ABSTRACT: Due to frequent power outages, the typical Nigerian firm incurs huge costs arising from damaged equipment, lost output, spoiled materials, idle workers and restart costs. This paper developed mathematical models for the computation of the economic costs due to power outages in selected electricity intensive industries from the major industrial areas of Nigeria. This became necessary to optimize investment and operating decisions for adequate power outage mitigation measures.
Assessment of Impact of Outages in Selected Electricity Intensive Industries ...Dr. Hachimenum Amadi
The typical Nigerian firm incurs huge costs arising from frequent cuts in electricity supply. This paper investigated the impact of power outages in Nigeria’s industries for the year 2014 through the simulation of statistical data collected from two hundred and fifty (250) electricity intensive industries drawn from the nation’s three major industrial cities using the Statistical Package for the Social Sciences (SPSS) Version 16.0. This study found that in 2014 alone, Nigeria’s industries spent a whooping N2,558,562,894,261.7 equivalent to 2.26 % of the nation’s GDP for that year or 56.9% of the budget for 2015 as a result of power outages. The results further showed that Nigeria’s industries suffer low capacity utilization, significant reduction in productivity, low marginal profit and lack of competitiveness in the international market due to perennial shortages in energy supply resulting from high distribution losses. The paper suggested remedial measures to mitigate losses arising from unannounced electricity cuts as well as achieve more efficient power supply to the nation’s industrial sector. The findings of this research provide a data bank for industry operators, future researchers in the areas of electricity distribution and power sector stakeholders.
Electric Load Forecasting Using Genetic Algorithm – A Review IJMER
Many real-world problems from operations research and management science are very
complex in nature and quite hard to solve by conventional optimization techniques. So, intelligent
solutions based on genetic algorithm (GA), to solve these complicated practical problems in various
sectors are becoming more and more widespread nowadays. GAs are being developed and deployed
worldwide in myriad applications, mainly because of their symbolic reasoning, flexibility and
explanation capabilities.
This paper provides an overview of GAs, as well as their current use in the field of electric load
forecasting. The types of GA are outlined, leading to a discussion of the various types and parameters of
load forecasting. The paper concludes by sharing thoughts and estimations on GA for load forecasting
for future prospects in this area. This review reveals that although still regarded as a novel
methodology, GA technologies are shown to have matured to the point of offering real practical benefits
in many of their applications.
Optimal Expenditure and Benefit Cost Based Location, Size and Type of DGs in ...TELKOMNIKA JOURNAL
The economic issue is an essential element to determine whether DG should be installed or not. This work presents the economical approach for multi-type DGs placement in microgrid systems with more comprehensive overview from DG’s owner perspective. Adaptive Real Coded GA (ARC-GA) with replacement process is developed to determine the location, type, and rating of DGs so as the maximum profit is achieved. The objectives of this paper are maximizing benefit cost and minimizing expenditure cost. All objectives are optimized while maintaining the bus voltage at the acceptable range and the DGs penetration levels are below of the DGs capacities.The proposed method is applied on the 33 bus microgrids systems using conventional and renewable DG technology, namely Photovoltaic (PV), Wind Turbine (WT), Micro Turbine (MT) and Gas Turbine (GT). The simulation results show the effectiveness of the proposed approach.
Expert workshop on the creation and uses of combined environmental and economic performance datasets at the micro-level - 10-11 July 2018 - OECD, Paris
Assessment of Impact of Outages in Selected Electricity Intensive Industries ...Dr. Hachimenum Amadi
The typical Nigerian firm incurs huge costs arising from frequent cuts in electricity supply. This paper investigated the impact of power outages in Nigeria’s industries for the year 2014 through the simulation of statistical data collected from two hundred and fifty (250) electricity intensive industries drawn from the nation’s three major industrial cities using the Statistical Package for the Social Sciences (SPSS) Version 16.0. This study found that in 2014 alone, Nigeria’s industries spent a whooping N2,558,562,894,261.7 equivalent to 2.26 % of the nation’s GDP for that year or 56.9% of the budget for 2015 as a result of power outages. The results further showed that Nigeria’s industries suffer low capacity utilization, significant reduction in productivity, low marginal profit and lack of competitiveness in the international market due to perennial shortages in energy supply resulting from high distribution losses. The paper suggested remedial measures to mitigate losses arising from unannounced electricity cuts as well as achieve more efficient power supply to the nation’s industrial sector. The findings of this research provide a data bank for industry operators, future researchers in the areas of electricity distribution and power sector stakeholders.
