Economic impact of voltage sags and short interruptions

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1/27 Economic impact of Economic impact of voltage sags and short voltage sags and short interruptions interruptions Prof. Jovica V. Milanović Prof. Jovica V. Milanović Dipl.Ing., MSc, PhD, DSc, CEng, F(f)SAEngS, FIET, FIEEE Dipl.Ing., MSc, PhD, DSc, CEng, F(f)SAEngS, FIET, FIEEE Manchester, M13 9PL, United Kingdom School of Electrical & Electronic Engineering J.V.Milanovic–UK–Round table: Session 2

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School of Electrical & Electronic Engineering. Economic impact of voltage sags and short interruptions. Prof. Jovica V. Milanović Dipl.Ing ., MSc, PhD, DSc, CEng, F(f) SAEngS , FIET , FIEEE Manchester, M13 9PL , United Kingdom. J.V.Milanovic–UK–Round table: Session 2. Content. - PowerPoint PPT Presentation

Transcript of Economic impact of voltage sags and short interruptions

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Economic impact of voltage sags Economic impact of voltage sags and short interruptions and short interruptions

Economic impact of voltage sags Economic impact of voltage sags and short interruptions and short interruptions

Prof. Jovica V. MilanovićProf. Jovica V. Milanović Dipl.Ing., MSc, PhD, DSc, CEng, F(f)SAEngS, FIET, FIEEEDipl.Ing., MSc, PhD, DSc, CEng, F(f)SAEngS, FIET, FIEEE

Manchester, M13 9PL, United Kingdom

School of Electrical & Electronic Engineering

J.V.Milanovic–UK–Round table: Session 2

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Content Content

• Quality of Electricity Supply / Power Quality (PQ)• Consequences (financial) of inadequate PQ• Assessment of financial losses incurred to industry by

inadequate PQ

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Quality of Electricity Supply / Power Quality of Electricity Supply / Power Quality definitionsQuality definitions

Quality of Electricity Supply / Power Quality of Electricity Supply / Power Quality definitionsQuality definitions

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Quality of Electricity Supply Quality of Electricity Supply

Quality of Electricity Supply can be broadly subdivided into three categories:

• Reliability – measure of the ability of the network to meet

continuously changes in customer demand• Commercial quality

– relates to individual agreements between the utility and end-use customers

• Power Quality (often referred to as Voltage quality)

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Power Quality Power Quality • Collection of various subjects which utilities have

traditionally dealt with individually:Interruptions HarmonicsDips (Sags) Capacitor switchingFlicker Lightning SurgesVoltage Regulation (Reliability)

• Covers all areas from the generation plant to the last customer in the chain of electricity supply

• Deals with complex physical interaction between electricity supply a end-user’s equipment

• Principally deals with the quality of supply voltage waveform

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Consequences (financial) of inadequate Consequences (financial) of inadequate Power QualityPower Quality

Consequences (financial) of inadequate Consequences (financial) of inadequate Power QualityPower Quality

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Source: META Group (www.metagroup.com), 2003; Converted to £, 2005

Business interruption costsBusiness interruption costs

Revenue loss/Hour

£0.2M - £1.6M£0.2M - £1.6M

Revenue loss/Employee/Hour

£22 - £613£22 - £613

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Annual outages and PQ costs - 2 Annual outages and PQ costs - 2

Italy (2002)- normalized costs due to voltage sags based on 200 small industrial customers(0.2 - 3.2 Euro/kW)(0.2 - 3.2 Euro/kW)

10-month study carried out by a major generator in Europe on 12 sites of low technology manufacturing operation

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Annual outages and PQ costs - 4 Annual outages and PQ costs - 4

Total losses due to outages are about

$45.7B/yr$45.7B/yr ($23K/plant/yr)

US economy loses $104 - $164B/yr$104 - $164B/yr

Total losses due to PQ are about

$6.7B/yr $6.7B/yr ($3,406/plant/yr) US economy loses

$15 - $24B/yr$15 - $24B/yr

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Sectors

$599

$2,859

9,643

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Digital Economy Cont. Process Mfr. Fab. & Essn. Srvs.

