Power Transformer Economic Evaluation in Decentralized Electricity Markets

Owing to deregulation, privatization, and competition, estimating financial benefits of electrical power system projects is becoming increasingly important. In other words, it is necessary to assess the project profitability under the light of new developments in the electricity market. In this paper, a detailed methodology for the least cost choice of a distribution transformer is proposed, showing how the higher price of a facility can be traded against its operational cost over its life span. The proposed method involves the incorporation of the discounted cost of transformer losses to their economic evaluation, providing the ability to take into account variable energy cost during the transformer operating lifetime. In addition, the influence of the variability in the energy loss cost is investigated, taking into account a potential policy intended to be adopted by distribution network operators. The method is combined with statistical and probabilistic assessment of electricity price volatility in order to derive its impact on the transformer purchasing policy.