The hard impact low probabilities’ impacts on power distribution system economy

Abstract

Electricity distribution systems benefit customers, investors, and operational managers economically. However, natural hazards pose significant risks to these networks, contributing to economic instability. This study assesses the impact of low-probability, high-impact events, particularly storms, on asset management and lifespan within the electricity distribution industry. By introducing three key indicators—rate of return, service rate, and cost per asset—the research investigates how different assets respond to various risks. Each asset has a distinct threshold for risk tolerance, which diminishes as its lifespan increases. Utilizing a cost model and analyzing breakpoint curves, the study evaluates the effects of high impact and low probability (HILP) incidents on the indicators mentioned earlier, factoring in asset composition changes. The study assesses the impact of storms with varying intensities on a sample network by formulating economic relations and allocating budgets for HILP events across different network conditions. Results highlight the allocation of budgetary resources for securing assets of different ages within the network. Furthermore, sensitivity analysis explores how changes in network expansion coefficients and failure rates influence these factors. Notably, findings reveal that systems with slower development rates exhibit greater asset resilience; as demonstrated in scenario 3, the assets are strengthened from a 70-year life to a 6-year life for a 145 km storm.