Electric Load Forecasting Using Genetic Algorithm – A Review IJMER
Many real-world problems from operations research and management science are very
complex in nature and quite hard to solve by conventional optimization techniques. So, intelligent
solutions based on genetic algorithm (GA), to solve these complicated practical problems in various
sectors are becoming more and more widespread nowadays. GAs are being developed and deployed
worldwide in myriad applications, mainly because of their symbolic reasoning, flexibility and
explanation capabilities.
This paper provides an overview of GAs, as well as their current use in the field of electric load
forecasting. The types of GA are outlined, leading to a discussion of the various types and parameters of
load forecasting. The paper concludes by sharing thoughts and estimations on GA for load forecasting
for future prospects in this area. This review reveals that although still regarded as a novel
methodology, GA technologies are shown to have matured to the point of offering real practical benefits
in many of their applications.
Optimal Expenditure and Benefit Cost Based Location, Size and Type of DGs in ...TELKOMNIKA JOURNAL
The economic issue is an essential element to determine whether DG should be installed or not. This work presents the economical approach for multi-type DGs placement in microgrid systems with more comprehensive overview from DG’s owner perspective. Adaptive Real Coded GA (ARC-GA) with replacement process is developed to determine the location, type, and rating of DGs so as the maximum profit is achieved. The objectives of this paper are maximizing benefit cost and minimizing expenditure cost. All objectives are optimized while maintaining the bus voltage at the acceptable range and the DGs penetration levels are below of the DGs capacities.The proposed method is applied on the 33 bus microgrids systems using conventional and renewable DG technology, namely Photovoltaic (PV), Wind Turbine (WT), Micro Turbine (MT) and Gas Turbine (GT). The simulation results show the effectiveness of the proposed approach.
Expert workshop on the creation and uses of combined environmental and economic performance datasets at the micro-level - 10-11 July 2018 - OECD, Paris
Electricity Markets Regulation - Lesson 8 - PricingLeonardo ENERGY
Once the revenue requirements are established they should be converted into tariff systems. This session explains the major economic principles of electricity pricing and the general pricing models using average and marginal costs. Moreover the session explores the major pricing models for the electricity activities including: generation, transmission, distribution and retail activities.
* Pricing principles : economic efficiency - cost recovery
* General pricing models : average cost pricing - marginal cost pricing
* Cost allocation issue
* Pricing for different activities in the electricity industry : generation pricing - transmission pricing - distribution pricing - retail supply pricing
Ratemaking and Environmental Compliance PlansJohn Wolfram
Utilities make significant investments to comply with environmental regulations. This paper discusses the ratemaking considerations for utilities' Environmental Compliance Plans.
Electricity Markets Regulation - Lesson 6 - Efficiency AssessmentsLeonardo ENERGY
Regulators use efficiency assessment to set the efficiency targets of the regulated service providers. This session explains the role of the efficiency assessment, the methods to measure efficiency and the incorporation of efficiency results in the price control.
* Why measure efficiency?
* Methods for efficiency assessments : Uni-dimensional ratio analysis / Statistical and econometric methods / Linear programming methods / Virtual network models
* Application of efficiency results o TOTEX versus OPEX benchmarking : Building block approach / Cost controllability (short- and long-term) / Efficiency convergence speed / Capping efficiency scores / Using efficiency bands
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Abstract - In order to perform its basic function of safeguarding life and property, every power system needs an earthing profile that is effective and efficient. Recent studies carried out in the Niger Delta show that its soil is corrosive and frequently attacks the earthing system thereby rendering same ineffective thus posing a great danger to human life and property. This paper reviewed several scholarly literature related to the study for possible causes of earthing system failures and found that corrosive soils, poor workmanship, wrong choice of earthing materials, lack of maintenance etc. were dominant factors hindering effective and sustainable earthing system in the Niger Delta. The paper, therefore, recommends the regular use of experienced workmen, choice of quality earthing materials, periodic testing, inspection and maintenance as strategies to improve the earthing condition in the area.
Evaluation of losses in distribution networks of selected industrial cities i...Dr. Hachimenum Amadi
Distribution losses contribute to energy shortages and therefore power outages in Nigeria’s industries. This work evaluated the technical losses in the distribution networks of selected industrial cities in Nigeria. Power flow simulation of network data collected over the period 2011-2015 from three distribution companies (DisCos) domiciled in these cities was done by Newton-Raphson (N-R)
technique using the Electrical Transient and Analysis Program (ETAP) software version 12.6.
Results of the power flow simulation showed that between 2011 and 2015 covered by the study, the cities of Lagos, Kano and Port Harcourt recorded a total power loss of 15.8 MW, 36.2 MW and 6.04 MW respectively. The findings also revealed that overloaded power transformers is part of the reasons for high losses in the distribution networks of some of the cities. The outcome of the study provides a guide for system planners and utility companies in providing for prioritization and system
upgrade to ensure improved efficiency of their distribution networks.
Abstract
Frequent power outages arising from poor state of electricity infrastructure is hindering Nigeria’s socio-economic growth. Port Harcourt is one of the foremost cities in Nigeria where business and social activities are becoming rapidly more dependent on electricity. Any power outage, even of the shortest duration, in Port Harcourt City has severe socio-economic impacts and there is no likelihood that the phenomenon would abate even in the nearest future. This research investigated the causes of incessant power outages in Port Harcourt City and suggested remedial measures to reverse the trend. The researcher relied on data personally collected from primary sources through personal observations, interviews and discussions with residents of the city and from secondary sources such as the National Bureau of Statistics (NBS), the Manufacturers Association of Nigeria (MAN) and current scholarly literature relating to this research, over a period of twelve months. The study used a descriptive and the non-parametric simple percentages technique in analysing the data so collected and in drawing conclusions. It was found that inadequate power generating capacity, shortage of gas, weak and dilapidated electrical transmission and distribution network, inadequate power infrastructure facilities, etc. are the chief causes of incessant power outages in the Port Harcourt metropolis. The paper recommends, among others, immediate upgrade of existing power infrastructure facilities, review of government policy on domestic gas supply and stiff statutory legislation on vandalism as measures to stabilise electricity supply in the Port Harcourt city.
This work investigates and evaluates the electric energy interruptions to the residential sector resulting from severe power outages. The study results show that this sector will suffer tangible and intangible losses should these outages occur during specific times, seasons, and for prolonged durations. To reduce these power outages and hence mitigate their adverse consequences, the study proposes practical measures that
can be adopted without compromising the consumers’ needs, satisfaction, and convenience.
This work investigates and evaluates the electric energy interruptions to the residential sector resulting from severe power outages. The study results show that this sector will suffer tangible and intangible losses should these outages occur during specific times, seasons, and for prolonged durations. To reduce these power outages and hence mitigate their adverse consequences, the study proposes practical measures that
can be adopted without compromising the consumers’ needs, satisfaction, and convenience.
Electricity Markets Regulation - Lesson 8 - PricingLeonardo ENERGY
Once the revenue requirements are established they should be converted into tariff systems. This session explains the major economic principles of electricity pricing and the general pricing models using average and marginal costs. Moreover the session explores the major pricing models for the electricity activities including: generation, transmission, distribution and retail activities.
* Pricing principles : economic efficiency - cost recovery
* General pricing models : average cost pricing - marginal cost pricing
* Cost allocation issue
* Pricing for different activities in the electricity industry : generation pricing - transmission pricing - distribution pricing - retail supply pricing
Ratemaking and Environmental Compliance PlansJohn Wolfram
Utilities make significant investments to comply with environmental regulations. This paper discusses the ratemaking considerations for utilities' Environmental Compliance Plans.
Electricity Markets Regulation - Lesson 6 - Efficiency AssessmentsLeonardo ENERGY
Regulators use efficiency assessment to set the efficiency targets of the regulated service providers. This session explains the role of the efficiency assessment, the methods to measure efficiency and the incorporation of efficiency results in the price control.
* Why measure efficiency?
