The Value of Electricity Reliability: Evidence from Battery Adoption
In this working paper, the authors obtain a revealed-preference estimate of the willingness to pay for electricity reliability via uptake of rooftop-solar-plus-battery-storage systems in wildfire-prone areas of California.
Abstract
To avoid electric-infrastructure-induced wildfires, millions of Californians have had their power cut for hours to days at a time. We show that rooftop solar-plus-battery-storage systems increased in zip codes with the longest power outages. Rooftop solar panels alone will not help a household avert outages, but a solar-plus-battery-storage system will. Using this fact, we obtain a revealed-preference estimate of the willingness to pay for electricity reliability, the Value of Lost Load, a key parameter for electricity market design. Our estimate, of around $4,300/MWh, suggests California's wildfires-prevention outages resulted in losses from foregone consumption of $322 million to residential electricity consumers.
