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KILE – Costs of energy not supplied (CENS)

Power supply interruptions cost Norwegian end-users around NOK 800 million per year in the form of KILE costs.

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KILE stands for “costs of energy not supplied” (CENS) and represents the total socioeconomic costs imposed on end-users when interruptions occur. It is important that the KILE scheme uses correct rates and that the calculation rules take the necessary factors into account. SINTEF has contributed to the development of the KILE scheme.

The purpose of the KILE scheme is to “provide grid companies with an incentive to build and operate the grid with a level of reliability of supply that is optimal from a socioeconomic perspective” (NVE–RME). This means maintaining reliability of supply (number of interruptions and their duration) at an acceptable level.

KILE covers both short interruptions (≤ 3 minutes) and long interruptions (> 3 minutes). Both notified and unnotified interruptions caused by planned outages and operational disturbances in electrical installations with voltages above 1 kV are included.

Through the KILE scheme, power outages create an economic consequence for the grid company, as the actual KILE each year is deducted from the company’s revenue cap. KILE is calculated in the grid company’s local FASIT software for each individual interruption based on cost functions for different customer groups. The calculation considers the timing and duration of the interruption, and whether it was notified or not. Cost functions and methodology are specified in the network revenue regulation. SINTEF Energy Research has contributed to developing the calculation methodology for KILE.

SINTEF’s research and expertise related to interruption costs and KILE

The KILE scheme was introduced in 2001, and researchers from SINTEF Energy Research contributed to its preparation, including the development of a standardized method for calculating energy not supplied.

KILE rates (cost functions) are based on nationwide surveys. Three such surveys have been conducted (1989–1991, 2000–2003, and 2010–2012) to identify end-users’ costs during interruptions and their willingness to pay to avoid interruptions. SINTEF Energy Research has participated in all these surveys in collaboration with economic research institutions (Samfunns- og Næringslivsforskning (SNF) and Econ Pöyry), NVE-RME, Fornybar Norge, Statnett, and various industry and energy companies.

Since 2003, end-users have been divided into six user groups. In the early years, constant KILE rates in NOK/kWh were used, where costs were normalized by energy not supplied. In 2009, short interruptions (≤ 3 minutes) were included in the KILE scheme, and cost functions were introduced where costs were normalized by interrupted power, as a function of the timing and duration of the interruption. RME has since updated the cost functions with new data for households and adjusted them using the consumer price index (CPI). The current cost functions are specified in the network revenue regulation.

SINTEF Energy Research has contributed to developing the methodology for normalizing interruption costs and establishing cost functions and has developed the method used for calculating KILE costs.

In 2010, SINTEF Energy Research conducted a study of methods for estimating interruption costs and costs related to voltage disturbances. The report describes the state of the art of various methods for estimating such costs, provides recommendations on method selection and the division of end-user groups, and offers guidance/a handbook for conducting national surveys. This work was carried out for the Council of European Energy Regulators (CEER), which, based on SINTEF’s report, developed the Guidelines of Good Practice (GGP) on Estimation of Costs due to Electricity Interruptions and Voltage Disturbances. One of the conclusions in CEER’s report was that “These GGP – including the SINTEF consultancy report – should be used as a reference when performing a nationwide cost-estimation study, always taking into account country-specific issues and needs.”

This led to several advisory projects carried out by SINTEF Energy Research for various European countries wishing to conduct their own national studies on interruption costs.

The work SINTEF Energy Research performed for CEER has also provided a foundation for further efforts in Europe related to the use of interruption costs (Value of Lost Load—VoLL), including the EU project GARPUR, later in the regulation of grid companies by ACER, and in cost-benefit analyses by ENTSO-E.

Figure showing total cost and reliability level

FASIT – the Norwegian system for recording faults and interruptions

The core of the KILE scheme is FASIT, the standardized system for recording faults and interruptions in the Norwegian power system. All grid companies are required to use the current FASIT specification as the basis for recording interruptions, and KILE costs are calculated in local software based on the FASIT specification.

Related expertise:  

Expertise Security of Electricity Supply

 

Typical assignments we can perform

Questions related to socioeconomic interruption costs and KILE are relevant for grid companies, the transmission system operator (Statnett), authorities such as NVE–RME, and industrial and energy companies. We have the expertise to carry out everything from small research and advisory assignments to large research collaborations on this topic:

  • Studies to estimate costs associated with power supply interruptions
  • Normalization of interruption costs and development of cost functions for KILE
  • Development of methodology for calculating total socioeconomic interruption costs (KILE)
  • Use of interruption costs in reliability analyses to determine the socioeconomically optimal level of reliability of supply 
  • Decision support for risk-based planning, operation, and maintenance of the power grid
  • Advisory services for conducting national surveys on interruption costs.

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