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Risk-based methods for reliability investments in electric power distribution systems
KTH, School of Electrical Engineering (EES), Electric Power Systems.
2011 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Society relies more and more on a continuous supply of electricity. However, while underinvestments in reliability lead to an unacceptable number of power interruptions, overinvestments result in too high costs for society. To give incentives for a socioeconomically optimal level of reliability, quality regulations have been adopted in many European countries. These quality regulations imply new financial risks for the distribution system operator (DSO) since poor reliability can reduce the allowed revenue for the DSO and compensation may have to be paid to affected customers.This thesis develops a method for evaluating the incentives for reliability investments implied by different quality regulation designs. The method can be used to investigate whether socioeconomically beneficial projects are also beneficial for a profit-maximizing DSO subject to a particular quality regulation design. To investigate which reinvestment projects are preferable for society and a DSO, risk-based methods are developed. With these methods, the probability of power interruptions and the consequences of these can be simulated. The consequences of interruptions for the DSO will to a large extent depend on the quality regulation. The consequences for the customers, and hence also society, will depend on factors such as the interruption duration and time of occurrence. The proposed risk-based methods consider extreme outage events in the risk assessments by incorporating the impact of severe weather, estimating the full probability distribution of the total reliability cost, and formulating a risk-averse strategy. Results from case studies performed show that quality regulation design has a significant impact on reinvestment project profitability for a DSO. In order to adequately capture the financial risk that the DSO is exposed to, detailed risk-based methods, such as the ones developed in this thesis, are needed. Furthermore, when making investment decisions, a risk-averse strategy may clarify the benefits or drawbacks of a project that are hard to discover by looking only at the expected net present value.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology , 2011. , xii, 97 p.
Series
Trita-EE, ISSN 1653-5146 ; 2011:040
Keyword [en]
Distribution system reliability, risk management, quality regulation design, customer interruption costs, weather modeling, Monte Carlo simulations
National Category
Other Electrical Engineering, Electronic Engineering, Information Engineering
Identifiers
URN: urn:nbn:se:kth:diva-33815ISBN: 978-91-7501-003-8OAI: oai:DiVA.org:kth-33815DiVA: diva2:417913
Public defence
2011-06-15, D3, Lindstedtsvägen 5, KTH, Stockholm, 14:00 (English)
Opponent
Supervisors
Note
QC 20110530Available from: 2011-05-30 Created: 2011-05-18 Last updated: 2011-05-30Bibliographically approved
List of papers
1. An activity-based interruption cost model for households to be used in cost-benefit analysis
Open this publication in new window or tab >>An activity-based interruption cost model for households to be used in cost-benefit analysis
2007 (English)In: Proceedings of Power Tech 2007, 2007, 1611-1616 p.Conference paper (Refereed)
Abstract [en]

This paper develops an interruption cost model for households that, as well as outage duration uses activity patterns, outdoor temperature and daylight to describe the impact of different electrical power outages. For households the interruption costs usually measure the inconvenience associated with interrupted activities and uncomfortable indoor temperature due to the outage. Further, the model also captures the large variations in interruption costs for identical outages among households. The model is applied to a test system, and using a Monte Carlo technique the total interruption cost is studied. The results imply that both the time of occurrence and the distributed nature of residential interruption costs have a significant impact on ECOST.

National Category
Other Electrical Engineering, Electronic Engineering, Information Engineering
Identifiers
urn:nbn:se:kth:diva-33808 (URN)10.1109/PCT.2007.4538556 (DOI)000258730101046 ()2-s2.0-50849093177 (ScopusID)978-1-4244-2189-3 (ISBN)
Note
QC 20110519Available from: 2011-05-18 Created: 2011-05-18 Last updated: 2011-07-18Bibliographically approved
2. Considering extreme outage events in cost-benefit analysis of distribution systems
Open this publication in new window or tab >>Considering extreme outage events in cost-benefit analysis of distribution systems
2008 (English)In: Proceedings of Australasian Universities Power Engineering Conference (AUPEC), 2008Conference paper (Refereed)
Abstract [en]

