IEEE Power & Energy Magazine - July/August 2016 - 30
Implementing a New Paradigm
for Managing Economic Risks
in Grid Expansion
Image
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of optimization methods that identify network configurations from the thousands or millions
of possibilities that are potentially advantageous and so deserve more detailed analysis. In
this article, we argue that these tools need to be enhanced to deal with the newest challenge:
that of managing the profound uncertainties which currently face the industry.
The twists and turns of the power industry over the past decades have taught us that disregarding uncertainty can be costly and even fatal for companies. does
the phrase "stranded assets" sound familiar?
how many readers remember washington
public power supply system (wppss, aptly
pronounced "whoops") and its nuclear plans
(hopefully, you didn't invest your retirement
savings in their bonds). radical changes in the
industry include (but are certainly not limited
to) new environmental policies, declining-and
even disappearing-load growth, and the expansion of new clean-energy technologies. Consider
that in the 1960s, a prominent industry forum
labeled the ugliness of overhead distribution lines
as the greatest environmental issue, while 7% annual
load growth was the norm. nuclear and oil-fired generation grew rapidly; soon after, president Carter outlawed natural gas in new power plants as too "low" a
use for that scarce fuel.
more changes are sure to come, but their nature
and magnitude are highly uncertain in this rapidly
evolving world. future carbon policy; the impact of
electric vehicles, distributed resources, and smart-grid
technologies on load growth; the role of storage and central-station renewables; the roller coaster of fuel prices-
these are just a few of the risks we face. depending on
what happens in the future, transmission facilities added
today may provide far more value than planners anticipate;
on the other hand, they may turn out to be costly stranded
assets. Transmission planning tools need to recognize these
uncertainties. Importantly, they need to properly evaluate the
flexibility that investments provide for adapting to all the possible future twists and turns.
most tools today consider just one possible future trajectory
of loads, policies, and costs when maximizing the economic benefits of investment; therefore,
they cannot quantify the economic value of this flexibility. as a result, such deterministic
(single-scenario) tools are likely to undervalue investments that make the system more adaptable, while overvaluing grid investments tailored for a particular future scenario that could
hem the system in and leave it vulnerable to other possible scenarios.
july/august 2016
ieee power & energy magazine
31
Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - July/August 2016
IEEE Power & Energy Magazine - July/August 2016 - Cover1
IEEE Power & Energy Magazine - July/August 2016 - Cover2
IEEE Power & Energy Magazine - July/August 2016 - 1
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IEEE Power & Energy Magazine - July/August 2016 - 114
IEEE Power & Energy Magazine - July/August 2016 - Cover3
IEEE Power & Energy Magazine - July/August 2016 - Cover4
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