IEEE Power & Energy Magazine - July/August 2016 - 28

Conclusions
TEP under uncertainty is a largely unsolved issue in restructured, modern electricity markets. The depth and extent of
uncertainty in TEP is demonstrated by three key practical
dimensions.
✔ First, the structure of uncertainty determines the most
appropriate modeling techniques, stressing the existence of several high-impact uncertainties for which
no single and reliable modeling technique is available.
✔ Second, the timescale of uncertainty defines the scope
of possible actions, encompassing operation decisions
in the short term, planning decisions in the medium
term, and strategic decisions in the long term. The
scope of long-term strategic decisions is such that the
future may be partly constructed and not only predicted or bounded by including normative elements
along explorative scenarios that depict plausible and
uncontrollable futures.
✔ Third, different sources of uncertainty require different management strategies, such as public policy
for geopolitical uncertainties, public involvement for
social uncertainties, or markets integration for economic uncertainties, while strategies such as energy
efficiency and transmission expansion simultaneously
address several uncertainties.
Risks produced by each source of uncertainty should be
assessed when evaluating transmission projects with large
impacts. Thus, TEP is inherently multicriteria when considering its impact on reliability and security standards,
economic benefits, and environmental externalities, among
other objectives and risks. Furthermore, the extent of some
large uncertainties suggests that TEP is to be treated as part
of a broader guidance process for electricity markets, where
innovative solutions to directly address problems such as
public opposition are to be explored together with traditional
expansion planning. Besides demonstrating the large impact
of uncertainties in TEP and other management strategies,
the proposed categorization aims to improve communication
between researchers and professionals and aid understanding
of key properties of uncertainty to analyze existing literature
and suggest future research efforts.
Regarding optimization tools, no single approach is
currently appropriate by itself for dealing with TEP under
myriad relevant uncertainties in the short, medium and long
term. SP and RO are both valid alternative approaches to
medium-term TEP, requiring primarily methodological
improvements. Although the economic foundation of SP
on expected utility theory is unmatched, RO may be preferable because of tractability issues of SP. On the other
hand, no approach seems to be reliable enough to deal with
Unknowable uncertainties in the form of strategic scenarios.
Other approaches such as devising robust and flexible plans
by means of minimax regret and adjustment cost, respectively, have also been proposed. Unfortunately, it is not currently clear which approach is the most promising, given
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conflicting evidence and the variety of arguments in favor of
one approach or the other.
Significant research efforts are required to integrate
uncertainty into TEP models along other important issues
such as competition, sustainability, and reliability standards. Uncertainty in TEP connects all of these important
issues in modern, restructured electricity markets. The
conceptual framework proposed clearly depicts these interactions, their extent and the resulting complexity of TEP,
advocating for a far more integrated and holistic approach
to power systems and markets planning than within the
regulated utility.

Acknowledgements
Acknowledgements to Rodrigo Pérez, Danilo Jara, Jorge
Urrutia, Marysol Ayala, and Yarela Flores as part of Pontificia Universidad Católica de Chile's transmission working
group for the Chilean National Energy Commission (CNE),
and Víctor Perez-Cotapos. Thanks to Fondecyt 1141082
project and Dr. Luiz Barroso for suggestions.

For Further Reading
G. Apostolakis, "The concept of probability in safety assessments of technological systems," Science, vol. 250, no. 4986,
pp. 1359-1364, Dec. 1990.
D. W. Bunn, Applied Decision Analysis. New York: McGraw-Hill, 1984.
F. X. Diebold, N. A. Doherty, and R. J. Herring, "Introduction," in The Known, the Unknown, and the Unknowable
in Financial Risk Management: Measurement and Theory
Advancing Practice, F. X. Diebold, N. A. Doherty, R. J.
Herring, Eds. Princeton, NJ: Princeton Univ. Press, 2010,
pp. 1-30.
S. Lumbreras and A. Ramos, The new challenges to
transmission expansion planning. Survey of recent practice
and literature review, Electric Power Syst. Res., vol. 134, pp.
19-29, May 2016.
P. J. H. Schoemaker, "Multiple scenario development: Its
conceptual and behavioral foundation," Strategic Manage.
J., vol. 14, no. 3, pp. 193-213, Mar. 1993.
W. E. Walker, R. J. Lempert, and J. H. Kwakkel, "Deep
uncertainty," in Encyclopedia of Operations Research and
Management Science, S. I. Gass, M. C. Fu, Eds. New York:
Springer, 2013, pp. 395-402.

Biographies
Constantin Velásquez is with Pontificia Universidad Católica de Chile, Chile.
David Watts is with Pontificia Universidad Católica de
Chile, Chile.
Hugh Rudnick is with Pontificia Universidad Católica
de Chile, Chile.
Cristian Bustos is with Pontificia Universidad Católica
de Chile, Chile.
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