To find an acceptable level of reliability in distribution systems, cost-benefit analysis using customer interruption costs can be applied. In a case study of a test distribution system, investment in cables instead of overhead lines, aimed to increase reliability, is investigated. In addition to considering average values of reliability indices, tools for risk analysis in the financial industry, value-at-risk (VaR) and conditional value-at-risk (CVaR), are also used for the evaluation. Applying these tools allows for extreme events to be given more weight in the investment decision-making process. Even though these kind of events are very infrequent, the consequences are devastating and extreme cases should be included in cost-benefit analysis. By the help of VaR and CVaR the case study shows that cables can cause higher customer interruption costs for some load points in the system during extreme years.

National Category
Other Electrical Engineering, Electronic Engineering, Information Engineering
Identifiers
urn:nbn:se:kth:diva-33809 (URN)2-s2.0-67649641412 (ScopusID)978-0-7334-2715-2 (ISBN)978-142444162-4 (ISBN)
Conference
2008 Australasian Universities Power Engineering Conference, AUPEC 2008; Sydney, NSW; Australia; 14 December 2008 through 17 December 2008
Note

QC 20111222

Available from: 2011-05-18 Created: 2011-05-18 Last updated: 2014-10-24Bibliographically approved
3. Representative test systems for Swedish distribution networks
Open this publication in new window or tab >>Representative test systems for Swedish distribution networks
2009 (English)In: Proceedings of CIRED2009, 2009, 837-837 p.Conference paper (Refereed)
Abstract [en]

This paper describes two electrical distribution systems, Swedish Urban Reliability Test System (SURTS) and Swedish Rural Reliability Test System (SRRTS), which are representative of actual Swedish distribution networks. These test systems aim to serve as a basis for reliability and cost analyses of Swedish distribution networks and for studies of regulation policies. The project was conducted within a research programme of Elforsk, a Swedish industry research association. The challenge has been to make the test systems representative in terms of load, component and customer data as well as network topology. To ensure the similarity of the test systems to actual networks, industry representatives of major Swedish power distribution companies have been an integral part of the development process. This paper shows the result of a validation of the test systems against data compiled by the Swedish Energy Markets Inspectorate. The validation was performed for the reliability indices SAIDI and SAIFI. It was confirmed that the developed test systems are good representatives of actual distribution networks, and thus suitable for further research of distribution networks and for studies of regulation policies.

Keyword
Cost analysis, Customer data, Development process, Distribution network, Electrical distribution system, Energy markets, Industry representatives, Industry research, Integral part, Network topology, Power distribution company, Reliability Index, Reliability test system, Research programmes, Test systems
National Category
Other Electrical Engineering, Electronic Engineering, Information Engineering
Identifiers
urn:nbn:se:kth:diva-33810 (URN)10.1049/cp.2009.1015 (DOI)2-s2.0-70450191894 (ScopusID)978-1-84919126-5 (ISBN)
Conference
20th International Conference and Exhibition on Electricity Distribution, CIRED 2009; Prague; Czech Republic; 8 June 2009 through 11 June 2009
Note

QC 20110530

Available from: 2011-05-18 Created: 2011-05-18 Last updated: 2014-10-09Bibliographically approved
4. Financial risk assessment for distribution system operators regulated by quality regulation
Open this publication in new window or tab >>Financial risk assessment for distribution system operators regulated by quality regulation
2010 (English)In: Proceedings of Probabilistic Methods Applied to Power Systems (PMAPS), 2010Conference paper (Refereed)
Abstract [en]

In the reregulated electricity market, performance-based regulations accompanied by quality regulations are gaining ground. The quality regulation results in new financial risks for the distribution system operators (DSOs) which calls for risk assessment methods that can simulate what costs a certain regulation implies for the DSO. When, for example, guaranteed standards for worst-served customers is combined with a reward and penalty scheme the methods must be able to predict both customer and system reliability. This paper presents a new risk assessment methodology based on time sequential Monte Carlo simulations that can handle both of these levels of reliability to simulate the total regulation cost due to an arbitrary quality regulation. Since most quality regulations are corrected ex-post for each year, variations in yearly reliability can cause large variations in the total regulation cost. Instead of only considering the average total regulation cost the developed methodology uses risk tools from the financial industry to also measure the costs of more extreme years. Doing so gives the DSOs a better understanding of the financial risks they are exposed to. The developed risk assessment methodology is used to evaluate different investment alternatives in a case study.

