Investment Deferral Research Articles

Sustainable microgrids: Economic, environmental and social costs and benefits of microgrid deployment

This paper addresses the costs and benefits associated with microgrid development relative to the costs and benefits of conventional generation interconnected to a bulk transmission and distribution grid. The costs and benefits are classified as: environmental (avoided environmental damage costs); economic (mainly employment multiplier effects); deferral or avoidance of transmission and distribution investment costs; and greater access to electricity supply that is highly reliable and resilient. Deficiencies due to the lack of relevant available data and of research on economic modeling of microgrids at the societal level are discussed. The context in which these costs and benefits are measured is the Israeli electricity market, which features a highly centralized, vertically integrated electricity company (Israel Electric Corporation, IEC) with some legacy distribution companies. Moreover, because Israel’s transmission and distribution infrastructure investment have declined significantly over the past several years, the Israeli market provides a useful basis for analyses of microgrids as an alternative to such large-scale investments.The analysis reveals that under reasonable assumptions reflecting the current state of microgrid technologies, microgrids may constitute a viable, cost-effective alternative to additional central- station generation requiring new investments in transmission and distribution infrastructure. Specifically, using reasonable assumptions regarding 10-MW incremental investments in a microgrid and in central-station generation with necessary transmission and distribution investments, the analysis indicates that, when considering the reliability, T&D investment deferral, local economic, environmental, and social costs and benefits of each alternative, the net benefits to the Israeli economy from selecting the incremental 10-MW investment in a representative Israeli microgrid may exceed $13,000,000 per year. However, when local economic benefits are not considered, the net benefits decline to approximately $260,000 per year. For perspective, generation capacity additions by the Israel Electric Corporation have averaged 166 MW from 2008 through 2018, reaching 13,775 MW of installed capacity by the end of 2018. Total annual capital investment has averaged approximately $1 billion since 2015, about $400 million of which has been in the generation sector. The paper concludes with future research directions, with an emphasis on integrating engineering analysis, scenario simulation, flexibility, and quantifying social/equity (“fairness”) effects of microgrids.

Design of Optimal Incentives for Smart Charging Considering Utility-Customer Interactions and Distribution Systems Impact

With increasing environmental concerns the penetration of plug-in electric vehicles (PEVs) is expected to increase in the future. Such electrification of the transportation sector will impact the distribution grid adversely; however, PEV smart charging strategies can help mitigate the impacts. In this paper, a PEV smart charging approach is proposed where the charging loads are controlled and incentivized by the local distribution company (LDC) for every unit of energy controlled. A novel framework is proposed to determine the optimal participation of PEVs in the smart charging program and optimal incentives paid by the LDC to PEV customers, such that both parties are economically benefited. The proposed framework models the relationship between customers’ participation and incentives offered by the LDC. The relationship between the expected investment deferral and hence the economic benefits from smart charging participation are considered as well. Monte Carlo simulation is used to simulate the uncertainty of demand, electricity market price, drivers’ behavior, PEV market share, and charging level share. The proposed framework is tested on the 33-bus distribution system and the results show that the proposed approach is effective and can economically benefit both LDC and smart charging PEV participants, while also improving distribution system operation.

Cost metrics of electrical energy storage technologies in potential power system operations

Modern power systems could not exist without the many forms of electricity storage that can be integrated at different levels of the power chain. In this work, the most important applications in which storage provides technical, economic and environmental benefits such as arbitrage, balancing and reserve power sources, voltage and frequency regulation, investment deferral, cost management and load shaping and leveling, are reviewed. Using a 5-function normalization technique the technical and operational characteristics relating to 18 electrical energy storage (EES) technologies are qualitatively assessed and the technology-application pairs identified across the power chain are presented. In particular, two functions were used to normalize the characteristics expressed in real units, two further functions were used for those in percentage values and one function was used to quantify the technical maturity. For large-scale/energy-management applications pumped hydro is the most reliable energy storage option over compressed-air alternatives whereas flywheel and electromagnetic EES devices are still focused on short-duration/power-based applications including frequency regulation, uninterruptible power supply, spinning reserve, etc. Encouraged by the appropriate market and regulatory structures, economics enable storing bulk electricity produced by intermittent sources connected to the grid, rather than using it at once. In medium-to-large scales advanced Pb-acid and molten-salt batteries are considered capable of storing distributed electricity, providing the advantage of load leveling of both the supply network and generation plant. In terms of safety and simplicity, Pb-acid and Li-ion systems are viable options for small-scale residential applications, giving consumers an incentive to reduce their time-of-use charges. Apart from their expected use in transportation sector in the forthcoming years, regenerative fuel cells and flow batteries may offer intriguing potential in stationary applications once mature to commercialization.

