POWER SYSTEM PLANNING AND MANAGEMENT

By: Ginbar Ensermu

 COURSE OUTLINE
• FUNDAMENTALS
• Introduction
• Planning & economics
• Load data and Forecasting
• Power quality and Reliability analysis
 DESIGN PRINCIPLES & PRACTICE OF SUBSTATION
• Substation sizing and spacing
• Substation location
• Effect of changing load density
• Effect of changing primary voltage
• Cost interaction of substation size and spacing vs primary voltage and
load density
• PROJECT MANAGEMENT
• Project evaluation
• Financing
• Project phases
• Key points
• UNIT COMMITMENT
• Unit commitment
• Spinning reserve
• Priority list method/Merit order scheduling
 1. FUNDAMENTALS
1.1 INTRODUCTION
• Retail sale of electric energy involves the delivery of power in ready to

use form to the final consumers.

• This transmission and distribution (T&D) system consists of thousands of

transmission and distribution lines, substations, transformers, and other

equipment scattered over a wide geographical area and interconnected
so that all function in concert to deliver power as needed to the utility's
customers.
• A T&D system's primary mission is to deliver power to electrical
consumers at their place of consumption and in ready-to-use form & it
must be reliable, too, so that it provides an uninterrupted flow of stable
power to the utility's customers.
• The complex interaction of a T&D system is governed by a number of

physical laws relating to the natural phenomena that have been

harnessed to produce and move electric power.

• These interactions have created a number of "truths" that dominate the

design of T&D systems:

 It is more economical to move power at high voltage, and It is costly to change

voltage level.

 Power is more economical to produce in very large amounts.

 Power must be delivered in relatively small quantities at a low voltage level.

• An economical transmission and distribution system builds upon these

concepts. It must pick up power at a few, large sites (generating plants)

and deliver it to many more small sites (customers).
• As a consequence of the hierarchical structure of power flow from power
production to energy consumer, a power delivery system can be thought
of very conveniently as composed of several distinct levels of equipment,
as illustrated in the following figure.
• While each level varies in the types of equipment it has, its
characteristics, mission, and manner of design and planning all share
several common characteristics:
 Each level is fed power by the one above it,

 Reliability drops as one moves closer to the customer.

 Each level has many more pieces of equipment in it than the one above.

 Both the nominal voltage level and the average capacity of equipment drops from level
to level, as one moves from generation to customer. /Transmission lines 115 kV - 765
kV and 50 MW- 2GW. Distribution feeders 2.2 kV - 34.5 kV and 2 and 35 MW/.
 As a result, the net capacity of each level (number of units times average size)
increases as one moves toward the customer.
 Definitions and nomenclature defining "transmission" and "distribution"

vary greatly among different countries, companies, and power systems.

Traditionally, three types of distinction between the two were made:
 By voltage class: transmission is anything above 34.5 kV; distribution is anything below that.
 By function: distribution includes all utilization voltage equipment, plus all lines that feed power to service
transformers.
 By configuration: transmission includes a network; distribution is all the radial equipment in the system.

 Typically, a substation occupies an acre or more of land, on which the

various necessary substation equipment is located.
 Substation equipment consists of high and low voltage racks and busses
for the power flow, circuit breakers for both the transmission and
distribution level, metering equipment, and the "control house," where the
relaying, measurement, and control equipment is located. But the most
important equipment – what gives this substation its capacity rating, are
the substation transformers, which convert the incoming power from
transmission voltage levels to the lower primary voltage for distribution.
 1.2 PLANNING AND ECONOMICS
 Power system planning is complex because each unit of equipment in

every hierarchical level, generating units, transmission lines, substation

equipments /protective equipments, voltage regulators, power
transformers/, distribution lines, distribution transformers etc, influences
the electrical behaviour of its neighbours, and must be designed to function
well in conjunction with the rest of the system under a variety of different
conditions, regardless of shifts in the normal pattern of loads or the status
of equipment nearby.

 A major attribute of planning in almost all endeavours is reduction of cost.

Every alternative plan contains or implies certain costs: equipment,

installation, labour, operating cost, but often, equally important, when the
costs are incurred – how much must spent now, and how much later?
• Regulated prices are based on all the costs and reasonable return of the

investment.

• A power system can be expensive to design, build, and operate.

Equipment at every level incurs two types of costs.

• Initial costs /one time cost/ include the equipment and land, labour for site preparation,
construction, assembly and installation, and any other costs associated with building and putting
the equipment into operation.

• Operating costs /continuous cost/ include labour and equipment for operation, maintenance
and service, taxes and fees, as well as the value of the power lost to electrical losses.
• Initial cost of equipment can always be traded against long-term losses

costs.
• Highly efficient transformers can be purchased to use considerably less power to

perform their function than standard designs. Larger conductors can be used in any
transmission or distribution line, which will lower impedance and thus losses for any
level of power delivery.

• But both examples here cost more money initially - the efficient transformer may

cost three times what a standard design does; the larger conductor might entail a
need for not only large wire, but heavier hardware to hold it in place and stronger
towers and poles to keep it in the air. In addition, these changes may produce
other costs - for example, use of larger conductor, have a higher fault duty (short
circuit current), which increases the required rating and cost for circuit breakers.

• Regardless, initial equipment costs can be balanced against long-term

losses costs through careful study of needs, performance, and costs to

establish a minimum overall (present worth) cost.
• In order to operate as a business, an electric utility must take in
sufficient revenue to cover its continuing operating costs, pay for its
equipment and system, cover its debt payments (loans and bonds), and
provide earnings for its owners (shareholders).
• Minimum Revenue Requirement (MRR) planning is aimed at keeping
customer bills as low as possible — it seeks to minimize the amount of
money the utility must collectively charge its customers in order to
cover its costs.

