monetary valuations are complemented and compared with general attitudes towards a reliable electricity system.

Keywords

Acknowledgements

This research was supported by the Boysen-TUD-Graduiertenkolleg, which is funded by the Friedrich-und-Elisabeth-Boysen-Stiftung and the TU Dresden. We are grateful for the support from Adriane Schmidt, Niels Erdmann, Sebastian Thuß, Matthias Dierle, Matthew Schmidt and Wolfgang Donsbach. The authors thank the editor and the anonymous reviewer for their valuable comments which helped to improve the paper.

Citation

von Selasinsky, A., Schubert, D.K.J., Meyer, T. and Möst, D. (2017), "Valuing security of supply: does experience matter?", International Journal of Energy Sector Management, Vol. 11 No. 2, pp. 195-207. https://doi.org/10.1108/IJESM-03-2015-0001

Publisher

:

Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited