Direct Economic Evaluation of Impact of Severe Space Weather Events on a Deregulated Electricity Market

Evaluation of the economic losses caused by severe space weather events (SSWEs) presents a significant methodological challenge since the information about the response of the affected technological systems is usually not readily available for commercial reasons. While precise calculations are essential to maintain an optimal balance between the potential expenses related to SSWE and the investments into sufficient protective systems, most existing assessment methods are only indirect economic observations.

The goal of this work is developing a technique which enables a direct evaluation of the economic losses associated with increased levels of the geomagnetic disturbance. The studied data (2001-2016) include electricity prices of a fully deregulated electricity market in Alberta, Canada, placed in the context of the space weather conditions (Kp, Dst and AE indices and MEA magnetometer readings). It has been found that the electricity price and the SW parameters are not linearly correlated as one could expect. A more sophisticated time series analysis focusing on the relative timing of extreme events in the price and the local magnetic field evolution has revealed a statistically significant dependence. The obtained results demonstrate that the studied electric grid is not sensitive to SW disturbances lower than a particular dBH threshold (~12 nT). However, the severe events increase the likelihood of excessively high prices during the period of up to 2 days after the storm onset with the significance level p=0.95 or higher. The global indices do not present statistical correlation with electricity price due to aggregation and time difference. The developed technique allows determination of the threshold of SW sensitivity for an electric power grid system as well as direct evaluation of the economic impact. Thus, for the Alberta case our analysis indicates that although only a subset of price spikes is correlated with space weather, its contribution is systematic and led to unanticipated net losses of the order of $50M over the course of the study. This sum can be seen as the price paid for the lack of efficient SW preventive measures, as well as a potential saving, or even a profit from a successful space weather forecasting and preventive programs to be developed in the region.