 While similar in some cases, particularly

capital expansion planning, revenue
minimization, and cost minimization will
lead to slightly different decisions with
regard to selection of alternatives and
timing of expenses.
• Any utility planner must deal with two types of time versus money decisions.

• The first involves deciding whether a present expense is justified because it cancels

the need for a future expense of a different amount.

• A second and related cost decision involves determining if a present expense is

justified because it will reduce future operating expenses by some amount.

• For planning purposes, the present worth factor should be regarded simply

as a value that sums up all the reasons why a company would prefer to
spend money tomorrow rather than today. It is a planning tool used to
evaluate and rank alternatives based on when they call for expenditures and
leads to prioritization of options.

Q.2. Suppose a new feeder is to be built along
with the new substation. If built with 336 MCM
conductor at a cost of $437,000, the new
feeder will be able to satisfy all loading,
voltage drop, contingency, and other criteria.
However, if built with 600 MCM conductor, at a
total cost of $597,000, it will lower annual
losses costs every year in the future by an
estimated $27,000. Are the planners justified
in recommending that $160,000 be spent on
the larger, based on the long term continuing
savings? Present worth factor = 0.83, 0.9
Q.1.Suppose it has been determined
that a new substation must be built in
an area of the service territory which is
the site of much new customer growth.
Present needs can be met by
completing this new substation with
only one transformer, at a total initial
cost of $1,000,000. Alternatively, it
could be built with two transformers -
twice as much capacity - at a cost of
$1,800,000. Although not needed
immediately, this second transformer
will be required within four years
because of continuing growth. If added
at that time, it will cost $1,284,000 - a
reflection of the additional start-up cost
for a new project and of working at an
already-energized and in service
substation rather than at a "cold" site.
Which plan is best? Should planners
recommend that the utility spend
$800,000 now to save $1,284,000 four
years from now? Present worth factor
= 0.83, 0.9
• Adding 1% - or whatever is appropriate based on analysis of the

uncertainty and the planning method being used - to the PWF biases all
planning decisions so that they reflect this imperfection of planning.

• Rather than analyze planning alternatives over a short-term construction

period – for example the seven-year period during which the schedule of
transformer installations may vary - planners or budget administrators
often wish to look at a new addition to the system over the period in
which it will be in service or be financed.
Cost to deliver power varies
depending on location within a power
system. Variations are both due to
"natural" reasons - it is difficult to
deliver power to some locations like
the tops of mountains, etc., and due
to "system characteristic" reasons: no
matter how a delivery system is laid
out, some consumers will be close to
a substation and others will be
farther away from it. In some sense,
those farthest from it are most
expensive to serve, those closest to it
less expensive to serve. One must
bear in mind that traditional and
established regulatory opinion holds
that such variations do not
automatically justify proportional
pricing of electric service.
• All cost evaluation for power delivery planning should be based upon
economic evaluation that is consistent over the range of all alternatives.
Usually, this means that present and future costs must be compared.
Present worth analysis, life time levellized costing, or some similar
method of putting present and future value on a comparable basis will
be used.
• One complication in determining the most economical equipment for a
power system is that its various levels — transmission, substation, and
distribution – are interconnected, with the distribution, in turn, connected
to the customers.
• This means that the best size and equipment type at each level and
location in the system is a function not only of the local load, but of the
types of equipment selected for the other levels of the system nearby,
their locations and characteristics, as well as the loads they serve.
• Two Q method: A complication of modern, non-traditional distribution
planning is that reliability is often a key design element. Planners are
challenged to reduce overall cost while achieving designs that achieve
targets for both capacity and reliability.
• Planning methods and concepts that deal simultaneously with a
distribution system's quantity (demand and capacity) and quality
(continuity of sufficient service - reliability) are labelled as Two-Q
methods.
• Hence, the essence of Two-Q planning is to add

cost as a third dimension and then "optimize"

either rigorously or through trial, error, and
judgement, until the most effective cost to
obtain both Q target levels is obtained.
• The basic concept behind all Two-Q methods is to extend the planning

analysis and evaluation, and cost minimization approaches, to cover the

additional dimension of reliability from a performance standpoint.

• This means they plan and design systems to numerical reliability targets

in addition to, as traditional methods do, planning and designing to

numerical demand targets.
 1.3 LOAD DATA AND FORECASTING
A/ Load Data:
• The load data is needed for defining the requirements of the network’s
transmission capacity, approximating the transmission losses or
estimating the existing network’s capability to transfer increasing loads.
• The planning of new generation capacity or energy purchase requires
knowledge of customers’ load variation.
• The manner in which load curve data are collected, recorded, analyzed,
and represented can produce a dramatic effect on what the resulting load
curves look like and the perceived values of peak load and coincidence.
• Sampling rate and sampling method both have a big impact on what load
curve data look like, how accurate they are, and how appropriate they are
for various planning purposes.
• The load data may be formulated in several ways according to the

requirements of applications. The most important specifications for

load data are
• System location: customer site, low voltage network, transformer etc.

• Customer class: industry, service, residential, electric heating, etc.

• Time: time of year, day of week, time of day

• Time resolution of the load recording: 5min, 15min, 30 min etc.

• Load behaviour at the distribution level is dominated by individual

appliance characteristics and coincidence - the fact that all customers

do not demand their peak use of electricity at precisely the same time.
• Suppose one were to consider one hundred homes, for example one

hundred houses served by the same segment of a distribution feeder.

Every one of these homes is full of equipment that individually cycles
on and off appliances like - water heaters, air conditioners, heaters, and
refrigerators that all are controlled by thermostats.
• Thus, one particular household might peak at 22 kVA between 7:38 AM and 7:41 AM,

while another peaks at 21 kVA between 7:53 AM and 8:06 AM, while another peaks at 23
kVA between 9:54 AM and 10:02 AM. These individual peaks are not additive
because they occur at different times. The individual peaks, all quite short, do not all
occur simultaneously.
• Peak load per customer drops as more customers are added to a group. Each

household has a brief, but very high, peak load - up to 22 kW in this example for
a southern utility with heavy air-conditioning loads.