National Category
Other Electrical Engineering, Electronic Engineering, Information Engineering
Identifiers
urn:nbn:se:kth:diva-33811 (URN)10.1109/PMAPS.2010.5528969 (DOI)2-s2.0-77956449327 (ScopusID)978-1-4244-5720-5 (ISBN)
Note
QC 20110530Available from: 2011-05-18 Created: 2011-05-18 Last updated: 2011-05-30Bibliographically approved
5. A Reliability Model for Distribution Systems Incorporating Seasonal Variations in Severe Weather
Open this publication in new window or tab >>A Reliability Model for Distribution Systems Incorporating Seasonal Variations in Severe Weather
2011 (English)In: IEEE Transactions on Power Delivery, ISSN 0885-8977, E-ISSN 0885-8877, Vol. 26, no 2, 910-919 p.Article in journal (Refereed) Published
Abstract [en]

In distribution system planning and operation, accurate assessment of reliability performance is essential for making informed decisions. Also, performance-based regulation, accompanied by quality regulation, increases the need to understand and quantify differences in reliability performance between networks. Distribution system reliability performance indices exhibit stochastic behavior due to the impact of severe weather. In this paper, a new reliability model is presented which incorporates the stochastic nature of the severe weather intensity and duration to model variations in failure rate and restoration time. The model considers the impact of high winds and lightning and can be expanded to account for more types of severe weather. Furthermore, the modeling approach considers when severe weather is likely to occur during the year by using a nonhomogeneous Poisson process (NHPP). The proposed model is validated and applied to a test system to estimate reliability indices. Results show that the stochasticity in weather has a great impact on the variance in the reliability indices.

Keyword
Distribution system reliability assessment, sequential Monte Carlo simulation, weather modeling
National Category
Engineering and Technology
Identifiers
urn:nbn:se:kth:diva-32626 (URN)10.1109/TPWRD.2010.2090363 (DOI)000288758400045 ()2-s2.0-79953203514 (ScopusID)
Note
QC 20110419Available from: 2011-04-19 Created: 2011-04-18 Last updated: 2011-12-27Bibliographically approved
6. The impact of risk modeling accuracy on cost-benefit analysis of distribution system reliability
Open this publication in new window or tab >>The impact of risk modeling accuracy on cost-benefit analysis of distribution system reliability
2011 (English)In: Proceedings of the 17th Power System Computational Conference (PSCC), Power Systems Computation Conference ( PSCC ) , 2011Conference paper (Refereed)
Abstract [en]

This paper develops a new risk-based cost-benefit analysis method for distribution system reliability applications. In the conventional cost-benefit analysis, decisions are based on expected values which correspond to assuming that society is risk-neutral. Furthermore, input variables are assumed to be uncorrelated. In contrast to previous work this paper incorporates risk into the analysis by using time-sequential Monte Carlo simulations. By using the proposed method the impact that different risk strategies (risk-neutral/risk-averse) and risk models (non-time-varying/time-varying) have on the result of a cost-benefit analysis is investigated in a case study. Results show that when incorporating time-dependent failure rates, restoration times, customer interruption costs, and loads (correlated input data) a different reinvestment project is selected compared to when these time dependencies are ignored. This result holds regardless if decisions are made based on a risk-averse or a risk-neutral strategy.

