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DOE OSTI2016

A multi-model study of energy supply investments in Latin America under climate control policy

In this article we investigate energy supply investment requirements in Latin America until 2050 through a multi-model approach as jointly applied in the CLIMACAP-LAMP research project. We compare a business-as-usual scenario needed to satisfy anticipated future energy demand with a set of scenarios that aim to significantly reduce CO 2 emissions in the region. We find that more than a doubling of annual investments, in absolute terms, occurs in the business-as-usual scenario between 2010 and 2050, while investments may treble over the same time horizon when climate policies are introduced. However, investment costs as a share of GDP decline over time in the business-as-usual scenario, as well as the climate policy scenarios, due to the fast economic growth in that region. Business-as-usual cumulative investments of 1.4 trillion US$ are anticipated between 2010 and 2050 in energy supply, and increase when additional climate policies are introduced: under a carbon tax of 50 $/tCO 2 e in 2020 increasing with a rate of 4% per year, an additional 0.6 trillion US$ (+45%) investment is needed. Climate control measures lead to increased investment in low-carbon electricity technologies, primarily wind, solar, and CCS applied to fossil fuels and biomass. Our analysis suggests that compared to the business-as-usual case an average additional 21 billion US$ per year of electricity supply investments is required in Latin America until 2050 under a climate policy aiming at 2°C climate stabilization. Conversely, there is a disinvestment in fossil fuels. For oil production, a growth from 58 billion US$ to 130 billion US$ annual investment by 2050 is anticipated in a business-as-usual scenario: ambitious climate policy reduces this to 28 billion US$. Finally, mobilizing necessary additional investment capital, in particular for low-carbon technologies, will be a challenge, and suitable frameworks and enabling environments for a scale-up in public and private investment will be critical to help reach required levels. The economic case for such a transition still remains to be articulated.

54 ENVIRONMENTAL SCIENCES↗
DOE OSTI2017

Regulatory Incentives and Disincentives for Utility Investments in Grid Modernization

Electric power is America's most capital-intensive industry, with more than $100 billion invested each year in energy infrastructure. Investment needs are likely to grow as electric utilities make power systems more reliable and resilient, deploy advanced digital technologies, and facilitate new services to meet some consumers' expectations for greater choice and control. But do current regulatory approaches provide the appropriate incentives for grid modernization investments? This report presents three perspectives: -Financial analyst Steve Kihm begins by explaining that any major investor-owned electric utility that wants to raise capital today can do so at a reasonable cost. The question is whether utility managers want to raise capital for grid modernization. Specifically, they look for investments that create the most value for their existing shareholders. In cases where grid modernization investments are not the best choice in terms of shareholder value, Kihm describes shareholder incentive mechanisms that regulators could consider to encourage such investments when they are in the public interest. -From an institutional perspective, Dr. Janice Beecher finds that the traditional rate-base/rate of return regulatory model provides powerful incentives for utilities to pursue investments, cost control, efficiency and even innovation, and it is well suited to the policy objectives of grid modernization. Prudence of grid modernization investments (fair returns) depends on careful evaluation of the specific asset, and any special incentives (bonus returns) should be used only if they promote economic efficiency consistent with the core goals of economic regulation. According to Beecher, realizing the promises of grid modernization depends on effective implementation of the traditional regulatory model and ratemaking tools to serve the public interest. -Conversely, former commissioner and clean energy consultant Ron Lehr says that rapid electric industry changes require a better alignment of utility investment incentives with changes challenging the electricity sector, emerging grid modernization options and benefits, and public policies. For example, investor-owned utilities typically have an incentive to make capital investments, but rarely to employ expense-based solutions, since utilities do not earn profits on expenses. Further, Lehr cites a variety of factors that stand in the way of creating well targeted and well aligned utility incentives, including litigated regulatory processes. These may be a poor choice for finding the right balance among competing interests, establishing rules of prospective application, justifying demonstrations of new technologies and approaches to meeting emerging consumer demands, and keeping pace with rapid change.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2017

Design and impact assessment of watershed investments: An approach based on ecosystem services and boundary work