• This tendency of observed peak load per customer to drop as the size of the

customer group being observed increases is termed coincidence and is

measured by the coincidence factor, the fraction of its individual peak that each
customer contributes to the group's peak.
• The diversity factor, D, measures how much higher the customer's

Individual peak is than its contribution to group peak. D = 1/C

• As customers are combined in groups, as when the planner analyzes

load for groups served by equipment such as service transformers,

laterals, and feeders, the erratic load curves add together with the sharp
peaks intermingling and forming a smoother curve.

Q.3 Determine the peak load of transformer supplying to 30 households

having the peak demand of 15kw. C(15) = 0.48.
 B/ Load Forecasting and Utility Planning:

 Load forecasts are the starting point for the entire chain of power delivery.

Planners require a load forecast before they can set an optimal dispatch.
The load forecast must be of sufficient detail to provide necessary
information to the dispatch model.

 Usually all the needed load data is not available directly and the load

values must be estimated and forecasted using other available information.

 The load modelling and forecasting is based on knowledge of several

factors influencing the customer’s load. The most important factors are:
 Population: overall residential demand and also commercial and industrial activity
increase with increasing population.

 GDP: commercial and industrial load is increased or decreased by strong or adverse

economic growth. In addition, the wealth of households is also highly correlated with
demand.
 • Temporal behaviour patterns: electric consumption varies over time cycles in
relation to variation in human activities. Like vacation, school cycles, weekday
and weekend, holidays, and also early morning hours, work hours, evening
hours and sleeping hours.

• Weather parameters: it follows seasonal and daily patterns, which coupled with
temporal behaviour impact on residential, commercial and industrial load. This
includes temperature, humidity, sunshine and cloudiness, etc.

• A load shape is the power requirement as a function of time over a

given time interval. There are daily, weekly, and seasonal load patterns.

• Load predictions are made over different time horizons. Based on this,

future load demand can be estimated in either of the following

conditions:
Short term load forecasting and utility planning: is required for
scheduling a next-day dispatch. i.e, it includes forecasting day ahead
electricity demand, available supply and ancillary services and setting
day ahead dispatch schedule.

• Once a dispatch schedule has been set, planners forward it to day-

ahead schedulers. There are generation schedulers, inter utility

schedulers, fuel schedulers, and transmission schedulers. The
generation scheduler has the responsibility of informing each generation
facility of its next day’s operating schedule. Inter utility contract
schedulers inform their utility counterparty of required next-day power
exchanges. Fuel schedulers inform their suppliers of next-day fuel
deliveries. Transmission schedulers schedule power flow exchanges
across transmission lines of neighbouring control areas.
• This technique does not depend on population and GDP; however, it is

sensitive to temporal behaviour and weather.

• For day-ahead scheduling hourly forecasts are necessary, although

some planners use sub-hourly forecasts. An hourly forecast is

established as an energy requirement in MWH or a power requirement
in MW.

Mid-term load forecasting and utility planning: As with short-term

planning, load is the starting point of mid term planning because plans
are set to supply load.

• Load can be forecasted but is uncertain over the planning horizon. Mid-

term plans must be set to meet many possible outcomes for the load, so
planners must develop more than a single load forecast depending
weather condition, population growth, etc.
• It also optimizes dispatch costs over a time horizon ranging between 1
month and 3 years. A complete description of the load and supply
outlook is necessary.
• Mid-term planning address issue related to maintenance scheduling for
both generation and transmission, use of energy-limited resources, and
capacity contracting with other utilities.
• One aspect of midterm utility planning is support of decision making for
capacity transaction. The first step is to design a data set that determines
a capacity price and an associated energy price for interutility
transactions.
• In short, midterm planning is the decision to include or exclude a
resource from a utility’s capacity base in accordance with maintenance
requirements, weather and environmental limitations, or the price and
availability of capacity with in a network of utilities.
Long-term load forecasting and utility planning: is required for planning

retirements and additions. It addresses the economic selection of

generation, transmission additions necessary to meet projected load

requirements.

• Long-term forecasting addresses the annual changes in demand that

reflect changes in population and GDP. Although weather is a major

driver for short-term forecasting with an explicit role, it plays a

background role in long-term forecasting.

• Two methods for addressing annual
changes in demand are described by
the following diagram.
• Planners must have recommendations ready for project developers to

complete construction in time to meet customer load requirements.

• Project development encompasses the process of constructing a new

generating facility or transmission equipment from the conceptual phase

until the moment when the facility is operating.

• Aside from meeting the requirements of a baseline forecast, timelines are

also critical for contingency planning. Actual demands may vary from
baseline forecast, and planning must address this contingency.
1.4 POWER QUALITY AND RELIABILITY
• Perfect power quality is characterized by a perfect sinusoidal voltage

source without waveform distortion, variation in amplitude or variation in

frequency.

• To attain near-perfect quality, a utility could spend vast amount of money

and accommodate electrical equipment with high power quality needs.

• On the other hand, a utility could spend as little money as possible and

require customers to compensate for the resulting power quality problems.

• Since neither extreme is desirable, utilities must find a balance between

cost and the level of power quality provided to customers. Concerns arise
when power quality levels do not meet equipment power quality needs.
• Distribution reliability primarily relates to equipment outages and
customer interruptions. In normal operating conditions, all equipment
(except standby) is energized and all customers are energized.

• Availability is the probability of something being energized. It is the most

basic aspect of reliability and is typically measured in percent or per-unit.