* Methods for efficiency assessments : Uni-dimensional ratio analysis / Statistical and econometric methods / Linear programming methods / Virtual network models
* Application of efficiency results o TOTEX versus OPEX benchmarking : Building block approach / Cost controllability (short- and long-term) / Efficiency convergence speed / Capping efficiency scores / Using efficiency bands
Effective Earthing System in the Corrosive Soil of Niger DeltaDr. Hachimenum Amadi
Abstract - In order to perform its basic function of safeguarding life and property, every power system needs an earthing profile that is effective and efficient. Recent studies carried out in the Niger Delta show that its soil is corrosive and frequently attacks the earthing system thereby rendering same ineffective thus posing a great danger to human life and property. This paper reviewed several scholarly literature related to the study for possible causes of earthing system failures and found that corrosive soils, poor workmanship, wrong choice of earthing materials, lack of maintenance etc. were dominant factors hindering effective and sustainable earthing system in the Niger Delta. The paper, therefore, recommends the regular use of experienced workmen, choice of quality earthing materials, periodic testing, inspection and maintenance as strategies to improve the earthing condition in the area.
Evaluation of losses in distribution networks of selected industrial cities i...Dr. Hachimenum Amadi
Distribution losses contribute to energy shortages and therefore power outages in Nigeria’s industries. This work evaluated the technical losses in the distribution networks of selected industrial cities in Nigeria. Power flow simulation of network data collected over the period 2011-2015 from three distribution companies (DisCos) domiciled in these cities was done by Newton-Raphson (N-R)
technique using the Electrical Transient and Analysis Program (ETAP) software version 12.6.
Results of the power flow simulation showed that between 2011 and 2015 covered by the study, the cities of Lagos, Kano and Port Harcourt recorded a total power loss of 15.8 MW, 36.2 MW and 6.04 MW respectively. The findings also revealed that overloaded power transformers is part of the reasons for high losses in the distribution networks of some of the cities. The outcome of the study provides a guide for system planners and utility companies in providing for prioritization and system
upgrade to ensure improved efficiency of their distribution networks.
Abstract
Frequent power outages arising from poor state of electricity infrastructure is hindering Nigeria’s socio-economic growth. Port Harcourt is one of the foremost cities in Nigeria where business and social activities are becoming rapidly more dependent on electricity. Any power outage, even of the shortest duration, in Port Harcourt City has severe socio-economic impacts and there is no likelihood that the phenomenon would abate even in the nearest future. This research investigated the causes of incessant power outages in Port Harcourt City and suggested remedial measures to reverse the trend. The researcher relied on data personally collected from primary sources through personal observations, interviews and discussions with residents of the city and from secondary sources such as the National Bureau of Statistics (NBS), the Manufacturers Association of Nigeria (MAN) and current scholarly literature relating to this research, over a period of twelve months. The study used a descriptive and the non-parametric simple percentages technique in analysing the data so collected and in drawing conclusions. It was found that inadequate power generating capacity, shortage of gas, weak and dilapidated electrical transmission and distribution network, inadequate power infrastructure facilities, etc. are the chief causes of incessant power outages in the Port Harcourt metropolis. The paper recommends, among others, immediate upgrade of existing power infrastructure facilities, review of government policy on domestic gas supply and stiff statutory legislation on vandalism as measures to stabilise electricity supply in the Port Harcourt city.
This work investigates and evaluates the electric energy interruptions to the residential sector resulting from severe power outages. The study results show that this sector will suffer tangible and intangible losses should these outages occur during specific times, seasons, and for prolonged durations. To reduce these power outages and hence mitigate their adverse consequences, the study proposes practical measures that
can be adopted without compromising the consumers’ needs, satisfaction, and convenience.
This work investigates and evaluates the electric energy interruptions to the residential sector resulting from severe power outages. The study results show that this sector will suffer tangible and intangible losses should these outages occur during specific times, seasons, and for prolonged durations. To reduce these power outages and hence mitigate their adverse consequences, the study proposes practical measures that
can be adopted without compromising the consumers’ needs, satisfaction, and convenience.