Watershed investments, whose main aim is to secure water for cities, represent a promising opportunity for large-scale sustainability transitions in the near future. If properly designed, they promote activities in the watershed that enhance ecosystem services while protecting nature and biodiversity, as well as achieving other societal goals. In this paper, we build on the concepts of ecosystem services and boundary work, to develop and test an operative approach for designing and assessing the impact of watershed investments. The approach is structured to facilitate negotiations among stakeholders. Its strategic component includes setting the agenda; defining investment scenarios; and assessing the performance of watershed investments as well as planning for a follow-up. Its technical component concerns data processing; tailoring spatially explicit ecosystem service models; hence their application to design a set of “investment portfolios”, generate future land use scenarios, and model impacts on selected ecosystem services. A case study illustrates how the technical component can be developed in a data scarce context in sub-Saharan Africa in a way that is functional to support the steps of the strategic component. The case study addresses soil erosion and water scarcity-related challenges affecting Asmara, a medium-sized city in Eritrea, and considers urban water security and rural poverty alleviation as two illustrative objectives, within a ten-year planning horizon. The case study results consist in spatially explicit data (investment portfolio, land use scenario, impact on ecosystem services), which were aggregated to quantitatively assess the performance of different watershed investments scenarios, in terms of changes in soil erosion control. By addressing stakeholders' concerns of credibility, saliency, and legitimacy, the approach is expected to facilitate negotiation of objectives, definition of scenarios, and assessment of alternative watershed investments, ultimately, to contribute to implementing an adaptive watershed management.

54 ENVIRONMENTAL SCIENCES↗
DOE OSTI2017

Optimal investment strategies for distributed generation in distribution networks with real option analysis

Efficient and well‐timed investment in distributed generation (DG) in distribution networks in the electricity market environment presents a big challenge for distribution companies. In this study, a real option valuation framework is proposed to determine the optimal investment strategies for DG including the investment location, size, and timing. Within the proposed framework, the profit from investing in DG is modelled, where the benefits include the operation cost savings and capacity update deferral benefit compared with a no‐DG‐investment scenario over the study period. Future power demands and electricity prices are modelled as stochastic variables. The candidate DG investment plans are considered as multiple mutually exclusive options, and the corresponding managerial flexibility for seizing opportunities and mitigating risk of loss upon an unfavourable unfolding of future uncertainties is assessed with real option analysis using the extended least square Monte Carlo method. The distribution of future investment strategies and optimal initial investment threshold levels under various scenarios are analysed in a case study to demonstrate the characteristics of the proposed framework and methodology.

Zou, Bo↗
DOE OSTI2016

Effects of Deployment Investment on the Growth of the Biofuels Industry. 2016 Update

This report updates the 2013 report of the same title. Some text originally published in that report is retained and indicated in gray. In support of the national goals for biofuel use in the United States, numerous technologies have been developed that convert biomass to biofuels. Some of these biomass to biofuel conversion technology pathways are operating at commercial scales, while others are in earlier stages of development. The advancement of a new pathway toward commercialization involves various types of progress, including yield improvements, process engineering, and financial performance. Actions of private investors and public programs can accelerate the demonstration and deployment of new conversion technology pathways. These investors (both private and public) will pursue a range of pilot, demonstration, and pioneer scale biorefinery investments; the most cost-effective set of investments for advancing the maturity of any given biomass to biofuel conversion technology pathway is unknown. In some cases, whether or not the pathway itself will ultimately be technically and financially successful is also unknown. This report presents results from the Biomass Scenario Model--a system dynamics model of the biomass to biofuels system--that estimate effects of investments in biorefineries at different maturity levels and operational scales. The report discusses challenges in estimating effects of such investments and explores the interaction between this deployment investment and a volumetric production incentive. Model results show that investments in demonstration and deployment have a substantial growth impact on the development of the biofuels industry. Results also show that other conditions, such as accompanying incentives, have major impacts on the effectiveness of such investments. Results from the 2013 report are compared to new results. This report does not advocate for or against investments, incentives, or policies, but analyzes simulations of their hypothetical effects.