Average annual per-Average annual per-establishment cost of PQ establishment cost of PQ problems by sectors problems by sectors (on average 8.3 PQ problems (on average 8.3 PQ problems

per year)per year)

$10,598

$61,828

$49,328

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

Digital Economy Cont. Process Mfr. Fab. & Essn. Srvs.

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Average annual per-Average annual per-establishment cost of establishment cost of outages by outages by sectors sectors (on(on average 3.9 average 3.9 outages in a typical outages in a typical year mostly less year mostly less than 3 minutes long)than 3 minutes long)

Source: EPRI’sCEIDS Report – 2001

(9%-23% of (9%-23% of costs of outages)costs of outages)

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The economic issue - summaryThe economic issue - summary 1 1

• There are huge differences in reported financial losses per event, type of interruption, industry, utility and country.

• There is no uniformity in reporting the costs. – Is there a need for “Customised Customer Damage Function”?

• The annual figures are very large and easily exceed several millions per utility, the losses on the country/economy level are much higher.– Can we afford to ignore them in the present competitive

environment? – What steps should we take to put them under control and

ultimately reduce them?

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Customised Customer Damage FunctionCustomised Customer Damage Function

The area of uncertainty is bound by CCDF produced with two extreme weighting The area of uncertainty is bound by CCDF produced with two extreme weighting factor selections; size dominant (factor selections; size dominant (a=1, b=0) and location dominant (a=0, b=1) a=1, b=0) and location dominant (a=0, b=1)

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The economic issue - summaryThe economic issue - summary 2 2

• From a technical point of view, all equipment can be designed so that it is completely immune to voltage dips.

• Complete immunity would come at substantial cost, and most equipment might become ”too immune” for typical disturbances and common areas of application.

• The end-user should balance the higher price that needs to be paid for higher immunity against the potential financial loss incurred due to a failure of less resilient equipment/process

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The economic issue - summaryThe economic issue - summary 3 3

• Do we need mandatory voltage dip immunity standards? – The decision is essentially how much more should all

end-users who buy particular equipment be required to pay for the increased immunity of that equipment, keeping in mind that, for large number of applications, voltage dips might not be an issue in the first place.

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Summary on PQ costsSummary on PQ costs

• The ultimate queston: What is it that following disturbance, or irregularity in supply, leads to generation of finacial loss to utility/end users?– Are we worried because of equipment failure (or misoperation)

or because of process failure?• Are the the above two the same?

– Will equipment failure (or misoperation) always lead to process failure (interruption in production or service delivery)?

– If the industrial process or service eventually gets interrupted, how do we account for all relevant finacilal losses?

• Is there a standardised way to do so?– How do we assess true economic value of potential soluton?

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Assessment of financial consequences of Assessment of financial consequences of inadequate Power Quality inadequate Power Quality

Assessment of financial consequences of Assessment of financial consequences of inadequate Power Quality inadequate Power Quality

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Assessment of the cost of process failureAssessment of the cost of process failure

Fault statistics

Fault calculation with/without mitigating solution

Equipment/process immunity threshold established based on PIT

Assessed number of process failures with/without mitigating solution

Calculated expected dip performance at equipment terminals

Measured/ recorded dip performance at equipment terminals

Cost of process failures

Cost of mitigating solution (at network, or process or equipment level)

Other considerations

Investment decision

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Customer requirements Customer requirements

Source: Source: Samsung's "Power Vaccine" Standard: Samsung's "Power Vaccine" Standard: Applications and Recommendations for a Stringent Power Applications and Recommendations for a Stringent Power Quality Immunity Standard, Quality Immunity Standard, A. McEachernA. McEachern

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Voltage Sag and Short Interruption

(from simulations or monitoring)

Duration, Magnitude

DSI, MSI

Sensitivity Index

Equipment Failure Risk

(MDSI)

Fast Assessment

Accurate Assessment

MDSI Method

Fuzzy Method

Probabilistic Method

Equipment Failure Risk

(Probabilistic)

Equipment Failure Risk

(Fuzzy)

Equipment Failure Risk AssessmentEquipment Failure Risk Assessment OPTIONSImprovement of equipment immunity. Injection of power to compensate lost voltage. Provide redundancy in supply. Preventing sags from propagating to sensitive loads. Reducing the number and duration of faults.