• Scheduled and unscheduled events such as contingency, open circuit,

fault, maintenance outages etc. disrupt normal operating conditions and

can lead to outages and momentary or sustained interruptions.
Reliability indices: are statistical aggregations of reliability data for a
well-defined set of loads, components or customers. Most reliability
indices are average values of a particular reliability characteristics for an
entire system, operating region, substation service territory or feeder.
Customer-Based Reliability Indices: The most widely used reliability
indices are averages that weight each customer equally. Customer-
based indices are popular with regulating authorities since a small
residential customer has just as much importance as a large industrial
customer. These are
Total no. of customer interruptions
System Average Interruption Frequency Index /SAIFI/ : /yr
Total Number of Customers Served

• SAIFI is a measure of how many sustained interruption an average

customer will experience over the course of a year.
System Average Interruption Duration Index /SAIDI/ :
 Customer Interruption Durations hr /yr
Total Number of Customers Served
• SAIDI is a measure of how many interruption hours an average customer
will experience over the course of a year.
 Customer Average Interruption Duration Index /CAIDI/ :
 Customer Interruption Durations hr
Total Number of Customers Interruptions

• CAIDI is a measure of how long an average interruption lasts, and is used as a

measure of utility response time to system contingencies.

Customer Hours Service Availability
Average Service Availability Index /ASAI/ : pu
Customer Hours Service Demand
• ASAI is the customer-weighted availability of the system and provides the same

information as SAIDI. Higher ASAI values reflect higher levels of reliability.

• The increasing sensitivity of customer loads to brief disturbances has

generated a need for indices related to momentary interruptions.

Total no. of customer momentary interruptions
Momentary Average Interruption Frequency Index /MAIFI/ : /yr
Total Number of Customers Served
Total no. of customer momentary events
Momentary Event Average Interruption Frequency Index /MAIFI E / : /yr
Total Number of Customers Served

• MAIFI is attractive to utilities because it can easily computed from breaker

and re-closer counters.

• Such measures reflect average system reliability but may not have a high
correlation to customer satisfaction since few customers may actually
experience average reliability.
• There are two reliability indices that correspond to points on cumulative
distribution functions.
Load-Based Reliability Index: Two of the oldest distribution reliability
indices that weight customers based on connected kVA instead of
weighting each customer equally are
Connected kVA interrupted
Average System Interruption Frequency Index /ASIFI/ : /yr
Total Connected kVA Served
Connected kVA Hours Interrupted
Average System Interruption Duration Index /ASIDI/ : hr /yr
Total Connected kVA Served

• From utility perspective, ASIFI and ASIDI probably represent better

measures of reliability than SAIFI and SAIDI.
• In addition to geography, reliability indices can vary substantially based

on utility data gathering practices. Reliability index definitions can also

complicate comparisons between utilities. There is an increasing trend for
regulatory bodies to impose reliability reporting requirements on electric
utilities. The more aggressive authorities financially penalize and/or
reward utilities based on reported reliability.

• When a customer experiences an interruption, there is an amount of

money that the customer is willing

to pay to have avoided the event.

This amount is referred to as the

customer cost of reliability.

 Designing and operating a distribution system to minimize total societal
cost is referred to as value-based planning. Value-based planning is
the goal of publicly owned utilities. Investor owned utilities attempt to
maximize profits rather than maximize social welfare.
 Regardless, a good feel for customer costs can help investor owed
utilities to better understand their customers and offer value added
reliability services that can increase profits and increase customer
satisfaction.
 Cost of interruption varies widely from customer to customer and from
country to country. Other important factors include duration, time of
year, day of the week, time of day, and whether advanced warning is
provided.
 Customers will typically not be willing to pay for reliability improvements thinking
that utilities are obligated to address reliability problems for no additional cost.
2. DESIGN PRINCIPLES AND PRACTICE OF SUBSTATIONS
 Thus, in general, power system equipment is so interconnected that it
is impossible to evaluate any one aspect of a system's design without
taking many others into account.

 The major points which help to optimize planning in close evaluation of

ones interrelationship with the others are as follows:
1. substation spacing in the system,
2. size and number of substations,
3. sub-transmission voltage and design, and
4. distribution feeder voltage and design.

• Therefore, determining the most cost-effective design involves evaluating

the transmission-substation-feeder system design as a whole against the
load pattern, and selecting the best combination of transmission voltage,
substation transformer sizes, substation spacing, and feeder system
voltage and layout.
 In design interrelationships, how the cost, electrical performance and reliability
of the example system change as the characteristics of its layout, equipment,
and spacing are examined.

2.1 Substation Size and Spacing:

• The set of substation service areas for a T&D system must "tile" the utility
service territory, covering all locations where there is any demand, and each
substation must have sufficient capacity to serve the load in its service area.

• As the distance between substations – the substation spacing - is increased,

fewer substations are needed, but the average substation service area
becomes larger, and substations will need a greater individual capacity to
serve their loads.
• For instance, six substations serving an area of 108 square miles, evenly spaced in a hexagonal pattern
4.56 miles apart. Each serves 18 square miles with a peak load of 58.5 MW (65 MVA), with 81 MVA
capacity, for an 80% utilization rating. If the capacity of each substation were doubled, to 162 MVA, each
could serve twice the area - 36 square miles - and only half as many substations would be needed. Area,
and load, increase with the square of the spacing, so doubling the capacity and area served will result in
an increase of 41% in permissible substation spacing, in this case from 4.56 to 6.45 miles.
 Interactions and impacts of changing substation size: One way to change the
capacity of the substations in a system is to vary the number of transformers of a
standard size used in each. Another option for varying the capacity and hence the
potential service area of a substation is to vary the size of the transformers while
keeping their number constant. Here regarding about cost impact, the cost of any
level is lower if larger transformers are used to attain a capacity figure.
 The installed cost of a 54 MVA transformer is almost always substantially less than twice that of a 27
MVA transformer, so that even a larger savings is effected by increasing capacity to 162 MVA by using
three 54 MVA transformers instead of six 27 MVA units. Thus, a 54 MVA transformer, installed, would
cost $1,350,000 rather than the $1,550,000 cost of two 27 MVA units.

