Measuring the Value of Lost Load (VoLL)

Business challenge

Electricity supply interruptions have financial and social impacts on customers, which vary by season, time of day, customer load and customer type.

Previous estimates of the Value of Lost Load (VoLL) apply a single, uniform value based on energy usage to all customers. This was recognised as being inappropriate as the impact of a power cut can vary greatly depending on whether a customer is domestic or SME, urban or rural, on or off the gas grid, and – in the case of domestic customers – their household circumstances. These include customers in vulnerable circumstances who may be medically dependent on electricity, or lack the transport or finances to go out to get a hot meal.

Understanding VoLL with greater granularity is key for determining network planning and investment. This will be even more essential as customers become more reliant on electricity in the low carbon future.

Our client, Electricity North West (one of GB’s electicity distribution network operators), obtained funding from Ofgem’s Network Innovation Allowance to work with us to build a comprehensive understanding of VoLL over time and by customer segment.

What we did

Identified the latest thinking and best practice in VoLL via a detailed literature review and depth interviews with industry experts.
Explored customers’ perceptions and expectations of power cuts through representative Engaged Customer Panels, supplemented with depth interviews among vulnerable
customers and key stakeholders.
Quantified VoLL among key customer groups via a choice experiment exercise, taking data from two robust surveys conducted in summer and winter with 6,000 customers across GB.

Outcome

Our research has:

  • Produced a method that enables more efficient targeting of a DNO’s investment programme.
  • Identified the consequences of deteriorating assets for dfferent customer segments e.g. worst served.
  • Developed an effective tool that all DNOs can use now without the need for new data flows.