Option value of Soft Open Points in distribution networks

Abstract

We propose a novel stochastic planning model that considers investment in conventional assets as well as in Soft Open Points, as a means of treating voltage and thermal constraints caused by the increased penetration of renewable distributed generation (DG) sources. Soft Open Points are shown to hold significant option value under uncertainty; however, their multiple value streams remain undetected under traditional deterministic planning approaches, potentially undervaluing this technology and leading to a higher risk of stranded assets.