09 BIOMASS FUELS↗
DOE OSTI2021

Regulatory Mechanisms to Enable Investments in Electric Utility Resilience

In 2019, Sandia National Laboratories contracted Synapse Energy Economics (Synapse) to research the integration of community and electric utility resilience investment planning as part of the Designing Resilient Communities: A Consequence-Based Approach for Grid Investment (DRC) project. Synapse produced a series of reports to explore the challenges and opportunities in several key areas, including benefit-cost analysis, performance metrics, microgrids, and regulatory mechanisms to promote investments in electric system resilience. This report focuses on regulatory mechanisms to improve resilience. Regulatory mechanisms that improve resilience are approaches that electric utility regulators can use to align utility, customer, and third-party investments with regulatory, ratepayer, community, and other important stakeholder interests and priorities for resilience. Cost-of-service regulation may fail to provide utilities with adequate guidance or incentives regarding community priorities for infrastructure hardening and disaster recovery. The application of other types of regulatory mechanisms to resilience investments can help. This report: characterizes regulatory objective as they apply to resilience; identifies several regulatory mechanisms that are used or can be adapted to improve the resilience of the electric system--including performance-based regulation, integrated planning, tariffs and programs to leverage private investment, alternative lines of business for utilities, enhanced cost recovery, and securitization; provides a case study of each regulatory mechanism; summarizes findings across the case studies; and suggests how these regulatory mechanisms might be improved and applied to resilience moving forward. In this report, we assess the effectiveness of a range of utility regulatory mechanisms at evaluating and prioritizing utility investments in grid resilience. First, we characterize regulatory objectives which underly all regulatory mechanisms. We then describe seven types of regulatory mechanisms that can be used to improve resilience--including performance-based regulation, integrated planning, tariffs and programs to leverage private investment, alternative lines of business for utilities, enhanced cost recovery, and securitization--and provide a case study for each one. We summarize our findings on the extent to which these regulatory mechanisms have supported resilience to date. We conclude with suggestions on how these regulatory mechanisms might be improved and applied to resilience moving forward.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2016

Environmental assessment and investment strategies of provincial industrial sector in China — Analysis based on DEA model

As an energy-intensive industry, the industrial sector consumes 70% of energy consumption and causes serious environmental pollution in China. Also, the government emphasized the promotion of R&D investment in the industrial sector in China's National Plan on Climate Change (2014–2020). It is meaningful and contributes to assessing energy and environmental performance, as well as R&D and industrial pollution control (IPC) investment strategies of China's industrial sector. A non-radial DEA model, as with natural and managerial disposability, was adopted to evaluate this from provincial and regional perspectives during the 2008–2012 period. Energy and environmental performance was evaluated by unified efficiency under natural disposability (UEN), unified efficiency under managerial disposability (UEM), and unified efficiency under natural and managerial disposability (UENM). The empirical results indicated that Shandong and Hainan were efficient under natural and managerial disposability, while other provinces had the potential to improve their energy and environmental performance. The number of provinces that was fit for investments of R&D and IPC increased from 2008 to 2010, then decreased in 2011 and 2012. In spite of this, many provincial industrial sectors should make efforts to reduce pollution by investment on technology. Tianjin, Heilongjiang, Jiangxi and Henan were especially the best investment objects because investments of R&D and IPC turned to be effective for them during the whole study period. Moreover, western China had the highest average UENM, followed by eastern China and central China. Eastern China and central China were rewarding to expand investments. Coal consumption was the main factor to negatively affect unified efficiency whereas the increase in economic development level was primarily responsible for the improvement of unified efficiency. According to the results, differentiated suggestions to further improve energy and environmental performance were proposed.

54 ENVIRONMENTAL SCIENCES↗
DOE OSTI2011

Measuring the Economic Impacts of Federal Investments in Research

Measuring the Economic Impacts of Federal Investments in Research evaluates approaches to measuring the returns on federal research investments. This report identifies new methodologies and metrics that can be developed and used for assessing returns on research across a wide range of fields (biomedical, information technology, energy, agriculture, environment, and other biological and physical sciences, etc.), while using one or more background papers that review current methodologies as a starting point for the discussion. It focuses on tools that are able to exploit available data in the relatively near term rather than on methodologies that may require substantial new data collection. Over the last several years, there has been a growing interest in policy circles in identifying the payoffs from federal agency research investments, especially in terms of economic growth, competitiveness, and jobs. The extraordinary increase in research expenditures under the American Recovery and Reinvestment Act (ARRA) of 2009 and the President's commitment to science and technology (S&T) funding increases going forward have heightened the need for measuring the impacts of research investments. Without a credible analysis of their outcomes, the recent and proposed increases in S&T funding may not be sustained, especially given competing claims for federal funding and pressures to reduce projected federal budget deficits. Motivated by these needs and requirements, Measuring the Economic Impacts of Federal Investments in Research reviews and discusses the use of quantitative and qualitative data to evaluate the returns on federal research and development (R&D) investments. Despite the job-focused mandate of the current ARRA reporting requirements, the impact of S&T funding extend well beyond employment. For instance, federal funding in energy research may lead to innovations that would reduce energy costs at the household level, energy imports at the national level, and greenhouse gas emissions at the global level. In principle, these benefits can be measured as a return on research investments, with appropriate consideration of time lags to research outcomes and attribution to private as well as public expenditure. With appropriate metrics, the same could be true for benefits to public health, environmental quality, and food productivity and security. Federal funding of research leads to the development of human capital that is deployed in a variety of occupations with economic and social impacts. Research also produces information that is used in formal (e.g., regulatory and judicial) and informal (e.g., firm and consumer) decision making processes. In addition to reviewing the range of work (by academics, consultants, and research agencies themselves) that has been done in measuring research outcomes and providing a forum to discuss their methods, this report also considers the different methodologies used across fields of research (e.g., agriculture and energy research) to identifies which are applicable to a range of federal S&T funding.