 Reliability impact of changing substation size: Reliability of service is little

changed if capacity and spacing is scaled up or down by changing the size of the
transformers in a substation whose layout and configuration is otherwise the same.
In such cases - assuming reliability of the equipment itself does not change with size
or capacity and that utilization levels are kept constant - frequency and duration of
outages as experienced by the customers remain unchanged. Changing the number
of transformers to vary capacity, however, has a more complex impact on reliability.
 Substation spacing and feeder system interaction: Suppose the
substations in the example system plan are reduced in size, to 54 MVA
(two transformers), each serving a peak load of 43.3 MVA. Each now
serves only 66% as much area, and the feeder system emanating from it
must distribute only 66% as much load.
• The approximate formulae to estimate

feeder system PW cost can be re-written

in terms of the total length of routes that
must be built, F, and the substation spacing
dss: cost  f v  F  sv  L  0.4125 d ss

Where fv is the fixed cost at voltage V, sv is the slop of the cost in the linear range, F is the total
length of feeder routing (F=A*r), dss is the avergage distance b/n substations , A is area served, L
is load served(L=A*M), M= load density(MW/mile sq.), r = feeder route density (mile/mile sq.)

• The required reach for feeders in a distribution system will be roughly .75
times the substation spacing.
• Cost of the feeder system on a per
MW basis increases linearly up to the
maximum economical each of the prim-
ary voltage being used, then increases
exponentially. Shown here is the cost
per MW of a 12.47kV feeder system.
• Cost per MW of the combined sub-
transmission-substation-feeder system,
as a function of substation size and
spacing. Dotted line represents the cost,
assuming that planners can choose the
best sub-transmission voltage (dotted
line) appropriate to the spacing.
Solid line represents the cost with 138 kV
sub-transmission.
• The optimal spacing of 4.56 miles results because it is the best

compromise between "economies of scale" at the various levels of the

interconnected system. At the sub-transmission and substation levels,
there is a positive economy of scale with respect to substation spacing —
increasing the size and spacing of substations brings a lower cost per MW
of demand, as well as better reliability, because larger substations and
sub-transmission lines cost less per MVA and have slightly better abilities
to provide their own contingency support. The major contributor to this
economy of scale is the substation level. Substations represent about 20%
of the cost of the T&D system (Table 17.6), and their cost per MW served
drops by half as substation size is increased from 27 MW (2.63 mile
spacing) to 162 MVA (6.45 mile spacing) - an amount that represents
about 10% of the entire T&D system's cost
 The feeder system has an opposite economy of scale. Larger substations,
and the greater area that their feeder systems most serve, put a greater
MW-mile burden on the power distribution system, which increases cost.
This negative economy of scale behaves in a relatively mild manner
compared to the cost behavior at the substation level - feeder cost per MW
served increases by only 26% as substation spacing is increased from
2.63 miles to 6.45 miles, whereas substation cost drops by half in that
same increment. In addition, the greater feeder route distances required to
accommodate wider substation spacing means more exposure of
distribution to outages - so that reliability suffers slightly.
 But the feeder level represents 70% - nearly three times - the cost of the
substation level, so that as substation spacing is increased beyond 4.56
miles, the dollar amount of cost increase at the feeder level exceeds that
saved at the substation level. Feeder costs tend to dominate design
tradeoffs in T&D systems.
2.2 Substation location
• The decisions about where to locate new substations and how much
capacity to put at each one are the strategic moves in power delivery
planning. For although substations themselves represent a minority of
system cost, they define the overall character of the T&D system.
• They are the meeting place between transmission and distribution, a clue
in itself to their importance. But more important, their locations define the
end points of delivery need at the transmission system, as well as the
starting points for the feeders at the distribution level.
• This last is particularly important, for the selection of a poor site from the
feeder standpoint can increase the cost of the T&D system by a great
deal.
• The substation level, like other levels of a power delivery system, must
cover the entire system. Power delivered to each customer must come
through some substation - if not one particular substation nearby, then
from another somewhere farther away. Thus, the utility service territory is
"tiled" with substation service areas, as shown in the figure below.

• Each substation area consists of the part of the service territory that the
substation serves, its area covered by the feeder system emanating from
its low-side buses.
• For any existing or planned substation, there is a best location for it in the

sense of economics and a best location for it in the sense of electrical

performance, reliability, and service.

• Occasionally, these two locations are identical, but usually they are

slightly different. Regardless, usually the economic aspect rules

determination of location.

• The optimal location for a substation from the cost standpoint is almost

never the lowest cost site (i.e., cheapest land), but is instead the best
overall compromise between all the cost elements involved in the
substation - land cost, site preparation cost, cost of getting transmission
in and feeders out, and proximity to the loads it is intended to serve.
• The perpendicular bisector rule of identifying a substation service area
identifies the set of all points equidistant between a proposed substation
and its already existing neighbours. A line is drawn from the substation to
each of its neighbours (dotted lines) and bisected with a perpendicular
line (solid lines). Points inside this boundary are designated as served by
the proposed substation.

• While simple, this method in one form or another was used to lay out a
majority of substations currently in use worldwide.
• Modem substation sitting computer programs use accurate analytical

approaches that build upon the concept's guiding rule: serve load from
the nearest substation.

