Comparing T&D Capacity Options, On a Risk Adjusted … · EESAT_2005_DUA-Eyer.ppt 2 ACKNOWLEDGMENTS...

Comparing T&D Capacity Options,On a Risk Adjusted Cost Basis

Including Stationary and Transportable DERs

Joe Iannucci and Jim EyerDistributed Utility Associates

(510) 482 [email protected]

for US DOE and Sandia National Laboratories

andThe California Energy Commission

EESAT_2005_DUA-Eyer.ppt 2

ACKNOWLEDGMENTS

• This project is part of the collaboration between the California Energy Commission (CEC) and the Energy Storage Systems Program of the U.S. Department of Energy (DOE/ESS) through Sandia National Laboratories (SNL).


Agenda

• Study Purpose

• T&D Planning Uncertainties

• Risk Adjusted Cost Concept and Results

• Merits of DER Transportability

• Conclusions


Team

• Joe Iannucci, DER Advocate• Jim Eyer, Senior Analyst• Jim Skeen, Utility Distribution Engineer, P.E.• Dr. Roger Pupp, Economist, Financial Analyst• Dr. Thomas Hoff, Engineering Economist• Susan Horgan, Principal of DUA

• Imre Gyuk (DOE) and John Boyes (Sandia)• Mark Rawson (CEC)


Study Purpose

• Develop and try a basic framework to compare risk adjusted cost for T&D capacity options, including DER

– Hypothesis: More optimal cost-of-service is achieved by selecting T&D capacity options using risk adjusted cost.

• Characterize the merits of DER “transportability”


Background• Ri$k

– financial exposure that is not certain– forms: additional cost and/or reduced “profit”

• Explicit evaluation of risk allows utility toavoid unattractive outcomesaccept risk, to pursue favorable outcomes

• Utility pricing– revenue requirements obscures actual risk

“distributed risk” -- all customers pay


Risk Evaluation

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Do Nothing Do Upgrade 600 kW DER 750 kW DER Rent 500 kWDiesel

Rent 500 &250 kW Diesel

Option

Ris

k ($

Yea

r 1)

DER is Undersized

DER Reliability

Project Delay

Utility Response

Utility Lost Revenue

T&D Damage and Repair

Customer Unserved Energy


Risk Adjusted Cost Example

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Do Nothing Do Upgrade 600 kW DER,$100/kW-year

750 kW DER,$75/kW-year

Rent 500 kWDiesel

Rent 500 &250 kW Diesel

Option

Ris

k-ad

just

ed C

ost (

$ Ye

ar 1

)

Risk

Direct Cost


Key T&D Planning Uncertainties

• “Inherent” Peak Load Growth– Drivers: economic conditions & load mix

• Uncertain Block Load Changes – e.g.; strip malls, housing developments

primarily additions• Weather-related Variability

normally design to “extreme” conditions• e.g.; one year in ten


Key T&D Planning Uncertainties

• Construction Delays– engineering and/or construction staff shortages– budget shortfalls– “institutional” challenges (e.g., permits)

• Load Shape Change– load mix– energy use pattern

• T&D Equipment Loading History– remaining life / reliability


Calculating RiskExpected Value of Possible Future Outcomes

50% chanceload growth < expected

no overload

50% chance load growth > expected

10% overload

Load GrowthUncertainty

45% chanceno overload

5% chance7% overload



End States Cost ($)

$0

$50,000

$170,000

$425,000

Gross, forEnd-State

Probability-Adjusted

$0

$2,500

$31,500

$76,500

$100,000Expected Value (Risk)

TemperatureUncertainty

90% chance temperature <= design

10% overload

10% chance temperature > design

7% overload

10% chance temperature > design

17% overload

90% chance temperature <= design

0% overload


The Case• Upgrade 12 MW to 16 MW (+4,000 kW +33%)

– cost: $260/kWadded * 4,000 kW = $1,040,000– “annualized” @ 11% = $114,000/year

• Existing Equipment– remaining life 12 years– value: $39,600/year of remaining life

• Load – previous year peak load 11.7 MW– uncertain load growth


Ri$k is Co$t• Cost elements of risk quantified:

– Utility-related• T&D equipment damage -- $39,600/year remaining• event “response” -- assumed $1,000/event• lost revenues -- assumed 14¢/kWh

– Customer-related• cost incurred due to outages -- monetized• assumed $3/kWh of “unserved energy”

NORMALLY reliability indices are “proxy”

All costs evaluated relate to overloading.