Seasonally variant deployment of electric battery storage systems in active distribution networks

Due to the ageing of network infrastructure, the increasing load demand in distribution networks together with the increased installation of photovoltaic (PV) in the medium-voltage (MV) and low-voltage (LV) network, there is a need for network reinforcement. As load growth congests the grid, the strategic placement of electric storage systems can be an alternative to or contribute to a deferral of grid investments. To study this, an optimisation problem solving the dual-purpose deployment of prosumers' level battery storage system has been formulated and will be presented in this study. The MV/LV substation loadings are compared for the 0% prosumers and 100% prosumers scenarios with PV-battery system. The results of the analysis show that the absolute peak at secondary substation decreases by 8.74% and the average day peak drops by 17% while the total annual energy drawn from the grid reduced by 8.41% with the 100% prosumers scenario. Furthermore, by using household-level battery systems for peak shaving of local loads one can achieve a deferral of overloading by 3 years at MV/LV substation.

Assessment of the impact of demand-side management on distribution network voltage stability

The prospect of electricity market liberalisation, increasing renewable power penetration, and network investment deferral has made demand-side management (DSM) a key feature of future smart grid. This study investigates the effect of DSM actions on voltage stability of distribution network. The analysis performed considers the effect that the load reduction, change in load recovery times, and shifting of different type of load from 1 h to the other can have on overall voltage stability of the network. A generic 295 bus distribution network is used to demonstrate this effect.

A novel hierarchical contribution factor based model for distribution use-of-system charges

Due to the limited visibility at low voltage (LV) networks, existing Distribution Use-of-System (DUoS) charging methodologies assume that all the network users use the network in proportion to their peak flows. This naive supposition fails to reflect the contribution of network users to network peak flows, which actually is the driver for network reinforcement. This can send an inadvertent signal to customers, leading to aggravated network pressure. This paper for the first time, brings the new dimension into the design of DUoS charging methodology by considering the true contribution of customer class’s load on network peak flows. It proposes a novel Hierarchical Contribution Factor based Model (HCM), recognizing the contributions of differing customer classes to the network reinforcement of upstream asset. Such contribution will be further propagated to network assets at higher voltage level, forming a Hierarchical CF model and reflecting the true individual class contribution to the whole-system reinforcement. Benefit of the proposed model on investment deferral is assessed by determining annuitized present value (PV) of future investments, and consequences are assessed on a 22-bus practical Indian reference network. The approach helps customers as a class to reduce their network usage charges by minimizing their energy usage contribution during distribution network peaks, eventually reducing distribution network investment and energy transfer costs.

Synchronous DG Planning for Simultaneous Improvement of Technical, Overcurrent, and Timely Anti-Islanding Protection Indices of the Network to Preserve Protection Coordination

The deployment of the distributed generation (DG), especially the synchronous distributed generation (SDG), as the energy infrastructure of smart grid in the distribution systems has drawn the attention of the distribution utilities to improve system performance through DG planning. In this paper, a methodology has been proposed for the planning of SDG units in the distribution system in an attempt to optimize a multiobjective index including the active energy losses during the planning period, the active and reactive power losses at the peak demand, voltage deviations from a reference value, the network investment deferral, the overcurrent protection system speed, and the anti-islanding protection speed. The constraints include the feeders' capacity, the maximum penetration limit due to anti-islanding protection requirements, the voltage limit, the preservation of the overcurrent protection system coordination, and the discrete size of SDG units. The proposed method has been applied to IEEE 14-bus test system with different cases including the different sets of weighting coefficients and the anti-islanding protections.

Distributed Storage Capacity Reservations in Microgrid for LV Network Operation

Abstract This paper introduces a novel method for Low Voltage (LV) network management with diverse distributed energy storage batteries in microgrid. These batteries are used for demand response, allowing distributed network operators (DNOs) to reserve part of storage capacity for relieving network congestion by releasing stored energy. The major difficulty in carrying out storage capacity reservations among diverse customers is the reserved capacity quantification for each type of customers based on the identified network pressure degree and duration. To overcome this difficulty, the algorithm of storage capacity reservation can be considered from both technical and financial sides. In the proposed approach, the amounts of reserved storage capacities are basically evaluated following two criteria: contribution of customers to network pressure and operational cost of storage battery. Besides, an optimal solution for allocating reservation amount is put forward through an enhanced mixed reservation algorithm. A case study is carried out in a practical network in UK to implement the proposed method for network pressure mitigation and investment deferral.