Energy Evaluation and Processing Cost Reduction in Agudu Maize Processing Ind...Dr. Amarjeet Singh
This study evaluated energy consumption by Agudu Farms Limited (AFL) that processes maize and cassava into flour for human consumption. The objectives of study included to determine energy contribution to processing cost, to minimize the processing cost and to propose a new selling price per unit of sale of the product. The study materials included; a multi-meter, stopwatch, electrical appliances’ nameplates and bills, fuel purchased receipts, and production records. Data was collected through detailed energy audits and measurements of present electricity consumption. This data was converted into energy intensities, rates and costs, and analyzed. The monthly energy intensity plotted on bar charts using Microsoft excel and the results showed that diesel had the highest consumption variation of 3500 kWh/t, electricity 200kWh/t and labor 110 kWh/t. The percentage of energy contribution to processing cost was 33%. In monetary terms, the processing cost per hour of operation showed average value of ₦830. Whereas, the minimum production cost per hour using Tora software showed ₦767. The new product price per ten-kilogram (10kg) unit of sale of maize flour, using break-even analysis, showed ₦2864. The study observed that diesel contributed more to production cost than electricity and labor and therefore, recommended the setting up of an energy monitoring team to monitor procurement and control utilization of diesel to reduce production cost.
ADOPTING MEASURES TO REDUCE POWER OUTAGESelelijjournal
This work investigates and evaluates the electric energy interruptions to the residential sector resulting
from severe power outages. The study results show that this sector will suffer tangible and intangible losses
should these outages occur during specific times, seasons, and for prolonged durations. To reduce these
power outages and hence mitigate their adverse consequences, the study proposes practical measures that
can be adopted without compromising the consumers’ needs, satisfaction ,and convenience.
The project involves determining real time electricity charges incurred by the residential consumers. The smart grid integrated with residential PV systems was modeled in Simulink to determine demand response in dynamic pricing environment. Based on the load demand, electricity charges were calculated and compared with flat rate charges to highlight cost savings.
EFFICIENT POWER THEFT DETECTION FOR RESIDENTIAL CONSUMERS USING MEAN SHIFT DA...ijaia
Energy theft constitutes an issue of great importance for electricity operators. The attempt to detect and reduce non-technical losses is a challenging task due to insufficient inspection methods. With the evolution of advanced metering infrastructure (AMI) in smart grids, a more complicated status quo in energy theft has emerged and many new technologies are being adopted to solve the problem. In order to identify illegal residential consumers, a computational method of analyzing and identifying electricity consumption patterns of consumers based on data mining techniques has been presented. Combining principal component analysis (PCA) with mean shift algorithm for different power theft scenarios, we can now cope with the power theft detection problem sufficiently. The overall research has shown encouraging results in residential consumers power theft detection that will help utilities to improve the reliability, security and operation of power network.
Similar to The direct assessment and captive costs methods for estimating the economic costs of power outages (20)
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NO1 Uk best vashikaran specialist in delhi vashikaran baba near me online vas...Amil Baba Dawood bangali
Contact with Dawood Bhai Just call on +92322-6382012 and we'll help you. We'll solve all your problems within 12 to 24 hours and with 101% guarantee and with astrology systematic. If you want to take any personal or professional advice then also you can call us on +92322-6382012 , ONLINE LOVE PROBLEM & Other all types of Daily Life Problem's.Then CALL or WHATSAPP us on +92322-6382012 and Get all these problems solutions here by Amil Baba DAWOOD BANGALI
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The direct assessment and captive costs methods for estimating the economic costs of power outages
1. American Journal of Engineering Research (AJER) 2015
American Journal of Engineering Research (AJER)
e-ISSN: 2320-0847 p-ISSN : 2320-0936
Volume-4, Issue-5, pp-239-244
www.ajer.org
Research Paper Open Access
w w w . a j e r . o r g Page 239
The Direct Assessment and Captive Costs Methods for Estimating
the Economic Costs of Power Outages among Selected Industries
in Nigeria
Hachimenum N. Amadi1
, Ephraim N.C. Okafor2
Department of Electrical & Electronic Engineering, Federal University of Technology, Owerri, Nigeria.
ABSTRACT: Due to frequent power outages, the typical Nigerian firm incurs huge costs arising from damaged
equipment, lost output, spoiled materials, idle workers and restart costs. This paper developed mathematical
models for the computation of the economic costs due to power outages in selected electricity intensive
industries from the major industrial areas of Nigeria. This became necessary to optimize investment and
operating decisions for adequate power outage mitigation measures.
