Abstract
The expectation of electricity consumers to be served by electric utilities with higher levels of power quality and reliability becomes more stringent than ever, with the growth of total energy consumption worldwide, and mostly in developed areas and countries. Electricity supply interruptions less and less accepted by both consumers and regulators, imitated by the change of the consumer behavior and increased requirements by the regulator, making the requirements for the reliability of supply higher than ever. Meanwhile, distribution system operators struggle to achieve these requirements, mainly because of the infeasibility of the investments. However, if the consumers were willing to pay for the increased reliability of supply, these requirements can be achieved. Using a sample of 436 residential and business consumers in Sarajevo, Bosnia and Herzegovina, in this paper a willingness to pay (WTP) for an improved electricity service for both residential and business consumers is estimated by using the contingent valuation method (CVM). The average WTP of domestic consumers for avoiding one-hour interruption is estimated to be 3.02 BAM, while the average WTP of business consumers is 105.4 BAM. Information on the value of reliable service can be used to assess the economic efficiency of investments in distribution systems in order to strategically target investments to consumers segments that receive the most benefit from system improvements, and to numerically quantify the risk associated with different operating, planning and investment strategies.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Hubana, T., Begic, E., Saric, M.: Voltage sag propagation caused by faults in medium voltage distribution network. In: IAT 2017: Advanced Technologies, Systems, and Applications II, pp. 409–419. Springer International Publishing AG, Cham (2018)
Hubana, T., Saric, M., Avdakovic, S.: High-impedance fault identification and classification using a discrete wavelet transform and artificial neural networks. Elektrotehniški Vestnik 85(3), 109–114 (2018)
Sullivan, M.J., Mercurio, M.G., Schellenberg, J.A.: Estimated Value of Service Reliability for Electric Utility Consumers in the United States. Ernest Orlando Lawrence Berkeley National Laboratory, Berkeley (2009)
Hubana, T.: Transmission lines fault location estimation based on artificial neural networks and power quality monitoring data. In: 2018 IEEE PES Innovative Smart Grid Technologies Conference Europe (ISGT-Europe), Sarajevo (2018)
Hubana, T., Saric, M., Avdakovic, S.: Approach for identification and classification of HIFs in medium voltage distribution networks. IET Gener. Transm. Distrib. J. 12(5), 1145–1152 (2018)
Hubana, T., Saric, M., Avdakovic, S.: Classification of distribution network faults using Hilbert-Huang transform and artificial neural network. In: IAT 2018: Advanced Technologies, Systems, and Applications III, pp. 114–131. Springer, Cham (2019)
Hubana, T.: Coordination of the low voltage microgrid protection considering investment cost. In: 1. Conference BH BH K/O CIRED, Mostar (2018)
Goett, A., Hudson, K., Train, K.: Consumers’ choice among retail energy suppliers: the willingness-to-pay for service attributes. Energy J 21(4), 1–28 (2000)
Beenstock, M., Goldin, G., Haitovsky, Y.: The cost of power outages in the business and public sectors in Israel: revealed preference vs. subjective valuation. Energy J. 18(2), 39–61 (1997)
Hensher, D.A., Shore, N., Train, K.: Willingness to pay for residential electricity supply quality and reliability. Appl. Energy 115, 280–292 (2014)
Reinders, K., Reinders, A.: Perceived and reported reliability of the electricity supply at three urban locations in Indonesia. Energies 11, 1–27 (2018)
Murphy, P., Twaha, S., Murphy, I.: Analysis of the cost of reliable electricity: a new method for analyzing grid connected solar, diesel and hybrid distributed electricity systems considering an unreliable electric grid with examples in Uganda. Energy 66, 523–534 (2014)
Mansouri, I., Newborough, M., Probert, D.: Energy consumption in UK households: impact of domestic electrical appliances. Appl. Energy 54(3), 211–285 (1996)
Sagoff, M.: The Economy of the Earth: Philosophy, Law, and the Environment. Cambridge University Press, Cambridge (1988)
Gerpott, T.J., Paukert, M.: Determinants of willingness to pay for smart meters: an empirical analysis of household consumers in Germany. Energy Policy 61, 483–495 (2013)
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2020 Springer Nature Switzerland AG
About this paper
Cite this paper
Hubana, T., Ljevo, N. (2020). Willingness to Pay for Reliable Electricity: A Contingent Valuation Study in Bosnia and Herzegovina. In: Avdaković, S., Mujčić, A., Mujezinović, A., Uzunović, T., Volić, I. (eds) Advanced Technologies, Systems, and Applications IV -Proceedings of the International Symposium on Innovative and Interdisciplinary Applications of Advanced Technologies (IAT 2019). IAT 2019. Lecture Notes in Networks and Systems, vol 83. Springer, Cham. https://doi.org/10.1007/978-3-030-24986-1_8
Download citation
DOI: https://doi.org/10.1007/978-3-030-24986-1_8
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-24985-4
Online ISBN: 978-3-030-24986-1
eBook Packages: Intelligent Technologies and RoboticsIntelligent Technologies and Robotics (R0)