Value of Lost Load (VOLL)

Value of Lost Load quantifies the economic cost society incurs when electricity demand is curtailed, typically expressed in dollars per megawatt hour. Regulators derive VOLL from surveys, industrial impact studies, and macroeconomic modeling that capture how outages disrupt production, safety, and data integrity. The figure guides investments in generation, transmission, and distribution by translating reliability into monetary terms.

System planners use VOLL when comparing portfolios that exhibit different Expected Unserved Energy levels. By multiplying EUE by VOLL, they calculate the economic loss avoided by additional capacity or grid enhancements, which helps justify procurement budgets and rate recovery. Markets also embed VOLL into scarcity pricing caps or demand curves, signaling the maximum price society is willing to pay to avoid outages.

VOLL is not static. Electrification, digitization, and critical infrastructure dependencies increase the cost of outages, prompting periodic updates. Many jurisdictions differentiate between customer classes, assigning higher VOLL to hospitals, data centers, or manufacturing clusters. Developers must understand local VOLL values because they influence capacity market prices, resilience plans, and non-wires alternative evaluations.

Investors analyze VOLL trends to anticipate where regulators will support premium resiliency solutions such as microgrids or long duration storage. Corporate buyers reference VOLL when designing internal business continuity metrics that justify on site backup procurement and portfolio PPAs focused on 24-7 coverage.