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Process Immunity Time (PIT)Process Immunity Time (PIT)

• Time constant specifying maximum time a process can continue operation after its main equipment tripped (CIGRE C4 1.10)

• Process will not be disrupted if the equipment is restarted within this time

Process variable

Time

Processfailure

threshold

PIT

Instant of sensitive equipment failure due to PQ event

Successful restarts of failed equipment

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Financial loss due to equipment Financial loss due to equipment malfunction - 1malfunction - 1

• Direct costs - refer to production cost accrual at a given instance of disturbance, and are, therefore, a function of time and process activity. - Raw Material - Overhead- Energy - Lost Opportunity- Labour - Penalties

• Restart Costs – Expert Damage Assessment– Loss, Damage, Repair and Replace– Restart Energy – Idle and Restart Labour

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Financial loss due to equipment Financial loss due to equipment malfunction - 2malfunction - 2

• Hidden Costs

– Decreased Competitiveness, Reputation and Customer Dissatisfaction

– Employee Annoyance as a Result of Process Disruption

• Other Factors

– Hit Rate and Miss Rate

– Pass Rate and Fail Rate

– Plant Voltage Disturbance Trend with Time

– COD Dependence on Time, Power Consumption and Business Type

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1

0.82

0.58

0

0.2

0.4

0.6

0.8

1

1.2

Without LoadP rofile

Modeling

ContinuouslyOperating Load

Office-hour-type Load

Financial Risk Assessment & Load ProfileFinancial Risk Assessment & Load Profile

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Cost of downtimeCost of downtime

Profile for a typical Profile for a typical day’s work schedule day’s work schedule and and completecomplete process process disruptiondisruption

Profile for a typical Profile for a typical day’s work schedule day’s work schedule and and partialpartial process process disruptiondisruption

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Cost of downtimeCost of downtime

Profile for a typical Profile for a typical day’s work schedule day’s work schedule and and completecomplete process process disruptiondisruption

AdjustedAdjusted profile for a profile for a typical day’s work typical day’s work schedule and schedule and completecomplete process process disruptiondisruption

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Net Present Value calculation 1Net Present Value calculation 1

• Due to the long-term nature of investment in mitigation the financial tool should be able to account for the time value of money.

• Stochastic Net Present Value (SNPV), a modification of conventional Net Present Value (NPV) is suitable for this type of analysis as it includes risk representation in analysis.

• This feature is important for the problem in hand due to the non-deterministic nature of various components involved in the analysis, such as – equipment and plant sensitivities,– voltage sag profile, – variations in losses due to load profile and process cycle.

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Net Present Value calculation 2Net Present Value calculation 2

SCFt=stochastic net cash flow at

year t

T=project lifetime in years

t=the year number

I=initial investment (if applicable)

r=discount rate

N=total number of sags in year t

n=sag number

p=Process failure risk

Mt=operation and maintenance costs of

investment in year t (if applicable)

L=Loss due to process trip obtained from financial calculation

1 1

Tt

tt

SCFSNPV I

r

1

N

t t n nn

SCF M p L

The best mitigation option for the plant is the one with the highest SNPV

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Summary on economics of PQ immunitySummary on economics of PQ immunity

• In some cases immunity is (or might be) economically impractical.

• Complete voltage dip immunity may be prohibitively expensive for some equipment.

• The costs also depend on the meaning of “immunity”, and how wide this immunity should be, i.e., immunity of the equipment or immunity of the process?

• The process of selecting appropriate immunity of the equipment or industrial/commercial process involves complex techno-economic optimisation, where setting of different parameters involved may require quite different expertise.

Close collaboration between a range of specialists within an industrial

facility is necessary for selecting an adequate level of equipment/process

immunity to voltage sags.