99 GENERAL AND MISCELLANEOUS↗
DOE OSTI2012

Investment in different sized SMRs: Economic evaluation of stochastic scenarios by INCAS code

Small Modular LWR concepts are being developed and proposed to investors worldwide. They capitalize on operating track record of GEN II LWR, while introducing innovative design enhancements allowed by smaller size and additional benefits from the higher degree of modularization and from deployment of multiple units on the same site. (i.e. 'Economy of Multiple' paradigm) Nevertheless Small Modular Reactors pay for a dis-economy of scale that represents a relevant penalty on a capital intensive investment. Investors in the nuclear power generation industry face a very high financial risk, due to high capital commitment and exceptionally long pay-back time. Investment risk arise from uncertainty that affects scenario conditions over such a long time horizon. Risk aversion is increased by current adverse conditions of financial markets and general economic downturn, as is the case nowadays. This work investigates both the investment profitability and risk of alternative investments in a single Large Reactor or in multiple SMR of different sizes drawing information from project's Internal Rate of Return stochastic distribution. multiple SMR deployment on a single site with total power installed, equivalent to a single LR. Uncertain scenario conditions and stochastic input assumptions are included in the analysis, representing investment uncertainty and risk. Results show that, despite the combination of much larger number of stochastic variables in SMR fleets, uncertainty of project profitability is not increased, as compared to LR: SMR have features able to smooth IRR variance and control investment risk. Despite dis-economy of scale, SMR represent a limited capital commitment and a scalable investment option that meet investors' interest, even in developed and mature markets, that are traditional marketplace for LR. (authors)

21 SPECIFIC NUCLEAR REACTORS AND ASSOCIATED PLANTS↗
DOE OSTI2018

Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals

Investments are often recognized as the ‘lifeblood’ of the global energy system. Low-carbon investments can provide the means for initiating a system transformation, as called for by the Paris Agreement and Sustainable Development Goals. Improving our understanding of the scale and nature of these investments under diverging technology and policy futures is therefore of great importance to decision makers. Here we show that the pronounced reallocation of the investment portfolio needed for transforming the energy system will not be instigated by the current suite of Nationally Determined Contributions. Charting a course toward ‘well below 2 °C’ instead requires that low-carbon investments overtake fossil investments globally before 2025 and then continue to grow from there. Pursuing the 1.5 °C target demands a marked up-scaling in low-carbon capita beyond that demanded by 2 °C. The investment needs for making progress on certain other SDG targets are small relative to those for energy.

McCollum, David↗
DOE OSTI2013

Effects of Deployment Investment on the Growth of the Biofuels Industry

In support of the national goals for biofuel use in the United States, numerous technologies have been developed that convert biomass to biofuels. Some of these biomass to biofuel conversion technology pathways are operating at commercial scales, while others are in earlier stages of development. The advancement of a new pathway toward commercialization involves various types of progress, including yield improvements, process engineering, and financial performance. Actions of private investors and public programs can accelerate the demonstration and deployment of new conversion technology pathways. These investors (both private and public) will pursue a range of pilot, demonstration, and pioneer scale biorefinery investments; the most cost-effective set of investments for advancing the maturity of any given biomass to biofuel conversion technology pathway is unknown. In some cases, whether or not the pathway itself will ultimately be technically and financially successful is also unknown. This report presents results from the Biomass Scenario Model -- a system dynamics model of the biomass to biofuels system -- that estimate effects of investments in biorefineries at different maturity levels and operational scales. The report discusses challenges in estimating effects of such investments and explores the interaction between this deployment investment and a volumetric production incentive. Model results show that investments in demonstration and deployment have a substantial positive effect on the development of the biofuels industry. Results also show that other conditions, such as supportive policies, have major impacts on the effectiveness of such investments.

