Risk Analysis Can Improve Transmission Planning

Risk-based planning has the potential to provide a framework to address transmission planning challenges.
Published: Wed 06 May 2015

New challenges to the transmission system, including changing generation mixes and regulatory frameworks and new technologies, are presenting new challenges for transmission planning for which the current, primarily deterministic, analysis may not provide optimal solutions.

Probabilistic risk assessment

A recent white paper from the Electric Power Research Institute (EPRI) prepared for the Eastern Interconnection States’ Planning Council and National Association of Regulatory Utility Commissioners (NARUC), proposes that probabilistic risk assessment (PRA) methodologies, aka “risk-based planning” or “probabilistic planning” techniques, have the potential to provide a framework to consider the various uncertainties and risks facing transmission planners in a more rigorous manner.

Probabilistic approaches have been applied traditionally to resource adequacy planning. Such methods can address the complexities introduced by the uncertainties in data and forecasts. This cannot be captured in a deterministic framework because of the impossibly large number of deterministic studies required to assess each possible combination of outcomes. Another distinguishing feature of probabilistic planning is that the trade-off between reliability and cost can often be explicitly calculated. High reliability risk plans often carry low expected costs while plans with low reliability risk tend to be more expensive. The distributions of cost and risk output in PRA analyses allow planners to identify meaningful reliability targets that appropriately consider consumer costs. Furthermore, probabilistic planning can potentially address other regulatory requirements such cost allocation issues and Renewable Portfolio Standards (RPS) mandates.

Framework for transmission planning

Combining the strengths of risk-based approaches with the existing deterministic framework a comprehensive transmission planning approach is proposed. The three steps are summarized as follows:

1. Develop multiple scenarios (or futures) to consider long-term uncertainties that impact transmission planning process but cannot be quantitatively expressed using probability distributions. In the US for example, the main uncertainties that can impact transmission planning processes are federal, state, and local regulations related to environmental restrictions, changing resource mix both on supply and demand side, long-term fuel costs and availability, economic growth, and new technologies across generation, transmission and distribution systems. Multiple scenarios are developed to discretize these uncertainties.

2. Once a certain number of scenarios are developed, various risks impacting transmission planning should be considered for each scenario to develop transmission planning cases that represent credible load-generation dispatch scenarios.

3. The transmission planning cases developed in step 2 can be analyzed using risk-based reliability and risk-based economic methods and planning criteria. Risk-based reliability analysis involves finding frequency and duration of voltage and thermal problems, load curtailment due to remedial actions, as well as finding unreliability costs. The reliability analysis can be performed using either state enumeration or Monte Carlo technique. Probabilistic economic analysis can be used to calculate cash flows and net present value of different system enhancements. Finally, various alternatives can be compared and the one that meets the criterion can be selected.

Risk-based planning

Areas where risk-based planning can strongly support the existing deterministic framework are as follows:

At present planners try to simulate the worst case scenario along with a few seasonal cases without any explicit treatment of uncertainties and risks. However, this may no longer be sufficient to address variability due to renewable generation, changing load shapes as a result of demand side technologies, and spikes in extreme weather. Probabilistic approaches can be used to come up with transmission planning cases as described above.

For the developed transmission planning cases, existing deterministic criteria including the N-1 principle can be applied to assess system reliability and ensure that all deterministic criteria are respected in accordance with NERC standards. However, risk-based planning can be used in addition as a safety net to confirm need, timing, priority, and potentially, whether a more substantial investment is justified. In addition, using a probabilistic economic criteria can ensure that reliability and costs are appropriately weighted in to make a better decision.

In summary, risk-based approaches can provide a strong analytical framework to identify system weaknesses, compare multiple alternatives for system upgrades, and justify transmission upgrades. Thus they can not only co-exist with the deterministic framework but can play a very important role in making planning decisions.

Further reading

EPRI: PRA White Paper – A White Paper on the Incorporation of Risk Analysis into Planning Processes