Power Outages
THE PROBLEM
Power Outages
Being without power for even a short period of time is a real pain.
FIRST QUESTION
Does it make financial sense to have Backup Power?
The answer is yes, if the cost of being without power is more than the cost of getting backup power.
If you have already calculated the value of backup power and would like to learn how to get the best deal on backup power, let’s schedule a time to talk
If you need more help in determining if backup power makes sense for you, please click here and schedule a free consultation or learn more below:
Cost of Being Without Power
The cost of an outage is typically underestimated. Many firms simply assume it is the lost profit from the sales missed during the outage. This is fine for store fronts that rely on walk-in traffic, but it is useless for business-to-business operations, particularly industrial or healthcare firms.
In Business-to-Business, an outage has a cascading impact. For example, an outage at a firm that supplies to a Just-In-Time (“JIT”) manufacturer could cause the manufacturer to shutdown due to lack of parts. If there are other JIT operations in the value chain, an outage at a single supplier can cascade and take down the entire supply chain.
Brand protection is another powerful force driving the need for backup power. Companies spend years and hundreds of millions of dollars building their brands that provide a competitive edge. Missed deliveries or spoiled product can tarnish their reputation.
Healthcare outage costs are staggering because lives are at stake. It is easy to understand the direct impact of a power outage affecting life-sustaining technology, but the impact can be more widespread and insidious. Consider the 12 nursing home residents that perished from heat exhaustion when a hurricane knocked out power for several days.
Calculating the cost of an outage is a team effort, requiring representatives from all departments, including finance, sales, operations, customer support and maintenance to provide input. In such a meeting, perform a brainstorming exercise with each person providing the list of implications, downstream impacts, and an estimate of the costs. Exergy provides free facilitation for brainstorming outage cost estimation. To talk to one of our consultants, click here.
NEXT QUESTION
How Long Do Outages Last?
Reasonably good statistics can be obtained from SAIDI (System Average Interruption Duration Index), a reliability index that utilities publish that measures the average amount of time a customer experiences an outage. The following links provide both data and background.
https://www.eia.gov/electricity/annual/html/epa_11_01.html
https://en.wikipedia.org/wiki/SAIDI
SAIDI information is comprehensive, but misleading. The numbers are reported on a per-customer basis, which dramatically understates the duration of an outage for those experiencing an outage. They take the total number of outage hours divided by the total number of customers served by that utility.
Since only a small percentage of customers are actually without power, you need to divide the SAIDI number by the percentage of customers who actually do not have power. For example, if the SAIDI number is 1 hour but only 5% of customers are actually without power, the effective outage duration for those without power is 1 hour / 5%, or 20 hours.
Averages are also misleading. There is a huge difference between being down once a year for an hour, and being down 60 times in a year for 1 minute each time. A one-minute power outage could require several hours to recover. It’s important to remember that how long your operation is down is more important than the length of the outage.
Outage duration follows a probability curve. The following graph displays the probability of an outage as a function of the outage duration.
The statistics can be confusing and very granular. Exergy helps you get the right information for your decision. Book time with one of our consultants here, it’s free.
Probability of an Outage
“In this world, nothing is certain except death and taxes”; but outages are pretty close!
On average 90% of commercial and industrial customers suffer at least one power outage annually.
The probability of an outage is highly influenced by your location. More than 80% of outages are the result of downed wires caused by weather events. Areas subject to hurricanes, northern states impacted by blizzards, and tornado alley experience higher probability of outages compared to the national average. The following map shows the areas most likely to suffer outages.
The duration of an outage is also probabilistic: the following probability graph displays the probability of an outage as a function of its duration. As you can see, the graph is highly skewed with the vast majority of outages being short. The mathematics of this effect are well understood and for a given location Exergy will calculate how much backup is required to meet a duration within a confidence interval.
To learn more about outage durations and what backup you need schedule a free consultation with one of our consultants here.