Power Blackout Risks

industry typical financial loss
per event 
Semiconductor production
EUR 3,800,000
Financial trading
EUR 6,000,000 per hour
Computer centre
EUR 750,000
Telecommunications
EUR 30,000 per minute
Steel works
EUR 350,000
Glass industry
EUR 250,000
figure 5: consequences of blackouts
10
http://www.leonardo-energy.org/webfm_send/2793
11
Estimated Value of Service Reliability for Electric Utility Customers in the United States, Lawrence Berkeley National Laboratory 2009
Stock market bust
Bank runs
Road traffic restrictions
Business interruption in manufacturing process
Restricted operation of medical facilities
Business interruption in 
manufacturing process
Mass litigation
Production decline in manufacturing sector
Restricted operation of medical facilities
Telephone network collapse
Restricted operation of medical facilities
Cruise restrictions
Sharp decline in tourism
Air traffic restrictions
Decrease in retail and wholesale turnover
Consumption decrease
Stock market bust
Internet breakdown
Payment transaction restrictions
Loss of trust in banks
Mass litigation
Rail/Marine traffic restrictions
Business interruption in manufacturing process
Consequences of
Blackout
Mortality increase
Morbidity increase
Health care and treatment insufficient
Restricted operation of medical facilities

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The well known 2003 blackout in U.S. and Canada seems to be the highest economical loss ever during an 
outage with an estimated total cost of USD 4 bn to USD 8 bn. But even short blackouts which occur several times 
during a year in the U.S. sum up to an annual economic loss between USD 104 bn to USD 164 bn.
Such short term outages or even just dips in voltage seem to be harmless, however, they can have severe 
impacts in case production and supply chain depend on accurately synchronised production processes. 
Paper manufacturing is a prominent example of such a business, but also the production of semiconductors. 
Apart from the reduced output and the waste of raw materials, the inability to supply the customer is critical due 
to the ever increasing interdependencies of supply chains.
Costs per customer differ significantly between residential, commercial, and industrial customers. The costs can 
be described as the Value of Lost Load (VoLL), which is the estimated amount that customers would be willing to 
pay to avoid a disruption in their electricity service. Highest costs accrue during the first hour and then declining 
slowly thereafter, but they additionally differ according to various elements:
•
Industry sector
•
Size of the enterprise
•
Duration and frequency of past events
•
Time of day and by season of the year
•
Proportionate to household income

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17
crobriefing on Power Blackout Risks
12
The Economic Impacts of the August 2003 blackout, prepared by the Electricity Consumers Resource Council (ELCON) – February 9, 2004
13
http://www.policyholderperspective.com/2009/06/articles/first-party-property/2003-blackout-held-to-involve-property-damage-sufficient- 
to-support-claim-under-property-policy/