Value of Lost Load calculation and its Hungarian aspect

Abstract

The European Union has published a number of energy packages, defining the most important goals of the energy sector. These issues are also referred to as the energy trillem, the three dimensions of which are security of supply, creation of a single European competitive market and compliance of climate policy goals. Naturally, these goals can only be achieved through compromises. On the Energy only- market the current relationship between electricity demand and supply determines the price of electricity. In addition to the cost of energy, producers have no other source of income (such as capacity fee). As a result, there might be more frequent shortage periods when market prices can rise significantly. Consistent with the goals of EU, consumers should be supplied during these periods too which results periodically high costs on the market. The question arises can security of supply be guaranteed over all limits? The Value of Lost Load (VoLL) calculations were brought to the fore because of the problem mentioned above. VoLL shows how much the customer would be willing to pay the service provider to avoid a potential failure. The paper presents the latest news, interpretations and the effects of VoLL on the system. Moreover proxy-based calculation method was also used to determine the Value of Lost Load of Hungary.