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Evaluation of quality regulation incentives for distribution system reliability investments
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: Utilities Policy, ISSN 0957-1787, E-ISSN 1878-4356Article 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.

Place, publisher, year, edition, pages
2011.
National Category
Other Electrical Engineering, Electronic Engineering, Information Engineering
Identifiers
URN: urn:nbn:se:kth:diva-33814OAI: oai:DiVA.org:kth-33814DiVA: diva2:417909
Available from: 2011-05-18 Created: 2011-05-18 Last updated: 2017-12-11Bibliographically 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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