Unplanned blackouts cost economy N$1b on weekdays

The Electricity Control Board (ECB) has revealed that unplanned electricity outages in the country cost the economy N$1 billion on weekdays.

This was determined through an ECB study.

ECB chief executive Robert Kahimise, in a speech read by the general manager of market and economic relations Pinehas Mutota during a media briefing yesterday, said the total economic effect resulting from unplanned transmission system outages was calculated at N$85,38/kWh.

“The study revealed that the total annual economic cost ranged from N$126 million over weekends (N$5,26 million per weekend hour) to N$1 billion during weekdays (N$41,4 million per weekday hour),” Kahimise said.

The study delved into the economic impact of unplanned electricity outages in Namibia, introducing the cost of unserved energy as a metric.

The comprehensive analysis, conducted in collaboration with Cirrus Capital, sheds light not only on direct financial losses, but also on the nuanced indirect consequences affecting the economy.

“This study is a crucial step in understanding the economic ramifications of unplanned electricity outages. It provides valuable insights that will guide decisions to optimise the reliability of our electricity network,” Kahimise said.

The emphasis is on their potential impact on businesses and households.

According to the study, unplanned, short-duration outage events are to be expected, even in a well-planned system.

“Random failures of equipment, environmental events, or other potential causes can contribute to these interruptions, highlighting the importance of understanding their economic implications,” the study has found.

It excludes planned outages, underscoring the significant disparity in impact between planned and unplanned interruptions.

“Planned outages allow customers to make alternative arrangements during downtime, mitigating the impact on businesses and households, compared to unplanned interruptions.”

Kahimise said the ECB employed a macro-economic induction method in collaboration with Cirrus Capita to ensure a rigorous analysis.

This method leverages household expenditure and macro-economic data, including gross domestic product and gross value added to calculate the cost of unserved energy in kilowatt-hours (kWh).

“The methodology used for this version of the economic cost of unserved energy model considers both direct effects and indirect effects in the economy for a combined total effect which in corporates costs arising from cross-linkages in the economy,” Kahimise said.

He said the findings of the study also revealed that the direct economic cost of unserved energy is N$36,19/kWh – representing economic losses within specific sectors.

“The total cost of unserved energy is N$85,38/kWh, while the household cost of unserved energy is N$11,12/kWh, reflecting the economic impact on households in terms of discomfort and disruption,” he said.

The comprehensive report, now publicly available, serves as a crucial resource for stakeholders in the electricity supply industry.

Kahimise further urged policymakers, researchers, scholars and the media to leverage their insights as a comprehensive report is now publicly available.

“Understanding the relationship between the cost of a reliable power supply and its impact on the broader economy is vital for informed decision-making.”

– email: shania@namibian.com.na, X:@ShaniaLazarus