Investment Valuation of Energy Storage Systems in Distribution Networks considering Distributed Solar Generation

Due to growing global awareness of climate change, increasing penetration of distributed solar generation is to be expected worldwide. When the grid integration of these intermittent renewable technologies reaches a high penetration level, technical adaptation, such as generation back-up capacity or distribution network capacity, is required. In this sense, electrical energy storage systems (ESS) offsets variations in renewable electricity production and plays a vital role in integrating these variable generation resources into the grid. In turn, ESS can be used to store excess electricity generated during off-peak demand periods for discharge at peak hours that is known as load peak-shaving, thus saving the system's power for when it is most needed. This paper presents a comprehensive methodology for valuing investments of ESS in distribution networks with high penetration of photovoltaic distributed generation. Specifically, it is focused on the integral assessment of ESS as a flexible option for investment deferral into the expansion planning of the power grid, considering both economic and technical constraints and mainly using the ESS for load peak-shaving. The proposed methodology is tested on a typical Latin American distribution network, particularly from the San Juan Province in Argentina. For this, two expansion planning valuation are performed: one, taking into account traditional expansion alternatives and, the other, considering ESS as flexible expansion options. Results show that the greatest contribution of ESS lies in the flexibility it gives to distribution expansion planning, mainly by deferring network reinforcements.

Comprehensive benefits analysis and economic evaluation of microgrid

This paper is dedicated to analyze the economic issues related to the operation of microgrid system as well as exploring its benefits in improving reliability, energy saving and consumption reduction, environmental protection, investment deferral in transmission and distribution grids from the social perspective. It analyzes its cost and benefits in typical situations by the 2 typical cases of grid-connected and off-grid microgrids compared with that of distributed generator directly connected to power grid. And the key factors affecting the economy of microgrid are discussed.

The Big Jump from the Legs of a Frog [Historical

In recent years, we have witnessed growth in the importance of electrochemical storage for both stationary and mobile applications. With regard to the former, we have seen that the increasing penetration of intermittent renewable sources and of smart grids requires energy storage capabilities suitable for providing services with different technoeconomical horizons, such as sag compensation, frequency regulation, power smoothing, load leveling, load following, grid stabilization, power balancing, peak shaving, and time shifting up to investment deferral. With regard to the latter, the tremendous worldwide success of mobile electronics (cell phones, smartphones, laptops, etc.) in part relies on batteries capable of high power and energy densities. An even wider market expansion is expected in the coming years from electric vehicles, which demand batteries that feature high ranges at low costs. In this framework, intense efforts are being devoted to the development of improved batteries, with the aim of capturing a market that is expected to boom in the coming decades [1], [2]. However, apart from being expected to thrive in a bright future, batteries also boast a glorious past.

Water End-Uses in Low-Income Houses in Southern Brazil

Knowing water consumption patterns in buildings is key information for water planning. This article aims to characterize the water consumption pattern and water end-uses in low-income houses in the region of Florianópolis, Southern Brazil. Data were collected by interviewing householders, as well as by measuring the flow rate of existing water fixtures and appliances. The results indicated that the shower was the fixture with the largest water consumption in households, i.e., about 30%–36% of total water consumption on average, followed by the toilet (18%–20%). The surveyed households consumed from 111 to 152 L/capita·day on average, based on different income ranges. No correlation was found between income and water consumption. The results of this study can be used to estimate the consumption of water for new buildings, as well as to develop integrated water management strategies in low-income developments, in Florianópolis, such as water-saving plumbing fixtures, rainwater harvesting, and greywater reuse. Likely, there would be a deferral of capital investments in new water assets for enhancing water and wastewater services by saving water in low-income houses.

Energy Storage Valuation Under Different Storage Forms and Functions in Transmission and Distribution Applications

In this paper, we analyze and quantify functional value streams of energy storage under different forms (state in which energy is stored) and network location (e.g., transmission or distribution sides). First, we consider a transmission-connected thermal form of storage coupled with concentrating solar power. Using the California power grid as a case study, we show that the coupled unit is significantly less volatile in its response and, through its load following, day-ahead dispatching, and regulation capabilities, it produces significant cost savings. Another case study examines the value of the electrical form of storage in a distribution network and in coupling with photovoltaics. The energy storage is used to mitigate component overloads and to reduce the subsequent infrastructure investments, and smooth out the intermittency of renewable generation. Storage value is quantified formally and under optimal control configuration of storage charge and discharging. Finally, a case study is constructed to examine the functional value of substation-sited storage with respect to investment deferral for the substation transformer.

