The Value of Lost Load (VoLL) is an estimate of the social loss expected when power supply is disrupted. It is a hypothetical price that would compensate necessary facilities in the electricity market to prevent supply disruption. As the expansion of ...
The Value of Lost Load (VoLL) is an estimate of the social loss expected when power supply is disrupted. It is a hypothetical price that would compensate necessary facilities in the electricity market to prevent supply disruption. As the expansion of flexible resources is required in the future carbon-neutral electricity market, VoLL is expected to play an important role as a standard for preparing a compensation system. However, limited research has been conducted on the appropriate VoLL level in Korea. To address this research gap, this study estimated VoLL for the domestic manufacturing sector using the Contingent Valuation Method (CVM), which is a type of stated preference method. The empirical analysis found that VoLL for the manufacturing industry was approximately 384.5 KRW/kWh, which is less than the levelized storage cost (LCOS) of representative flexible resources. It implies the necessity of increasing CVM based VoLL by improving the recognition on stable electricity supply. The increase in system cost for securing flexible reserves would be inevitable. The public acceptance related to such cost increase are related to the CVM based VoLL.