• Serving each customer from the nearest substation assures that the

distribution delivery distance is as short as possible, which reduces

feeder cost, electric losses costs, and service interruption exposure.
Locating substations so they are as close as possible to the customers
does likewise.
• Suppose that the substation in figure below is moved one mile to the west,

while still being required to serve the hexagonal (shaded) area identified as its
service territory in that figure (i.e., that area's boundaries and territory will not
change).

• Moving this substation would have little impact on the sub-transmission costs

(the new site is along the same transmission corridor) or the substation itself
(the same exact substation would be built to serve the same load, assuming
the new site costs no more or less than the old site). The major cost impact
affected by this change in location would be on the feeder system. The new
site means the substation is closer to some loads (those to the west), and
farther from others (those on the east side of its service territory).
MW mile  load density  length of edge  distance moved
2

cost impact  s v  load density  length of edge  distance moved

2
• Certainly, if distribution planners were forced to move a substation away from

its theoretical optimum location, they should make whatever adjustments they
could to the rest of the system layout in order to reduce the cost impact as
much as possible.

• One option is to change the service area of the substation and its neighbours,

rather than leave them fixed, as was the case considered above.
• The substation in the figure is moved one mile west, and its
service area boundaries are "re-optimized" to minimize overall
impact on the feeder system, slightly changing substation service
area shape (but not its area, although the areas of its neighbours
do change). All substation boundaries in this system satisfy the
perpendicular bisector rule, optimal in a situation where load
density is uniform and there are no geographic constraints.

• Readjusting substation boundaries when the site must be moved will usually

halve the feeder-level cost impact of having to accept the non-optimal

substation site.
• The guidelines with respect to trying to obtain the optimal substation site:

1. There is an "optimum" location for a substation from the standpoint of

feeder system costs. Feeder cost to deliver the power to customers
increases as the actual substation site is moved away from this location.
This location is called the center of feeder cost.

2. Small deviations (less than 1/3 mile) in the actual substation site from the
center feeder cost create insubstantial cost increases. (A 1/3 mile difference
in the previous condition carries a cost impact of $37,000, less than 1% of
the substation's cost and less than .2% of the sub-transmission-substation-
feeder cost.)

3. Large deviations in actual site location from the center of feeder cost are
very expensive - moving the substation in the previous example 1.2 miles
(6,400 feet) costs $1,000,000.
4. Whenever non-optimal sites must be accepted, planners should re-plan the
associated service area boundaries and feeder network for the substation
and its neighbours.

5. Non-optimal sites near "hard" substation boundaries - such as when a river

or other geographic feature that cannot be moved forms one side of a
substation area boundary - carry a much higher cost penalty than those near
substation boundaries that can be re-adjusted. Planners should do everything
possible to avoid having to accept non-optimal sites whenever the service
areas are heavily constrained by geographic features.

6. T&D systems with higher primary voltage are less sensitive to deviations in
their substation location.

7. T&D systems with higher load density are ore sensitive to deviations in their
substation locations.
2.3 Effect of Changing load density
• When density is doubled, a substation whose capacity was previously sufficient

to serve an X mile radius around It now can serve only an X/1.41 radius. The
same radius as before can

be served by doubling substation capacity,

either by doubling transformer size or

installing twice as many transformers and

associated equipment.

• Ideally, a higher sub-transmission voltage should be used whenever load

density of the plan is raised, a lower one when density is reduced. When
density is doubled, optimum sub-transmission voltage will rise by 41%: Making
this increase gains the capability to serve the same number of substations per
transmission circuit.
• Increasing the load density changes the
relative economics of the various levels of
the system in favour of a slightly smaller
substation spacing with a slightly larger
substation size.

2.4 Effect of changing primary voltage

• The following figure reviews the primary impact on basic feeder segment
economics that are made by an increase in primary voltage. As the primary
voltage is changed:
• The fv fixed cost (Y-intercept) changes roughly in proportion to the square or cube root
of the relative voltage level - 25 kV costs about 35% more than 12.47 kV, while 34.5 kV
costs about 70% more, and so forth.
• The width of the economical linear range grows in proportion to voltage (i.e., it doubles
from 0-8.5 MW for 12.47 kV to 0-17 MW for 25 kV.
• The slope of the cost curve in the economical linear range, sv, is proportional to the
reciprocal of the voltage change (linear cost is $45,250 MW for 12.47kV, but only one-
half, $22,6257 MW, at 25 kV).
• The net result is that cost rises for segments that are very lightly loaded, but
falls for heavily loaded lines.
• The resulting impact of voltage level on the feeder system cost versus substation

spacing diagram (at the base example system density of 3.25 MW/mile2). The
curve for a 25 kV feeder system is plotted along with that for 12.47 kV.

• The vast majority of line segments in a feeder system are very lightly loaded.

Therefore, at small substation spacings - those dominated by fixed costs -overall

feeder system cost increases because of the higher fixed cost of 25 kV feeder
hardware. This occurs over most of the viable range of substation spacing - the
capability of 25 kV to carry load and reach greater distances at lower cost does
not pay off until beyond eight miles spacing.
2.5 Cost interaction of substation size and spacing vs primary
voltage and load density
• If load density is high enough, then 25 kV is more economical than 12.47

kV. Now, the curves cross at just over two miles substation spacing,
instead of at eight miles, as at 3.25 MW/mile2.

• For any substation spacing beyond two miles, the higher primary voltage

provides superior overall system economy. Based on the information,

optimum substation spacing and size can be determined.
• Total cost of T&D system utilizing 34.5 kV, 25 kV, or 12.47 kV as primary

distribution voltage, as a function of substation spacing, at 6.50 MW/mile

load density.

• The 25 kV voltage is now more economical than 12.47 kV for all but very

small substation spacing. However, 34.5 kV is not the most economical at

any spacing.

• The cost behaviour shown here is representative of all but very rare,

extremely strange power systems.