Assessing the Transmission Expansion Cost With Distributed Generation: An Australian Case Study

Distributed generation (DG) is rapidly increasing its penetration level worldwide and is expected to play a more important role in providing power. An important benefit of DG is its ability to defer transmission investments. In this paper, a simulation model is implemented to conduct quantitative analysis on the effect of DG on transmission investment deferral. The transmission expansion model is formulated as a multi-objective optimization problem with comprehensive technical constraints, such as AC power flow and system reliability and/or security. The case study that was selected is the Queensland electricity market in Australia. Simulation results show that DG can reduce transmission investments significantly. This ability however is greatly influenced by a number of factors, such as the location of DG, the network topology, and power system technical constraints.

Investment Decisions in Distribution Networks Under Uncertainty With Distributed Generation—Part I: Model Formulation

Investment in distributed generation (DG) is an attractive distribution planning option for adding flexibility to an expansion plan, mainly by deferring network reinforcements. In this first part of a two-part paper, a risk-based optimization approach is proposed to model a multistage distribution expansion planning problem that takes DG into account as a flexible option to temporarily defer large network investments. Five features of the installation of DG related to location, size, type, operation and timing are all optimized. The evolutionary particle swarm optimization (EPSO) method is applied to solve this mixed integer nonlinear problem. A return-per-risk index is proposed to assess expansion investments. This index achieves an efficient synergy between the expected return and the risk of investments by performing Monte Carlo simulations. In turn, the flexibility of network investment deferral is assessed through a real option valuation. Finally, in order to quantify the investment deferral benefit, the expected return from a traditional expansion plan (without DG) is compared to the return obtained from a flexible expansion plan (with DG). In the companion paper, the proposed approach is tested on a typical Latin American distribution network; implementation aspects and analysis of numerical results are presented.

Options analysis for long-term capacity design and operation of a lignocellulosic biomass refinery

The growth of the lignocellulosic fuels has been hindered by technological and market uncertainty. This paper optimizes strategic investment decisions by prospective biobased fuel and chemical enterprises. A real options-based stochastic integer programming model is developed in this paper. We model a hypothetical, vertically integrated lignocellulosic enterprise that produces cellulosic ethanol and biosuccinic acid. Uncertainty is represented in bioproduct demands and prices. Strategic options including investment in research and development, investments in a flexible production platform and deferral of project investment are modeled. A hypothetical market model is also developed to correlate crude oil prices with the evolution of bioproduct markets. The discounted value of equity free cash flows is optimized. The optimal results include multiple capacity design plans based on the long term evolution of bioproduct markets. Monte Carlo simulations are also conducted to quantify the risk adjusted NPV's and returns on investment for the optimal capacity design trajectories.

Characterizing and Specifying Connectivity Strategies in and Across Internet Exchanges

