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The impact of risk modeling accuracy on cost-benefit analysis of distribution system reliability
KTH, School of Electrical Engineering (EES), Electric Power Systems.
KTH, School of Electrical Engineering (EES), Electric Power Systems.ORCID iD: 0000-0002-8189-2420
2011 (English)In: Proceedings of the 17th Power System Computational Conference (PSCC), Power Systems Computation Conference ( PSCC ) , 2011Conference paper, Published 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 [en]
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: urn:nbn:se:kth:diva-33812Scopus ID: 2-s2.0-84943738118ISBN: 9789175012575 (print)OAI: oai:DiVA.org:kth-33812DiVA: diva2:417906
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
In thesis
1. Risk-based methods for reliability investments in electric power distribution systems
Open this publication in new window or tab >>Risk-based methods for reliability investments in electric power distribution 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
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:nbn:se:kth:diva-33815 (URN)978-91-7501-003-8 (ISBN)
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

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Söder, Lennart

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