• However, different systems will have slightly different quantitative

characteristics than shown here; the curves given here should not be
used as design rules of any utility system. Rather, planners should use the
principles shown here to develop similar analysis of their own system.
 3. PROJECT MANAGEMENT
• Engineers may feel that high engineering standards and excellence

in design should be the major factors in the award of contracts. It is

a fact of life that in a highly competitive environment good design is
only one part of the overall project process.

• Indeed, even compliance with the specification may be of

secondary importance if the contractor is able to offer alternative,
equally viable schemes with substantial cost savings.

• Low price, short and certain delivery and low cost financing are

also major factors leading to the success of the project from both
the client’s and contractor’s point of view.
3.1 Project Evaluation
• The electricity supply company must satisfy demand for power by the

consumer and obtain sufficient revenue from sales to meet investor

requirements and future expansion plans. In order to achieve these goals
investment in generating, transmission and distribution plant is necessary.
Money on capital projects is spent now in the hope or expectation of
sufficient returns or profit at a later date in the future. Investment may be for:
• Replacement of equipment possibly to reduce maintenance costs (cost reduction)
• Expansion of transmission or distribution capability to reach more customers
• Provision of new products.
• The problem is to find ‘good’ projects by imagination, alertness and creativity
(plus a degree of luck) in order to spot the investment opportunity. Imagine,
for example, the problems that international aid agencies might have in trying to
identify a ‘good’ project. They will be inundated with different schemes for projects
but only a small number will be viable and be capable of bringing about the
required benefits. It is necessary to look at both the financial and the economic
costs and benefits of the project before a final investment decision may be made.
• Financial Assessment: Financial project investment assessments look
at the project purely in monetary terms. The basic points are
i. Annual rate of return: this simple appraisal method looks at initial investment, total
cash inflows resulting from the project and average annual profit.

ii. Payback: to allow for the timing of returns from the project the payback method of
assessment may be used. This is a simple project financial appraisal method which
indicates how many years it will take before the original amount invested in the
project is ‘paid back’ – i.e, the time before cumulative return exceed the initial
investment with, generally the shorter the period the better.
 iii. Discounted cash flow: In order to forecast and analyse better a particular project
investment more information about both the amounts of cash generated and the
timing involved is required. Having said this no method of analysis gives a precise
answer or avoids the risks involved. The timing assumed in the analysis may not be
correct, the forecasted cash quantities may be inaccurate, the opportunity cost of
capital may vary as interest rates and tax regimes change during the life of the project
and non-financial aspects (cost benefit analysis, political upheaval, etc.) all need to be
considered.
iv. Sensitivity analysis: Obviously the end result of any such financial analysis can only
be as good as the input data and original assumptions. Such items as interest rates,
cost of materials, exchange rates and inflation may all change during the life of the
project and have an effect on the viability of the project. For the more sophisticated
analysis the sensitivity of the results to such changes are considered.

• Economic Assessment: Economic appraisals look beyond this and

include such intangibles, converted to money terms, as general benefits to
the community that the project will bring about.
• For example, a distribution scheme might allow the community to stop

chopping down trees for fuel (thereby saving the environment from soil
erosion) and allow greater productivity in the community.

• The economic appraisal of electrical transmission and distribution schemes is

• generally a three stage process. First, the scheme has to be shown to be the

least cost option. Various technically viable schemes are therefore

considered and costed. Secondly, an estimation of the financial and
economic benefits as revenues plus cost savings is made. Thirdly, a
comparison between the discounted benefits and costs is computed using
discounted cash flow techniques.

• The economic assessment basically includes cost benefit analysis (including

resource saving, superior quality energy supplies, extra output) and the
difficulties.
3.2 Financing
• Borrowing money on the open market is expensive and so both client and

contractor should attempt to keep these costs to a minimum.

• Sources of finance for a project may be internal to the client and taken out

of investment capital provisions or reserves held in the accounts. Client

support for the project may also arise from tax incentives or local currency
loans.

• External sources of funds include:

• Export credits from the contractor’s or major transmission and distribution plant
manufacturer’s countries.
• Commercial loans, often linked to export credits.
• Development aid in the case of developing countries (Asian Development Bank,
European Development Bank, World Bank, etc.).

• Since a contractor starved of cash cannot function, the following factors

are important:
1. Sufficient advance payments to the contractor should be considered. The purpose of
such payments is to cover contract ‘front end’ expenditure such as mobilization, early
engineering work, payments to subcontractors, commission and insurances. Typically,
such advances will be of the order of 10% of the contract value.
2. Progress payments to the main contractor on a regular basis related to the value of
work actually achieved. These should not normally be related to payments made by
the main contractor to the subcontractors. An independent valuation by respectable,
professional and independent quantity surveyors or consulting engineers on behalf of
the client assists in reducing client/contractor disputes.
3. Progress payments linked to the timely completion of specific defined parts of the
works or milestones. These must be capable of easy definition and measurement.
4. Retentions kept by the client from interim progress payments during the course of the
contract. The purpose of these is to act as an incentive for the contractor to finish the
works.
5. Insurance bonds or bank guarantees to be provided by the contractor and held by an
independent bank as surety that the contractor will complete the works.
3.3 Project Phases
• A project is the process of creating a specific result. Infrastructure
transmission and distribution development projects all tend to follow the
same general phases as shown in figure below.

• The concept and planning stages will require the type of financial and
economic evaluation together with finance resourcing as detailed in
previous section.
• In a ‘fast track’ project, where the client requires very fast completion

times, considerable overlapping of the different project phases occurs.

This is not to be recommended unless the particular project work is well
understood and has been completed before.

