NVE-RME is currently investigating alternative variables to better describe the task of delivering power to new and existing customers, and, hence, better reflect the cost structure of distribution grids. As part of this process, THEMA authored two studies on methods to calculate the power distance and to measure the value of a reliable power supply.
The Norwegian regulatory authority for energy (NVE-RME) is responsible for the income regulation of grid companies. The allowed income levels are determined through a benchmarking process where distribution grid companies are compared based on how cost-efficiently they solve the task of supplying power to customers. In the current income regulation, the task is represented by three output parameters; the number of customers, number of substations, and length of power lines in the high-voltage distribution grid.
As consumer patterns in the distribution grid change because of technological changes such as more distributed generation, local storage, and EV charging infrastructure, the benchmarking parameters should be adapted to capture the resulting changes in the DSOs task. In two projects for NVE-RME we have investigated parameters reflecting the effort associated with supplying power over long distances (‘power distance’), and in meeting customers’ quality of supply requirements (‘supply of reliability’).
An important criterion for both output variables is that they are exogenous, i.e. that they capture the challenges associated with power distribution and supply or reliability, and are not affected by the choices of the individual DSO.
NVE-RME identified the ‘power distance’ as a suitable parameter to reflect both the demand and the distance over which power has to be transferred to each customer. The power distance is defined as the sum of transferred power multiplied by the distance to each metering point, thereby reflecting the distribution of demand in a grid area. THEMA has worked with the formulation, computation, and interpretation of the power distance parameter through a series of projects for NVE-RME since 2018. Now, the concept of power distance as a benchmarking parameter has matured to a level where it could be applied to and analysed on real grid systems.
In the report “Methods for calculating power and energy distance”, we investigate different computational approaches to calculate the power distance in the high-voltage and low-voltage distribution grid. In the high-voltage distribution, grid algorithms to build an idealised grid based on customer locations and demand were developed and tested on the license areas of four Norwegian grid companies. In the low-voltage grid, we investigated three methods that are more suitable for large datasets. We recommend applying an idealised grid method that accounts for the marginal increase in power distance (artificial grid method) in the high-voltage distribution grid and suggest to further investigate the methods of customer density and angular proximity in the low-voltage distribution grid. We also recommend that the robustness of the methods be tested on a larger dataset, preferably from all grid companies in Norway.
Supply of reliability
The study “Variables for measuring the task of supplying reliability in the distribution grid”, focused on security and reliability of power supply. As a starting point for the analysis, we used the so-called CENS functions (cost of energy not supplied, Norwegian: KILE). These functions reflect the value of lost load for different customer groups and can therefore be used to quantify the customers’ demand for a reliable power supply. We performed a qualitative assessment of two methods to incorporate the demand for reliability in the benchmarking model: Through weighting existing output parameters with a reliability measure, or by introducing a separate output parameter for reliability. We also carried out a quantitative analysis to illustrate the possible impact of different approaches. Before a new reliability variable can be introduced, further analyses are however needed.