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Network Dec/Jan 2020

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NETWORK / 8 / DECEMBER 2019 / JANUARY 2020 POWER OUTAGES A new way to model VoLL Tracey Kennelly of distribution network operator (DNO) Electricity North West, and Anuj Nayyar of energy specialist Frazer-Nash Consultancy, on their project to accurately assess the "value of lost load", and how all DNOs could benefit from the new modelling tool that will follow P ower cuts affect different types of customers in differ- ent ways, but currently this isn't always reflected in the decision-making process of distribution companies. Elec - tricity North West believes that investment decisions should include a customer dimension that reflects divergent customer needs, to deliver greater customer and societal benefit. The company has also consulted its customers and stakeholders, who endorse this view. The Value of Lost Load, or VoLL, is the estimated average value that business and domestic customers place on the reliabil - ity of their electricity supply. It represents the financial and social cost of unplanned supply interruptions – the value of loss, of course, can vary relative to the duration, season and time of day – but VoLL is the average estimate that customers would be willing to accept in compensation if they were to experience a power cut. The UK energy regulator, Ofgem, uses VoLL to inform its policy decisions, such as network regulation and price control; while for the Transmission System Operators and regional electricity distributors, it acts as a price signal for adequate levels of supply security. Research for Ofgem in 2013, by eco - nomics consultancy, London Economics, produced a headline VoLL value of £16,940/ MWh, as the load-weighted average pay- ment that domestic and small-to-medium business customers' would be willing to accept to experience an outage on peak winter workdays. But, six years later, this figure is believed to have increased by almost 50 per cent – perhaps reflecting society's changing expectations of the services it needs, and its greater dependency on electricity. A recent project by Electricity North West, involving 6,500 customer surveys, found that VoLL measured against similar criteria could now be as much as £25,300/MWh. "Electricity network investment is currently driven by estimates that fail to recognise differentiations in customer need"

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