Cost for Possible Future Outcomes

0

300

600

900

1,200

1,500

1,800

2,100

2,400

2,700

3,000

3,300

0% 5% 10% 15% 20% 25%

Scenario Maximum Overload, % of T&D Equipment Rating

Scce

nario

Tot

al C

ost (

$000


Load Growth Uncertainty

0%

5%

10%

15%

20%

25%

30%

0% 5% 10% 15% 20% 25%Overload, % of T&D Equipment Rating

Freq

uenc

y of

Occ

urre

nce

0%

20%

40%

60%

80%

100%

Cum

ulative Probability


0

20,000

40,000

60,000

80,000

100,000

120,000

0 250 500 750 1,000 1,250 1,500

DER Capacity (kW)

Risk

-- E

xpec

ted

Valu

e ($

)

DER “Undersizing” RiskDo Nothing Cost


DER Cost

0

50,000

100,000

150,000

200,000

250,000

250 500 750 1,000 1,250 1,500DER Capacity (kW)

Ann

ual C

ost (

$)

$75 kW-year

$100 kW-year

$150 kW-year


0

20,000

40,000

60,000

80,000

100,000

120,000

0 250 500 750 1,000 1,250 1,500

DER Capacity (kW)

Risk

-- E

xpec

ted

Valu

e ($

)

0

50,000

100,000

150,000

200,000

250,000

250 500 750 1,000 1,250 1,500DER Capacity (kW)

Ann

ual C

ost (

$)

$75 kW-year

$100 kW-year

$150 kW-year

Risk Adjusted Cost Results

75,000

100,000

125,000

150,000

175,000

250 500 750 1,000 1,250 1,500DER Capacity (kW)

Ris

k A

djus

ted

Cos

t -- E

xpec

ted

Valu

e ($

)

Upgrade Risk-adjusted CostDo Nothing DER Cost $150 kW-yearDER Cost $100 kW-yearDER Cost $75 kW-year


Important CriteriaLoad Growth Uncertainty

Weather UncertaintyOverloading: magnitude, frequency, durationCustomer Cost Assumed for OutagesExisting T&D Equipment• Capacity “Headroom” Remaining• Type/value• Life Remaining

Budget/Staff Availability Uncertainty


DER Transportability Value• Use same capacity several times

different locationsdifferent seasonsdifferent years

• 3x to 5x benefits ($PW) for same kW• Distribution budget optimization

– serve same or more demand (kW) with less $• Fleet effects

– DER reliability (backup units, n+1)– economies-of-scale


0

50

100

150

200

250

300

1 2 3 4 5 6 7 8 9 10Year

Ann

ual $

PW

/ kW

Single Year Reliability/PQValue

Single Year Deferral Value

Example: Value Proposition for Transportable MES and DGs

0

50

100

150

200

250

300

1 2 3 4 5 6 7 8 9 10Year

Annu

al $

PW /

kW

0

200

400

600

800

1,000

1,200

1,400

Cumulative $PW

/ kW

Single Year Reliability/PQ Value

Single Year Deferral Value

Cumulative Value ($PW)


Conclusions• Transportable DERs can have significantly

enhanced value (relative to stationary).• T&D risk is an important though obscured

element of the DER value proposition.• A rich area for additional research

– “piggy-back” on related developments in T&D planning and engineering

• especially tools, data, “smart” T&D systems

– apply methodology to actual cases

Comparing T&D Capacity Options, On a Risk Adjusted … · EESAT_2005_DUA-Eyer.ppt 2 ACKNOWLEDGMENTS...

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