Strategic Valuation of Smart Grid Technology Options in Distribution Networks

The increasing penetration of renewable distributed generation (DG) sources in distribution networks can lead to violations of network constraints. Thus, significant network reinforcements may be required to ensure that DG output is not constrained. However, the uncertainty around the magnitude, location, and timing of future DG capacity renders planners unable to take fully informed decisions and integrate DG at a minimum cost. In this paper, we propose a novel stochastic planning model that considers investment in conventional assets as well as smart grid assets such as demand-side response, coordinated voltage control and soft open points. The model also considers the possibility of active power generation curtailment of the DG units. A node-variable formulation has been adopted to relieve the substantial computational burden of the resulting mixed integer nonlinear programming problem. A case study shows that smart technologies can possess significant strategic value due to their inherent flexibility in dealing with different system evolution trajectories. This latent benefit remains undetected under traditional deterministic planning approaches which may hinder the transition to the smart grid.