Cost/benefit approach to establish optimum adequacy level for generating system planning

There is an increasing worldwide interest in economic optimisation approaches for power system expansion and reliability planning. The optimality condition simply intends that the marginal dollar spent to improve service reliability should yield the same benefits to consumers. The application of basic adequacy assessment concepts to generating capacity evaluation is relatively straightforward and the basic concepts are well known. The application of the optimality condition to simultaneously evaluate optimal generation investments and reliability levels is complicated by the difficulty of estimating the functional dependence of consumer interruption costs upon alternate generation and reliability levels. This difficulty has resulted in a number of studies directed towards estimating customer interruption costs. The authors utilise the economic criterion for system optimisation which extends the traditional approach by treating the reliability level as a variable to be optimised. The method is illustrated using the IEEE Reliability Test System (IEEE-RTS)