Distribution system planning considering analytical reliability and regulated monopoly

Abstract

Distribution system planning is a multifaceted topic with physical, financial and regulatory aspects. The regulator arbitrates between the end customer and the utility to ensure a fair tariff from the customers. The increased penetration of renewable energy is accelerated by Distributed Generation Corporation (DGENCO) through distributed generation. The existing distribution planning paradigms do not incorporate regulator’s rate setting process alongwith independent DGENCO. Therefore, in this paper, the distribution planning is modeled as complete information sequential game with regulator, Distribution Network Operator (DNO) and DGENCO as agents. The proposed sequential game is solved by backward induction technique which translates to a tri-level optimization problem. The regulator’s model include the rate setting process, the DNO model incorporates extensive multistage distribution expansion planning formulation including reliability constraints, whereas the DGENCO models the selling of power through the process of Power Purchase Agreement (PPA). Moreover, an analytical reliability evaluation formulation that can model the effect of tie lines and bus coupler in reliability metric is also proposed. The proposed model was solved through a Mixed Integer Bilevel Linear Program (MIBLP) framework. The multistage integer non-linear model was transformed to MIBLP through Mccormick relaxations. Distribution planning with classical regulatory models are conducted on a 6 bus system and 13 bus radial system. The large memory requirement and computation times of the proposed model as discussed. The Price Cap Regulation (RPI) was proven more conducive for implementing cost reducing technologies, whereas the Cost of Service Regulation (COSR) delivered better reliability. The proposed methodology can test the potential impact of a regulatory policy on the service quality and network upgradation.