09 BIOMASS FUELS↗
DOE OSTI2014

The Cost-Effectiveness of Investments to Meet the Guiding Principles for High-Performance Sustainable Buildings on the PNNL Campus

As part its campus sustainability efforts, Pacific Northwest National Laboratory (PNNL) has invested in eight new and existing buildings to ensure they meet the U.S. Department of Energy’s requirements for high performance sustainable buildings (HPSB) at DOE sites. These investments are expected to benefit PNNL by reducing the total life-cycle cost of facilities, improving energy efficiency and water conservation, and making buildings safer and healthier for the occupants. This study examines the cost-effectiveness of the implementing measures that meet the criteria for HPSBs in 3 different types of buildings on the PNNL campus: offices, scientific laboratories, and data centers. In each of the three case studies examined the investments made to achieve HPSB status demonstrated a high return on the HPSB investments that have taken place in these varied environments. Simple paybacks for total investments in the three case study buildings ranged from just 2 to 5 years; savings-to-investment ratios all exceeded the desirable threshold of 1; and the net present values associated with these investments were all positive.

BUILDINGS↗
DOE OSTI2018

Foreign direct investment with tax holidays and policy uncertainty

Abstract We study foreign direct investment agreements that entitle firms to a lower tax rate during a tax holiday period. Our model considers both finite and uncertain tax holiday period settings. We show that the tax holiday duration may have, for small tax rate reductions, a nonmonotonic effect on the investment timing. For sufficiently high tax reductions, a longer tax holiday speeds up investment. A higher tax reduction during the tax holiday and a lower uncertainty are shown to have a monotonic effect on the threshold, hastening investment. However, in case of a finite tax holiday, for exceptional high salvage values, a higher uncertainty can speed up investment. We show the usefulness of our model to design an optimal incentives package that prompts investment.

Azevedo, Alcino↗
NASA NTRS2001

An Approach to Establishing System Benefits for Technologies In NASA's Spaceliner Investment Area

NASA's has established long term goals for access-to-space. The third generation launch systems are to be fully reusable and operational around 2025. The goals for the third generation launch system are to significantly reduce cost and improve safety over current systems. The Advanced Space Transportation Program Office (ASTP) at the NASA's Marshall Space Flight Center in Huntsville, AL has the agency lead to develop space transportation technologies. Within ASTP, under the Spaceliner Investment Area, third generation technologies are being pursued. The Spaceliner Investment Area's primary objective is to mature vehicle technologies to enable substantial increases in the design and operating margins of third generation RLVs (current Space Shuttle is considered the first generation RLV) by incorporating advanced propulsion systems, materials, structures, thermal protection systems, power, and avionics technologies. Advancements in design tools and better characterization of the operational environment will result in reduced design and operational variabilities leading to improvements in margins. Improvements in operational efficiencies will be obtained through the introduction of integrated vehicle health management, operations and range technologies. Investments in these technologies will enable the reduction in the high operational costs associated with today's vehicles by allowing components to operate well below their design points resulting in improved component operating life, reliability, and safety which in turn reduces both maintenance and refurbishment costs. The introduction of advanced technologies may enable horizontal takeoff by significantly reducing the takeoff weight and allowing use of existing infrastructure. This would be a major step toward the goal of airline-like operation. These factors in conjunction with increased flight rates, resulting from reductions in transportation costs, will result in significant improvements of future vehicles. The real-world problem is that resources are limited and technologies need to be prioritized to assure the resources are spent on technologies that provide the highest system level benefits. Toward that end, a systems approach is being taken to determine the benefits of technologies for the Spaceliner Investment Area. Technologies identified to be enabling will be funded. However, the other technologies will be funded based on their system's benefits. Since the final launch system concept will not be decided for many years, several vehicle concepts are being evaluated to determine technology benefits. Not only performance, but also cost and operability are being assessed. This will become an annual process to assess these technologies against their goals and the benefits to various launch systems concepts. The paper describes the system process, tools and concepts used to determine the technology benefits. Preliminary results will be presented along with the current technology investments that are being made by ASTP's Spaceliner Investment Area.

