Financial Risk Evaluation of RCS Deployment in Distribution Systems

Abstract

Remote controlled switch deployment in distribution networks is usually justified via comparing the required investment with the expected decrease in interruption costs. Although the investment is known prior to the implementation, the stochastic nature of contingencies imposes significant uncertainty on interruption costs. The uncertainty may impose substantial financial risks on the distribution company. This paper aims at evaluating the financial risk and key affecting parameters. For doing so, a step-by-step method is presented to evaluate the risk. The method captures the stochastic nature of contingencies through a sequential Monte Carlo simulation approach. A mathematical formulation is developed to optimize post-fault actions minimizing customers’ interruption costs. Various financial risk indices such as volatility index, value-at-risk, and conditional value-at-risk are used to quantify the risk. The proposed method is applied to a test system where different sensitivity analyses are conducted to identify key affecting parameters.