Keywords: Electricity, Impact, Industries, Outages, Power outages costs
I. INTRODUCTION
Provision of infrastructural services such as electricity, in most developing countries, is the sole
responsibility of government. Confronted with ever dwindling revenue, however, most governments are unable
to provide and maintain these infrastructures resulting in shortages in the supply of these services [1]. An
electric power outage has many socio-economic consequences [2]. Preventing power outages therefore is
important in order to avoid its adverse effects on both the economy and the social life of the people [3].
Understanding the impact of a power outage is vital to devising measures to curtail it. The magnitude of the cost
of a power outage depends on several factors such as the duration of the outage, the time of day the outage
occurred, the season of an outage, the frequency of an outage, the severity of the outage, the type of customer
(whether industrial, service, residential or agricultural) and the character of the outage (whether the outage was
anticipated or not) [3, 4, 5]. Among these factors, however, are two that have the greatest monetary significance.
These are: the duration of the power outage and the character of the outage [6]. Frequent power outages in
Nigeria arising from government inability to provide uninterruptible power supply has imposed a huge cost on
the average firm operating in the country resulting from damaged equipment, lost output, spoiled materials, idle
workers and cost of operation restarts. It is imperative, therefore, to quantify these costs in order to successfully
optimize investment and operating decisions for adequate power outages mitigation and more efficient power
sector.
II. METHODS OF EVALUATING POWER OUTAGES COSTS
Several methods have been evolved for the assessment of the customer costs of electric power outages [3, 5, 7].
See Table 1. The major categories commonly in use today include:
Indirect Analytical methods. The indirect analytical method, also known as the Ratio of Gross Economic
Output to Energy Consumption technique [8, 9], uses objective data such as electricity tariffs, gross national
product of a country and the country’s annual electricity consumption to ascertain the interruption costs
otherwise referred to as the Customer Damage Functions (CDF). Some of the big advantages of this method of
evaluating power outage costs are: its objectivity in using publicly declared, easy to access data like electricity
prices and turnovers, straightforwardness and cheapness in estimating the value of outage costs. The method,
however has some big disadvantages as well. For instance, many direct costs are usually not sufficiently
captured and all indirect costs are virtually overlooked. Its results are also too broad and are therefore not very
useful to the utilities for planning purposes [3, 7].
2. American Journal of Engineering Research (AJER) 2015
w w w . a j e r . o r g Page 240
Case studies
Case studies are usually carried out after the occurrence of large and significant blackouts as in the case of the
1977 New York City blackout and covers both direct and indirect costs of power interruption [8, 9]. The direct
costs of an outage often include loss of sales, loss of food, etc. while the indirect costs are comprised of
emergency costs and losses resulting from some civil disorders that took place following the outage. Case
studies have the unique advantage of dealing with more accurate data due to the fact that the study gets
conducted soon after a real interruption. The major disadvantages of the method are the frequency of the large
blackout events and the difficulty to draw an analogy between the large scale and the small scale blackouts [3,
9]. Previous studies show that the indirect costs are usually higher than the direct costs despite being very
cumbersome to ascertain [3, 10]. Also, the study findings from case studies suffer great limitations imposed by
geographic constraints as well as the characteristics and duration of the specific outage being studied [8].
Customer Surveys methods
Customer surveys methods employ the technique of asking questions in order to determine the costs of power
outages and therefore require active mutual communication e.g. one-to-one interviews, telephone calls, and
sending and receiving e-mails. Questions are often asked about the time of day when the outage occurred
(whether during working hours or outside working hours), the duration of the outage, and the season of the year
(whether summer or winter) [9]. The customer surveys methods are the most suitable for calculating outage
costs because it affords sufficient and more accurate outage cost data for planning purposes [3, 11]. The
methods have the disadvantages, however, of being very costly due to the fact that customer response rates to
survey are usually low such that to get more accurate data, the questionnaire must be done to as many customers
as possible. Besides, it requires much time and effort to design the survey, retrieve and analyse the respondent
data [8].
