Value of Lost Load A Critical Parameter for Optimum Utility Asset Investment

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Value of Lost Load A Critical Parameter for
Optimum Utility Asset Investment
2005
Dr. Amir Hisham Hashim Daniel Andrew Sen Radzian
A Rahman 6 December 2005
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Introduction

• Utilities are responsible for
• Generation
• Transmission
• Distribution

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Introduction

• This responsibility includes ensuring
• System adequacy
• Security criteria
• Balanced against the
• Investment costs
• Operating costs

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Background

• Two approaches for asset optimization
• Probabilistic approach
• Deterministic approach

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Background

• Reliability worth according to Billington is
• Outage Cost to Utility includes loss of
  revenue, loss of goodwill, loss of future
  potential sales and increased expenditure for
  maintenance and repair
• Outage Cost to Industry includes lost of
  production, damaged machineries and products and
  corrective maintenance
• Outage Cost to Residential this includes lost
  of frozen foods, alternative energy cost

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Background

• Often, outage cost to Industry and Residential
  outweigh the outage cost to Utility
• Cost can be reduced through
• construction of parallel lines which connect a
  power source to the load

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Background

• Utility Asset Investment Balancing Reliability
  Cost and Reliability Worth

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Value of Lost Load

• The Value of Loss Load (VoLL) is
• The estimated amount that customers receiving
  electricity with firm contracts would be willing
  to pay to avoid a disruption in their electricity
  service.
• The value of these losses can be expressed as a
  CDF
• Loss (/kW) f(duration, season, time of day,
  notice)

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Value of Lost Load

• Example Customer Damage Functions (CDFs)

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Application of VoLL

• Example of three networks with different
  reliability levels

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Application of VoLL

• Table 1 Example Failure Events

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Application of VoLL

• Table 3 Annual Customer Interruption Cost

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Application of VoLL

• Calculation show that, statistically, the
  increase of power lines is proven to reduce the
  annual outage time at a load point, and thus the
  outage costs incurred
• However, building lines incurs investment cost

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Application of VoLL

• Assuming the distance is 100m
• Capital cost of building an additional line would
  be RM50,000
• Savings derived from adding another line to the
  spur network so that it becomes a double circuit
  is RM2740.00 RM360.56 or RM2379.44 per year
• Initial investment of RM50,000 can be recovered
  in a period of 21 years of service

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Application of VoLL

• Adding another line for a triple circuit network
  is not cost effective because the additional
  savings is only RM46.64 per year derived
• Therefore, the optimum topology in this
  particular example case is a double circuit
  network

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Conclusion

• Determination of VoLL is important
• Cost benefit analysis of any new asset
  development
• Comparision of outage cost vs. investment cost
• Payback period due to higher system reliability

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Conclusion

• Wider scope of application
• Maintenance work worth RM3 million
• What is the payback period?
• What is the projected increase in reliability?
• What is the projected cost savings of this work?
• What is the optimum amount of work that needs to
  be done?

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• The End