The economic effects of power outage

The economic effects of power outage

If you live in a developed country, power outages or blackouts are rare. We are used to them, but we must add that they have become less common. We hope they will soon become part of our popular history.

Beyond the darkness, we should worry about the interruption to the production system. It takes time to start up factories after power outages. Some machines break down because of such interruptions, adding to costs.

The interconnectedness of the economy means that a fault in one sector or factory affects other sectors. If suppliers are interrupted, so are their customers. Everyone along the supply chain loses.

Critical sectors like hospitals and restaurants are affected too, with life-saving machines or food that goes bad. Think of airports or military installations. And all the services that have shifted online. We often forget that going online means more.

What’s the solution?

In Kenya, power shortage is not an issue. Reliability is. We can monitor the systems live and take corrective measures. We have a balanced portfolio of power sources which should increase reliability. We even have power from neighboring countries.
Power outages mar the image of the country. Tourists get caught up in all this. Another suggested solution is to have the power suppliers compensate the customers for loss from power outages.

For continuous production and development of the economy,
the power supply should be stable, of good quality, reliable and efficient. Unfortunately, in many African economic environments, frequent power outages and chronic electricity shortages have been the main challenges affecting continuous business and economic development.

There is a clear connection between economic growth and power use. As the economy grows, so does the demand for power and its reliability. Today, quality, not quantity, is a big issue in the power sector.

With digitalization, reliable power becomes more critical. Would competition reduce blackouts? Today power generation is competitive, and transmission and distribution are by one firm. Can we bring more players?

After all, few can dispute that this sector has money.

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