Hueter, Uwe↗
NASA NTRS2017

ESTO Investments in Innovative Sensor Technologies for Remote Sensing

For more then 18 years NASA Earth Science Technology Office has been investing in remote sensing technologies. During this period ESTO has invested in more then 900 tasks. These tasks are managed under multiple programs like Instrument Incubator Program (IIP), Advanced Component Technology (ACT), Advanced Information Systems Technology (AIST), In-Space Validation of Earth Science Technologies (InVEST), Sustainable Land Imaging - Technology (SLI-T) and others. This covers the whole spectrum of technologies from component to full up satellite in space and software. Over the years many of these technologies have been infused into space missions like Aquarius, SMAP, CYGNSS, SWOT, TEMPO and others. Over the years ESTO is actively investing in Infrared sensor technologies for space applications. Recent investments have been for SLI-T and InVEST program. On these tasks technology development is from simple Bolometers to Advanced Photonic waveguide based spectrometers. Some of the details on these missions and technologies will be presented.

Babu, Sachidananda R.↗
DOE OSTI2013

Master Limited Partnerships and Real Estate Investment Trusts: Opportunities and Potential Complications for Renewable Energy

Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs) are two proposed investment vehicles which have the potential to lower renewable energy assets' high cost of capital; a critical factor in the Department of Energy's goal for renewable energy to achieve grid-parity with traditional sources of electric generation. Due to current U.S. federal income tax laws, regulations, and administrative interpretations, REITs and MLPs cannot finance a significant portion of the cost of renewable energy assets. Efforts are underway to alter these rules by changing the definition of 'real property' (REIT) and 'qualified income' (MLP). However, even with rule changes, both investment vehicles have structural challenges to efficiently finance renewable energy assets. Among them are 1) effectively utilizing the U.S. federal income tax incentives; 2) administratively structuring the investments to not be overly onerous or complicated, given the potential for pooling a relatively large amount of small assets; and 3) attracting and retaining a large enough investment community to participate in the funding opportunities. This report summarizes these challenges so that if proposed federal changes are made, stakeholders have an understanding of the possible outcomes.

32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATI↗
DOE OSTI2015

Inconsistent Investment and Consumption Problems

In a traditional Black–Scholes market we develop a verification theorem for a general class of investment and consumption problems where the standard dynamic programming principle does not hold. The theorem is an extension of the standard Hamilton–Jacobi–Bellman equation in the form of a system of non-linear differential equations. We derive the optimal investment and consumption strategy for a mean-variance investor without pre-commitment endowed with labor income. In the case of constant risk aversion it turns out that the optimal amount of money to invest in stocks is independent of wealth. The optimal consumption strategy is given as a deterministic bang-bang strategy. In order to have a more realistic model we allow the risk aversion to be time and state dependent. Of special interest is the case were the risk aversion is inversely proportional to present wealth plus the financial value of future labor income net of consumption. Using the verification theorem we give a detailed analysis of this problem. It turns out that the optimal amount of money to invest in stocks is given by a linear function of wealth plus the financial value of future labor income net of consumption. The optimal consumption strategy is again given as a deterministic bang-bang strategy. We also calculate, for a general time and state dependent risk aversion function, the optimal investment and consumption strategy for a mean-standard deviation investor without pre-commitment. In that case, it turns out that it is optimal to take no risk at all.

71 CLASSICAL AND QUANTUM MECHANICS, GENERAL PHYSIC↗
DOE OSTI2014

Economic evaluation of distribution system smart grid investments

This paper investigates economic benefits of smart grid automation investments. A system consisting of 7 substations and 14 feeders is used in the evaluation. Here benefits that can be quantified in terms of dollar savings are considered, termed “hard dollar” benefits. Smart Grid investment evaluations to be considered include investments in improved efficiency, more cost effective use of existing system capacity with automated switches, and coordinated control of capacitor banks and voltage regulators. These Smart Grid evaluations are sequentially ordered, resulting in a series of incremental hard dollar benefits. Hard dollar benefits come from improved efficiency, delaying large capital equipment investments, shortened storm restoration times, and reduced customer energy use. Analyses used in the evaluation involve hourly power flow analysis over multiple years and Monte Carlo simulations of switching operations during storms using a reconfiguration for restoration algorithm. The economic analysis uses the time varying value of the Locational Marginal Price. Algorithms used include reconfiguration for restoration involving either manual or automated switches and coordinated control involving two modes of control. Field validations of phase balancing and capacitor design results are presented. The evaluation shows that investments in automation can improve performance while at the same time lowering costs.

25 ENERGY STORAGE↗