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Title: The Value of Electricity Reliability: Evidence from Battery Adoption

Citation Type: Working Paper

Publication Year: 2023

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Abstract: To avoid electric-infrastructure-induced wildfires, millions of Californians have had their power cut for hours to days at a time. We show that rooftop solar-plus-battery-storage systems increased in zip codes with the longest power outages. Rooftop solar panels alone will not help a household avert outages, but a solar-plus-battery-storage system will. Using this fact, we obtain a revealed-preference estimate of the willingness to pay for electricity reliability, the Value of Lost Load, a key parameter for electricity market design. Our estimate, of around $4,300/MWh, suggests California's wildfire-prevention outages resulted in losses from foregone consumption of $322 million to residential electricity consumers. JEL-Classification: Q40, Q54, Q58

Url: https://sites.ualberta.ca/~econwps/2023/wp2023-05.pdf

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Authors: Brown, David P; Muehlenbachs, Lucija; Dooley, Jenet; Fowlie, Meredith; Hayes, Kristin; Jenkins, Jesse; Kury, Ted; Mansur, Erin; Mercadal, Ignacia; Reguant, Mar; Rust, John; Sappington, David; Schaufele, Brandon; Staubli, Stefan; Verboven, Frank; Wolak, Frank; Wood, Joel

Series Title: University of Alberta Faculty of Arts Department of Economics

Publication Number: 2023-05

Institution: University of Alberta

Pages: 1-65

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Data Collections: IPUMS NHGIS

Topics: Labor Force and Occupational Structure, Land Use/Urban Organization, Natural Resource Management

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