Interruption Cost Estimation for Value-Based Reliability Investment in Emerging Smart Grid Resources

Growing uncertainty in supply and demand in power systems causes significant challenges in maintaining supply reliability at affordable costs. Power grids are expected to undergo substantial transformations to address these challenges with upgrades and integration of emerging smart technologies that require significant investment costs. A value-based reliability assessment of these grid technologies is necessary to justify the worth of these investments. A key parameter required in such an assessment is the cost of power interruptions originating from transmission system failures. The interruption cost data available in published reports and past surveys relate to generation inadequacy since generation facilities comprise the most capital-intensive investment of an electric utility. Customer interruptions due to a lack of generation mainly occur due to generation failures during the peak demand period, whereas interruptions due to transmission component failures can occur at other periods with specific probabilities. This paper presents a methodology to estimate the cost of outages originating from transmission asset failures, which proposes a sector period model for each customer sector to obtain associated demand-normalized interruption costs. The proposed method can also be used to decide investment in grid resiliency enhancement against extreme weather that mainly impacts the grid network facilities.