Unplanned electricity outages cost an estimated N$1 billion

Martin Endjala

A recent study conducted by the Electricity Control Board (ECB) has shed light on the staggering cost of unplanned electricity outages in Namibia.

The research reveals that these disruptions can cost the economy up to N$1 billion annually during weekdays, translating to an estimated N$41.4 million per hour.

Over weekends, the impact slightly lessens to N$126 million, or N$5.26 million per weekend hour.

The study, aimed at understanding the economic impact of these outages, employs the Cost of Unserved Energy (COUE) metric to quantify the financial toll on both consumers and the broader economy.

According to ECB Chief Executive Officer, Robert Kahimise, the research stresses the extensive direct and indirect effects that power interruptions have across all sectors.

The COUE metric is crucial in quantifying the economic value lost due to the inability to satisfy electricity demand at specific times.

These figures are vital for guiding investment and refurbishment decisions to enhance network reliability.

Kahimise detailed that the direct economic consequences of power outages, such as reduced sales from halted production, lead to a cascade of decreased purchasing from suppliers, ultimately diminishing the Gross Value Added (GVA) throughout the economy.

The study calculated the overall economic effect at N$85.38 per kilowatt-hour (kWh) for the year 2018, with the direct cost of unserved energy pegged at N$36.19/kWh. T

his figure represents the immediate economic losses within sectors, quantified as GVA per kWh lost when energy supply falls short of demand.

The analysis further explores the broader economic implications, noting that disruptions in one sector invariably ripple through the economy, affecting transactions and reducing GVA across the board.

The study also delves into the household impact of unserved energy, estimated at N$11.12/kWh, highlighting the discomfort and inconvenience experienced by households during outages, distinct from the direct economic production losses but equally significant.

This comprehensive study by the ECB not only quantifies the financial implications of electricity outages in Namibia but also emphasizes the need for strategic investments in the nation’s electricity infrastructure to mitigate these costly disruptions.