Variations of the customer surveys methods include: The preparatory action method (PAM), that directly
evaluates outage costs in terms of costs of mitigation measures required to avoid outage, the direct worth (DW)
technique that evaluates the outage costs in terms of avoiding the impact of the outages [11] and the price
proportional method that involves both the willingness to pay (WTP) and willingness to accept (WTA)
techniques [3, 12]. In WTP, the survey asks the customers how much they are willing to pay for uninterruptible
electricity supply. But in WTA, the survey seeks to understand how much the customers are willing to accept as
compensation in case of an interruption in service supply [13]. Studies, however, show a pattern among the
respondents to demand more compensation while unwilling to pay the amount of money that would otherwise
be needed to provide them with the desired service for the same outage scenario. This causes much disparity
between WTP and WTA results such that it is often advised that WTP and WTA results be never used in
isolation while making outage cost evaluations.
Proxy methods
Proxy methods make use of an observable customer behaviour in order to estimate the cost of an outage. These
power outage cost assessment approaches, consider that an industrial customer would rather prefer to rely on
back-up generation until such a time when the marginal cost of additional back-up power would equal the
expected marginal cost of an outage event [14]. Such choice by the consumer thus becomes an evidence of
‘revealed preference’ towards avoiding an outage [15, 16]. Proxy methods are widely known not to reveal much
detail about consumer preferences and sometimes provide only an upper or lower limit on outage cost estimates.
In order to obtain an outage cost, proxy methods also make numerous assumptions, and usually does not
consider such helpful cost assessment factors like the duration of an outage, time or season of the outage, type of
customer, etc. [8].
Power outage cost researches in Nigeria applied mostly the customer surveys methods and dates back to the
1960s when [17] used the production function approach (a variation of the customer survey method) to study
power outage costs in the industrial and commercial sectors in Nigeria during 1965 and 1966. The problems
with this study was that [17] used aggregated data for the manufacturing sector and thus omitted subsector
effects of the power outages; besides, the study focused only on output loss for unsupplied electricity and
ignored other equally vital costs such as raw material and equipment spoilage and the cost of auto-generation
[1].
Another researcher, [18] adopted the self-assessment technique to study the cost of power outages on the
household sector and focused on the high-income area of Lagos Island, Ikoyi, Victoria Island, Yaba and
Surulere areas of Lagos state in Nigeria. He ended up with high cost estimates having concentrated his study
only on the high-income area of the household sector in Lagos.
3. American Journal of Engineering Research (AJER) 2015
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Yet [19] used the self-assessment survey to measure the adaptive costs to the business sectors in coping with
infrastructural deficiencies in Nigeria. Their study shows that most firms in Nigeria adapt to the unreliability of
publicly provided electricity by investing in backups. The problem with this study is the self-assessment
approach used which suffers from the limitation of subjectivity.
Table 1: Previous studies on Cost of Power Outages
Later, [20] considered the different types of outage costs e.g. material and equipment loss, value of unproduced
output lost, etc. through a survey of various sectors covering the industrial and commercial firms in Lagos state.
However, the study like [19] adopted the self-assessment survey approach widely known for subjectivity and
possible exaggeration of figures by the respondents. Besides, the study was conducted within the Lagos
metropolis only, thereby making generalisation of the results to other industrial areas of the country almost
impossible.
Reference [21] estimated the adaptive costs of electricity failure on the Nigerian economy without due
consideration of the short-term losses incurred by consumers such as raw material and equipment spoilage and
lost output [1]. Their research was therefore not sufficiently comprehensive and generalizable.
Lastly, [1] adopted both the revealed preference approach [14, 15, 22] which allowed him to freely estimate the
firms’ willingness to pay for a reliable supply of electricity and the production approach which enable him
estimate the potential losses to the firm from power outages. His approaches have the dual benefits of making
inference of the mitigated costs arising from the installation of private generators possible thereby providing a
basis for why firms still invest in their own electricity generation plants, high marginal cost of private generation
notwithstanding. The approaches also allowed the losses due to power outages to be characterized based on firm
size, location and sector of operations. A major drawback of his study is that it focussed on firms located along
Lagos–Ibadan, Kano–Kaduna and Anambra–Imo axes [1] thereby capturing but marginally the industrial nerve-
centres of the nation. The outcome of the study can therefore be hardly used to generalise to other parts of
Nigeria.
III. THE METHODOLOGY FOR THIS STUDY
The afore-stated literature highlight some of the attempts to estimate the cost of electric power outages in
Nigeria. This paper as an addition to these efforts, however, adopted the direct assessment and captive costs
methodology in estimating the economic costs of the power outages among Nigerian industries – an approach
different than any previously used by any researcher known to the authors of this paper. For instance, unlike any
of the previous studies, this paper used a methodology which combines the full benefits of the direct and the
4. American Journal of Engineering Research (AJER) 2015
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captive costs assessment methods and survey techniques. This makes it possible to ascertain both the direct cost
of power outages to the respective industries and the costs incurred by each industry as it invests in backup
facilities to mitigate power outages. Unlike previous attempts to evaluate costs of outages also, the study
covered Lagos, Kano and Port Harcourt which, statistically speaking, are the most populous as well as the three
most industrialised cities of the country. With stratified sampling design employed in the work, therefore, it is
very possible to generalise the results of the research to all subsectors of industries in Nigeria irrespective of
their sizes, business specialties and locations.
Two models were derived for this study. The first is the total direct cost model for the evaluation of power
outages incurred by each of the industries selected for study. See Fig. 1. This model is expressed mathematically
as:
T dc CCCCCC rserdelbpodm
…………………………………….(1)
The summation of the total direct cost for all the industries gives:
N
i
dciT
1
CCCCCCCCCCCC rsNerNdeNlbNpoNdmNrsierideilbipoidmi
N
i
....
1
………………………………………………………….………………………………...(2)
Fig. 1: Total direct costs due to power outage
Where,
T dc
= Total direct cost incurred by each industrial consumer
C dm
= Cost of damaged materials
C po
= Cost of production output lost
C lb
= Cost of labour lost
C de
= Cost of damaged equipment
C er
= Cost of equipment repair
C rs
= Cost of restart
5. American Journal of Engineering Research (AJER) 2015
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N = Total number of industries selected for the study
The cost per unit of electricity in Kilowatt-hour lost ($/KwH) is expressed as:
C el
= ET lsdc
/ …………………………………………………………………….(3)
Where,
E ls
= Total units of electricity, in Kilowatt-hour, lost due to power outages
The second model is that of the total captive (indirect) cost derived from the cost of backup facilities put in
place by each of the industrial consumer to mitigate power outage. Total captive cost or cost of backup facilities
for each industry expressed mathematically,
T bc
= [(C bc
x D fb
) + C bm
+ C fc
]/ E bp
……………………………………..(4)
Therefore the summation of the total captive cost for all the industries gives:
N
i
bciT
1
=
N
i 1
[(C bci
x D fbi
) + C bmi
+ C fci
]/ E bpi
+….+
C bcN
[( x ECCD bpNfcNbmNfbN
/]) ..……………………………....(5)
Where,
C bc
= Purchase or capital cost of backup plant
D fb
= Depreciation factor of backup plant (assumed per annum)
C bm
= Annual maintenance cost of backup plant
C fc
= Annual cost of fueling backup plant
N = Total number of industries selected for the study
E bp
= Total units of electrical energy, in Kilowatt-hour, generated by backup plant per annum. Adding (2) and
(5) yields:
Total cost in $ due to power outages,
T cpoi
=
N
i
dciT
1
+
N
i
bciT
1
……………………………………………………..(6)
IV. CONCLUSION
This paper successfully developed mathematical models for the computation of economic costs arising from
power outages in selected electricity intensive industries in Nigeria. The direct costs and the captive (backup)
costs assessment techniques are useful in estimating the costs directly incurred by the firm and the mitigation
costs arising from the use of backup facilities in the event of a power outage. By including all the essential
components e.g. the cost of damaged materials, production output lost, labour lost, damaged equipment,
equipment repair, restart as well as purchase cost of backup plant, annual maintenance cost of backup plant and
annual cost of fueling backup plant, etc. the paper covered almost holistically the industrial costs due to power
outages. The results, therefore, are reliable for the purposes of industrial energy planning.
6. American Journal of Engineering Research (AJER) 2015
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