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Effect of global warming on willingness to pay for uninterrupted electricity supply in European nations

Abstract

Predicted changes in temperature and other weather events may damage the electricity grid and cause power outages. Understanding the costs of power outages and how these costs change over time with global warming can inform outage-mitigation-investment decisions. Here we show that across 19 EU nations the value of uninterrupted electricity supply is strongly related to local temperatures, and will increase as the climate warms. Bayesian hierarchical modelling of data from a choice experiment and respondent-specific temperature measures reveals estimates of willingness to pay (WTP) to avoid an hour of power outage between €0.32 and €1.86 per household. WTP varies on the basis of season and is heterogeneous between European nations. Winter outages currently cause larger per household welfare losses than summer outages per hour of outage. However, this dynamic will begin to shift under plausible future climates, with summer outages becoming substantially more costly and winter outages becoming slightly less costly on a per-household, per-hour basis.

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Fig. 1: Monthly average temperatures across the EU.
Fig. 2: Hourly WTP across our sample of 19 European nations.

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Acknowledgements

We gratefully acknowledge funding for this project through the Austrian Climate and Energy Funds ACRP 7th Climate Research Programme award no. KR14AC7K11859.

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J.R. and M.S. were primarily responsible for the creation and implementation of the survey instrument. J.C. was primarily responsible for the creation and management of the data set. All authors contributed to data analysis. All authors contributed to the writing of the paper with J.C. and J.R. as the primary authors.

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Correspondence to Jed Cohen.

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The authors declare no competing financial interests.

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Supplementary Information

Supplementary Figures 1–2, Supplementary Tables 1–2, Supplementary Note 1, Supplementary Methods and Supplementary References.

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Cohen, J., Moeltner, K., Reichl, J. et al. Effect of global warming on willingness to pay for uninterrupted electricity supply in European nations. Nat Energy 3, 37–45 (2018). https://doi.org/10.1038/s41560-017-0045-4

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