Theory and Case Study

348 Pages·2003·12.69 MB·English

by  World Bank Group

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PRCP<,1e V
ENttERGY
LIBRARY
1. B. R. D I
M?5
lqe9
The Economics of
Power System Reliability
and Planning
SECTORAL LIBRARY
INUERNATIONAL BANK
RECONSRI RUCrON AND DFVFLOPMENrF
SEP 0 3 1987
37N
E ER G Y
LlBRRY
AW a
A World Bank Research Publication

Mohan Munasinghe
The Economics of
Power System Reliability
and Planning
Theory and Case Study
SECTORAL LIBRARY
INTERNArIONAL BANK
FOR
RECONSTRUC7ION AND DFVE[OPMENM
with contributions by SEP O 3 1987
Walter G. Scott and Mark Gellerson
Published for the World Bank
The Johns Hopkins University Press
Baltimore and London
Copyright © 1979 by the International Bank for Reconstruction
and Development / The World Bank
1818 H Street, N.W., Washington, D.C. 20433, U.S.A.
All rights reserved
Manufactured in the United States of America
The views and interpretations in this book are the author's and
should not be attributed to the World Bank, to its affiliated
organizations, or to any individual acting in their behalf.
Library of Congress Cataloging in Publication Data
Munasinghe, Mohan.
The economics of power system reliability and planning.
Bibliography: p. 306.
1. Electric power systems-Reliability-Economic
aspects. 2. Underdeveloped areas-Electric utilities-
Case studies. 1. Scott, Walter G. II. Gellerson,
Mark. III. Title.
HD9685.A2M85 338.4'3 79-2182
ISBN 0-8018-2276-9
ISBN 0-8018-2277-7 PBK.
Foreword
In evaluating the merits of the investment programs it finances, the
World Bank has generally sought to adopt a national viewpoint, by con-
sidering not only the supply costs incurred by the borrowing institution,
but also the effect of these investments on other individuals and enter-
prises in the economy. In view of the increasing dependence of modern
economies on electric power, the capital-intensive nature of the power
sector, and the shortage of economic resources in the developing coun-
tries, the Bank's wider concerns have focused on, among other things,
the trade-off between the rising unit costs of electricity supply and the
costs imposed on consumers by the reduced reliability or quality of
supply.
I believe that this is the first book that seeks to provide a well-
balanced and integrated economic-engineering treatment of the topic of
power system reliability. It demonstrates that in order to maximize the
net social benefit of consuming electric power, it is necessary to mini-
mize total social costs, which consist of both the supply costs to the
power authority and the costs to the consumer that are likely to result
from supply shortages or power outages. This approach, which estab-
lishes socially optimum reliability levels, subsumes the traditional sys-
tem planning criterion based upon minimization of system costs alone.
Thus the methodology presented here is both timely and relevant, not
only in the Third World, but also in the developed countries.
v
Vi FOREWORD
This book is an integral part of the World Bank's continuing research
program in energy, and as such it is linked to and contributes to other
elements in the overall research effort. Thus, the book analyzes the sub-
ject of optimum system reliability within a broader context by discussing
a range of related topics that are of more general application, including
demand forecasting, system expansion planning, shadow pricing, and
optimum tariff policy.
YVES ROVANI
Director
Energy Department
The World Bank
Contents
Foreword v
Figures xi
Tables xiii
Preface xv
Definitions xix
Part One. Theory 1
Chapter 1. Objectives and Methodology 3
Summary of Methodology and Conclusions 5
Chapter 2. Introduction to Reliability 9
Reliability Concepts 9
Measures of Reliability 16
The Need for Economic Criteria 24
Chapter3 . Method of Optimizing Reliability 28
Features of the Model 28
Reliability Optimizing Planning Model 33
Outage Simulations and Optimum Reliability Levels 37
vii
Viii CONTENTS
Chapter 4. Estimation of Outage Costs (with Mark Gellerson) 45
Nature of Outage Costs 45
Methods of Estimating Outage Costs 49
Review of Previous Studies 54
Measurement of outage costs 55
Treatment of electricity consumers by category 58
Relation between outage costs and outage duration 60
Conclusion 61
Chapter5 . Residential Outage Costs 62
Household Activities 63
Value of Foregone Leisure 65
Empirical Estimation 69
Chapter 6. IndustrialO utage Costs 72
Types of Outage Costs 72
Spoiled Product Cost 74
Idle Factor Cost 75
Overtime Production Cost 77
Chapter 7. Other Outage Costs 80
Commercial 80
Public Services 82
Special Institutions 83
Rural 85
Secondary Effects 85
Chapter 8. Power System Planning and Supply Costs 87
The Investment Decision 87
Load Forecast 89
System Design and Planning 94
Costing 102
Chapter9 . Shadow Pricing 105
General Principles 105
Numeraire 109
Application of Shadow Prices 110