Estimating the Value of Lost Load in Italy through outage cost surveys

Electricity system adequacy is a fundamental requirement for a modern economy because any interruption of electricity supply can have strong impacts on both industrial processes and society in general. The value of lost load (VoLL) is a monetary indicator expressing the costs associated with power supply interruption in €/MWh. This paper quantifies the VoLL of Italian consumers through outage cost surveys, following the adoption of the EU Clean Energy Package which introduces a new methodology for measuring VoLL. The results of the study confirm that the concept itself of VoLL has many limitations and that its direct usage for investment decisions (e.g. Capacity Markets design, Cost Benefit analyses, …) must be carefully weighted. This intrinsic limitation of the VOLL concept will be more and more relevant in the years to come, when – as a consequence of progressive electrification of final energy uses – our quality of life will be almost completely dependent on 24/7 power availability.