Transmission network reinforcement versus FACTS: an economic assessment

While a significant amount of work has been and continues to be devoted to the description and analysis of the technical performance of flexible AC transmission systems (FACTS), very little attention has been paid to the economics of FACTS devices. The most frequently stated economic benefit of FACTS devices id that they enable postponement of network reinforcement. This paper describes a linear programming approach for computing the maximum savings in operating costs that could be secured from installing ultimate (100%) FACTS. This gives the volume of the "market" potentially available for FACTS. As the main aim of this paper is to assess the competitiveness of FACTS against network reinforcement, only FACTS devices used for active power control are modeled. The volume of the market for FACTS, defined as the difference between the gross benefit of full network flexibility and the net benefit of network reinforcement is determined for a wide range of line reinforcement costs. It is shown that economics of FACTS are system specific and depend strongly on the cost of reinforcement. It is further concluded that at values of network reinforcement costs presently used in practice, FACTS devices may find it difficult to compete favorably with network reinforcement. The model employed in this evaluation takes account of inter-temporal load variations as well as network security constraints in addition to the usual generator output and transmission thermal limits.