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Energy Economics 22 2000 319]330
Reliability economies of scale for tropical island electric power
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Peter C. Mayer
U P.O. Box 25921, GMF, Guam 96921-5921, USA
Abstract
Island electric power systems have special reliability problems since island systems, in an emergency, are unable to tap power from a continental transmission grid. Analysis of a
survey shows the effect of scale on a reliability criterion chosen by operators of tropical island power systems and the scale impact of historical decisions. Discussed are the
implications for islands of the energy crises of the 1970s and of other unexpected changes in electric power use. Also considered is the impact on islands of new technological choices.
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2000 Elsevier Science B.V. All rights reserved.
JEL classifications: L94; Q41; D21
Keywords: Continental transmission grid; Installed reserve margin; Slow speed diesel generators
1. Introduction
That island electric-power systems are unable to tap into a continental transmis- sion grid for emergency power results in reliability and other economies of scale
impacts. The small scale is shown by the usable survey sample of this study. The
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Mangilao, Guam. Statistical analysis and first draft performed and written while senior economist with the Guam Power Authority. Based on a presentation at the Pacific Rim Allied Economic
Organizations Third Biennial Conference, Bangkok, Thailand, 13]18 January 1998.
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Tel.: q1-671-734-7537. Ž
. E-mail address:
pcmayeryahoo.com P.C. Mayer 0140-9883r00r - see front matter Q 2000 Elsevier Science B.V. All rights reserved.
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P.C. Mayer r Energy Economics 22 2000 319]330 320
sample contains 37 systems owned by 22 distinct utilities. Table 1 lists information about the systems in order of system peak load. Annual peak load for these systems
varies from 0.14 to 2929 MW. Peak load refers to highest use of generating capacity. The preponderance of smaller systems apparent from the first column of
Table 1 is confirmed by mean size being 156 MW with median being 12.2 MW. ŽThe meaning and significance of the other columns of Table 1 will be discussed
. throughout the paper.
For comparison, the 1996 annual peak load for California was 48 480 MW Ž
. California Energy Commission, 1997 and California is but a part of the Western
North American grid. The operational significance of the small scale is illustrated by the following
from the letter accompanying the survey questionnaire.
‘Although this study is an outgrowth of Guam’s utility planning, other island utilities may use the results for benchmarking and other evaluation. Guam Power Authority’s regulator criticized the
w Authority for planning a much greater installed reserve margin a measure of redundancy which
x provides reliability than is customary among utilities connected to a continental grid. Mean-
while, the public justly criticizes the Authority for providing unreliable power.’
Qualitatively, the impacts are the same for temperate and tropical islands but differences in seasonality of demand may result in different quantitative impacts.
Temperate seasons allow greater reliability from given capacity relative to annual peak load through scheduling maintenance during the low demand season.
This paper analyses a survey of Caribbean and Pacific tropical island electric utilities. The analysis shows how island power system size influences a reliability
criterion chosen by management and influences an operating criterion.
2. Theory