Internet eXchanges (IXes) are developed to localize traffic, reduce connectivity costs, and reduce latency. Historically, transit savings were sufficiently substantive to justify investment in IX interconnection strategies, overshadowing other benefits enjoyed by IX participants. Recent work argues these basic IX effects facilitate regional economic development. In developed regions, as transit prices converge with comparable per volume price on Internet exchanges, a new question emerges: given this convergence, what additional value and benefits does the IX provide existing and would-be participants? Governance and organization studies of IXes provide some of the nuance necessary to answer this question. Based on interviews with IX managers and participants, there is value in a more fluid market of interconnection options that facilitate investment deferral and greater control over the repurposing of interconnection resources. Interconnection is presented in terms of platforms and how they implement interconnection options, highlighting how the mechanics of these implementation frame network actors’ decisions regarding how to maximize access to and investments in interconnection markets. Semi-structured interviews of a wide range of network operators and IX operators over the last year and a half imply decision heuristics for optimizing value and network resilience: selectively increasing redundancy, increasing unique interconnection partners, and reducing switching costs, are among the most common criteria. This work distills decision heuristics identified thus far into a partially parameterized model of interconnection decision making across platforms that serve as markets for interconnection options. Unpacking decision heuristics contributes to more precisely explaining the mix of interconnection options available to actors that both derive value from network- and application-level services but who also influence infrastructure investment and strategy decisions through the options they select. This work demonstrates how IX-platforms facilitate greater access to interconnection options and defer bargaining and measurement costs necessary for more specific asset investments. IX-enabled interconnection contributes to the “flattening” of the Internet by providing an investment path to more sophisticated bundles of (flatter) bilateral relations rather than participating solely in the transit hierarchy. The model developed here provides a clear formalism for comparing these. Two classes of parameters are missing: connectivity cost information and parameters representing actor-specific valuations of system properties such as redundancy or latency. A key contribution is to understand the options available by carefully specifying the parameter space based on empirical observation: what are the variables and how are they conceptually related? This work unpacks the mechanisms implementing two common types of interconnection option and concludes with working hypotheses that will be further refined and tested in ongoing work. The next stage of this work focuses on identifying appropriate operationalizations, data sources for cost, and strategies for comparing (validating) theoretical valuations based on empirical operationalizations of variables such as redundancy. A social science approach to indicator development is applied to frame heuristics as background concepts that are refined into specifications of incentives, relationships, and potential indicators. Variables specified here represent possible systematizations of background concepts elicited from interviews. Neither the specification nor the relationships are presented as being writ in stone — rather, they are a part of an ongoing project to elicit empirical trends in the interconnection industry. The variety of network actors that engage with IXes, their value propositions, and the means by which they connect to IX platforms provide insight into which interconnection options are appealing to which types of actors as well as common trade-offs. Qualitatively, this gives insight into which types of actors are willing to invest in which mixes of infrastructure types and topologies. By highlighting trade-off conditions in the demand for interconnection, this specification provides direction for further identification of interconnection costs and the constraints by those making investment decisions. The framework offers a number of contributions. Different interconnection modes are conceptualizes independently, but the framework subsequently highlights mutual dependence and benefits. Working hypotheses argue that different platforms structure and mediate interconnection option implementations (transport, colocation, IX), how they are interleaved with one another in practice, and offer a first pass at identifying and realizing critical paths through investment decisions as they grow and develop specific relationships (and asset investments) beyond simple transit. Building on the notion of a real option, flexibility in general purpose resources (IX-mediated interconnection) facilitates staged, dynamic investment decisions and learning effects.

Cost-Benefit Analyses of Active Distribution Network Management, Part I: Annual Benefit Analysis

With more and more renewable energy generation (REG) connections, busbar voltage violation and line overloading problems may occur for some parts of a distribution network. However, building new circuits to accommodate REG may have high monetary and environmental costs. This paper considers distribution automation as a supplementary scheme to traditional primary asset investments and analyzes the operational benefits from introducing an autonomous regional active network management system (AuRA-NMS) to a practical distribution system with rich renewable sources. The benefits are quantified in terms of optimal power flow control and investment deferral, and the resulting quantification will inform distribution network operators of the trade-offs between investment in the automation system and in the primary assets, thus helping them to make cost-effective investment decisions. Time-series-based simulation for over an entire year is implemented to calculate the benefits of active power loss and curtailment reductions for AuRA-NMS over the current practice. Part I of this paper illustrates the current schemes for voltage control and constraint management, advanced voltage control and constraint management enabled by the distribution automation, and the annual benefit by introducing the AuRA-NMS to the system with different considerable new DG integrations. Part II analyzes the investment deferral benefit by deploying AuRA-NMS.

Fostering microgeneration in power systems: The effect of legislative limitations

The large-scale integration of microgeneration (MG) can bring several technical benefits, such as: improving the voltage profile, reducing power losses and allowing for network capacity investment deferral. Furthermore, it is now widely accepted that introducing new renewable MG, such as wind turbines, photovoltaic panels or biomass can help control carbon emissions, reduce our dependence on oil and contribute to a sustainable energy growth. This paper presents an empirical analysis of the benefits of MG on avoided losses, voltage profiles and branch congestion. The main goal is to clarify whether the current regulatory framework allows for obtaining all the MG potential gains. The main conclusion is that some legal constraints should be removed, or at least relaxed, in order to promote the growth of distributed power generation, particularly, for domestic MG.

DG Impact on Investment Deferral: Network Planning and Security of Supply

Despite the technical challenges in properly accommodating distributed generation (DG), one of the major and well-recognized benefits is the ability of DG to defer future demand-related network investment. It is, however, often poorly represented in existing planning approaches and analysis ignores the potential security of supply benefits. Here, a novel, more integrated, approach is presented wherein reinforcements required by system security standards (e.g., N - 1) are also taken into account. The DG contributions to system security provided by U.K. Engineering Recommendation P2/6 are adopted, enabling the methodology to quantify the deferment produced by DG considering both demand growth- and system security-related investment. The methodology employs the successive elimination algorithm together with multistage planning and is applied to a generic, meshed, U.K. distribution network. Results show that, despite differences between technology types, significant economic benefits can be harnessed when strategically incorporating DG at the planning stage.