How to Estimate the Value of Service Reliability Improvements

Publication Type

Conference Paper

Date Published

07/2010

LBNL Report Number

LBNL-3592E

Abstract

A robust methodology for estimating the value of service reliability improvements is presented. Although econometric models for estimating value of service (interruption costs) have been established and widely accepted, analysts often resort to applying relatively crude interruption cost estimation techniques in assessing the economic impacts of transmission and distribution investments. This paper first shows how the use of these techniques can substantially impact the estimated value of service improvements. A simple yet robust methodology that does not rely heavily on simplifying assumptions is presented. When a smart grid investment is proposed, reliability improvement is one of the most frequently cited benefits. Using the best methodology for estimating the value of this benefit is imperative. By providing directions on how to implement this methodology, this paper sends a practical, usable message to the industry.

Conference Name

IEEE Power and Energy Society General Meeting

Year of Publication

2010

Publisher

IEEE

Conference Location

Minneapolis, MN

Organization: 

Research Areas: