Dr. Hao Chen recently had a paper published in the Energy Economics. The paper titled‘How will power outages affect the national economic growth: Evidence  from 152 countries’, was coauthored with Lu Jin and Mingming Wang from  Renmin University of China, Lin Guo from Huazhong University of Science and Technology, Jingwen Wu from South China Agricultural University.

Abstract

Electricity system security is facing severe challenges due to climate change, natural disasters, and network cyber-attacks. Although the microeconomic impacts of power outages on economic output have been well  studied, there is insufficient understanding on their macro-economic effects, thus failing to efficiently support the  electricity reliability policies. With this motivation, this study first constructs a theoretical model to analyze the  mechanism between power outages and economic growth based on the classical production function. Then, an  empirical econometric model is developed from the theoretical analysis and applied to 152 countries. To address  the potential endogeneity problems, an index of annual country lightning density is calculated using remote  sensing data and is served as an instrumental variable of power outages. Our major findings are that: (1) every  1% decrease in System Average Interruption Duration Index (SAIDI) will lead to an increase in global economic  growth of 2.16%. (2) the impacts of power outages are heterogenous among different countries, and larger  impacts occur in countries of lower-income, larger land area and lower electrification rates. (3) the improvement  of power infrastructure quality in low-income countries can significantly narrow the world wealth gap, and the  Gini index will decline by 9.55 ‰ if the SAIDI in low-income countries is reduced to 10% quantile of that in high income countries. Our results provide evidence for investment in power system operating and power supply  quality improving.

Other information

Publication Date:2023

Journal: Energy Economics

DOI:https://doi.org/10.1016/j.eneco.2023.107055  

Read the paper here.