Place, publisher, year, edition, pages
Power Systems Computation Conference ( PSCC ), 2011
Keyword
Cost-benefit analysis, Distribution system reliability, Monte Carlo simulations, Risk analysis, Cost effectiveness, Costs, Intelligent systems, Investments, Monte Carlo methods, Reliability, Reliability analysis, Risk assessment, Cost benefit analysis methods, Customer interruption costs, Expected values, Input variables, Risk strategies, Time dependent failure, Time sequential Monte Carlo Simulation, Cost benefit analysis
National Category
Other Electrical Engineering, Electronic Engineering, Information Engineering
Identifiers
urn:nbn:se:kth:diva-33812 (URN)2-s2.0-84943738118 (ScopusID)9789175012575 (ISBN)
Conference
17th Power System Computational Conference, Stockholm Sweden, August 22-26, 2011
Note

QC 20110530

QC 20151223

Available from: 2011-05-18 Created: 2011-05-18 Last updated: 2016-02-16Bibliographically approved
7. Risk-based method for distribution system reliability investment decisions under performance-based regulation
Open this publication in new window or tab >>Risk-based method for distribution system reliability investment decisions under performance-based regulation
2011 (English)In: IET Generation, Transmission & Distribution, ISSN 1751-8687, Vol. 5, no 10, 1062-1072 p.Article in journal (Refereed) Published
Abstract [en]

In the reregulated electricity market there is a growing interest in performance-based regulation accompanied by quality regulation for electric distribution networks. This paper develops a new risk-based method for reliability investment decisions when the distribution system operator (DSO) is exposed to financial risks defined by a quality regulation. As quality regulation design becomes more complex, more detailed risk management methods are needed in order to adequately capture the financial risk the DSO is exposed to. The proposed method applies a Monte Carlo simulation technique in order to assess the risks of the considered reinvestment projects. By using the proposed method the impacts that different risk strategies (risk-neutral/risk-averse) and risk models (non-time-varying/time-varying) have on which reinvestment project is selected is investigated in a case study. This is investigated for two different quality regulation designs. The result show that primarily the quality regulation design but also the risk model formulation and risk strategy have a major impact on which reinvestment project is selected.

Keyword
risk based method, distribution system reliability, investment decisions, performance based regulation, re-regulated electricity market, quality regulation, electric distribution networks, distribution system operator, financial risks, risk management method, DSO, Monte Carlo simulation
National Category
Other Electrical Engineering, Electronic Engineering, Information Engineering
Identifiers
urn:nbn:se:kth:diva-33813 (URN)10.1049/iet-gtd.2011.0047 (DOI)000295534100009 ()2-s2.0-80053515792 (ScopusID)
Available from: 2011-05-18 Created: 2011-05-18 Last updated: 2012-01-03Bibliographically approved
8. Evaluation of quality regulation incentives for distribution system reliability investments
Open this publication in new window or tab >>Evaluation of quality regulation incentives for distribution system reliability investments
2011 (English)In: Utilities Policy, ISSN 0957-1787Article in journal (Other academic) Submitted
Abstract [en]

Designing a quality regulation that results in an adequate level of reliability in a distribution system is indeed a challenging task for the regulator. If the regulation is not well designed a socioeconomically beneficial reinvestment project is not beneficial for the DSO, and hence is not selected. This paper proposes an evaluation method for quality regulation designs. The proposed method is applied in a case study to evaluate what incentives for investments in distribution system reliability two different quality regulation designs give. One design is similar to the Swedish quality regulation that will apply from 2012 and the other design is similar to the current Norwegian quality regulation. The effect on network investment decisions when the two designs are modified to give optimal incentives for reliability on system level is also investigated. The case study result shows that even though the quality regulation on system level is designed to give incentives for socioeconomically beneficial investments, these investments may not be beneficial for the regulated DSO if the reward/penalty on the system level is capped too low.

National Category
Other Electrical Engineering, Electronic Engineering, Information Engineering
Identifiers
urn:nbn:se:kth:diva-33814 (URN)
Available from: 2011-05-18 Created: 2011-05-18 Last updated: 2012-03-16Bibliographically approved

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