• Although the different project phases cannot usually be

compartmentalized into clearly defined boxes with rigid start and end
dates, rules should be set up such that sufficient definition is available
before commencing each project phase.
• It is also important to understand the relative magnitudes of the financial
commitments involved during the different life cycle project phases.
Expenditure will increase as the engineering design phase gets underway
and continue to increase very steeply during the construction period.
Such expenditure and progress through a project tends to follow an ‘S-
curve’ shape as shown in the previous figure.
• Typical project cash flows resulting from a substation

construction project might be as shown where the revenue

from the additional customers is fully attributed to the
project itself. Such projections are used in the initial
financial assessment of the project and should be
regularly updated as the project proceeds.
There is always the necessity to appreciate the relative
uncertainty of the ultimate time duration and cost during
the different project life cycle phases.
• 3.4 Key Points

• Bond: The contractor may be required to provide bank bonds as part of a

construction contract. The bonds are paid for by the contractor as a small
percentage of their full value. Such bonds are usually held by the banks and
may be called upon by the client to be converted into cash payments if the
contractor fails to perform in accordance with the contract. The bank and the
contractor arrange a back-to-back agreement such that if such bonds are
called for payment by the client then the contractor either directly, or using
insurances, pays the bank the money owing.
• Contract: is an agreement between two or more parties such that if one party
fails to do what he has promised another party will have legal remedy. The
contract therefore embraces both statute and common law. A variety of
standard conditions of contract are available for transmission and distribution
construction works.
• These may be broadly classified into whether the works consist of: Supply

only of materials, Supply of materials and supervision of

erection/installation, Supply and installation.

• Resident Engineer: It is quite normal for the client to employ an ‘engineer’

to act as an impartial and technically competent adjudicator between client

and contractor for the administration and perhaps the design of the
contract works. The client sets up a contract between client and contractor
and a separate contract between client and engineer.

• There is no privity of contract between contractor and engineer. However,

the consulting engineer has specific duties and powers under the terms
and conditions of the client/contractor contract and is able to instruct the
contractor to perform during the course of the works. The arrangement is
shown in figure below.
• The consulting engineer is often brought in by the client at an early stage in

the project life cycle to carry out the technical system studies. The engineer
may advise the client on the best form of contract for the particular work to
be performed.

• The engineer may also assist or complete the financial and economic

project evaluation and prepare the project outline design. This work is then
converted into a tender document. The engineer will then supervise the
issue of tenders and produce an independent tender adjudication from
which the most appropriate contractor is selected to carry out the works.
• Typically, the engineer will check

the contractor’s detailed designs during

the contract period and also supervise

the installation on site.

• Tender evaluation: Different countries and organizations have different

methods of evaluating tenders. Usually very strict guidelines are enforced

in order to avoid any favoritism for one contractor or another.

• It is not necessary always to accept the lowest bid price since the bid may

not be technically compliant and may not have met the commercial
conditions required.

• Therefore it must be made clear at the tender stage what tender evaluation

method is to be employed so that there can be no complaints. For a typical

transmission and distribution contract considerable emphasis will be
placed upon technical compliance as well as cost.

• Therefore the technical merits of the different tenders have to be evaluated

by a fair method of comparison.

• One such method is to apply a ‘points system’ score for each major part of

the tender under such sections as: technical, management, financial,

manufacturing and quality control.

• Each section is then broken down into criteria which are considered

significant and a relative weighting as to the importance of each of these

factors allocated. Such an approach might be as shown in the table below.
• Construction: requires the management of supplies, materials, labour

and expertise necessary to complete the project and bring it on line. The
process proceeds from ordering supplies and materials through
construction, initial testing and final testing.

• Typically, a utility does not use its own personnel for actual construction

work; instead, utilities contract a specialized construction company along

with many subcontractors.
 4. UNIT COMMITMENT
4.1 Basics
• Note that to “commit” a generating unit is to “turn it on;” that is, to bring

the unit up to speed, synchronize it to the system, and connect it so it can

deliver power to the network. The problem with “commit enough units and
leave them on line” is one of economics.

• Suppose one had the three units given here:

• If we are to supply a load of 550 MW, what unit or combination of units should be used
to supply this load most economically? To solve this problem, simply try all
combinations of the three units. Some combinations will be infeasible if the sum of all
maximum MW for the units committed is less than the load or if the sum of all minimum
MW for the units committed is greater than the load.

• Note that the least expensive way to supply the generation is not with all three units
running, or even any combination involving two units. Rather, the optimum commitment
is to only run unit 1, the most economic unit.
• Suppose the load follows a simple “peak-valley’’ pattern as shown in

figure below. If the operation of the system is to be optimized, units must

be shut down as the load goes down and then recommitted as it goes
back up. We would like to know which units to drop and when.

• By considering their minimum and maximum operating conditions , let us

decided that when load is above 1000 MW, run all three units; between
1000 MW and 600 MW, run units 1 and 2; below 600 MW, run only unit 1.
• So far, we have only obeyed one simple constraint: Enough units will be
committed to supply the loud. If this were all that was involved in the unit
commitment problem-that is, just meeting the load-we could stop here
and state that the problem was “solved.” Unfortunately, other constraints
and other phenomena must be taken into account in order to claim an
optimum solution. These are spinning reserve, thermal unit constraints
and hydro-constraints.
4.2 Spinning Reserve
• Spinning reserve is the term used to describe the total amount of
generation available from all present load and losses being supplied.
Spinning reserve must be carried so that the loss of one or more units
does not cause too far a drop in system frequency. Quite simply, if one
unit is lost, there must be ample reserve on the other units to make up
for the loss in a specified time period.
• Spinning reserve must be allocated to obey certain rules, usually set by

regional reliability councils (in the United States) that specify how the
reserve is to be allocated to various units.

• Typical rules specify that reserve must be a given percentage of

forecasted peak demand, or that reserve must be capable of making up

the loss of the most heavily loaded unit in a given period of time. Others
calculate reserve requirements as a function of the probability of not
having sufficient generation to meet the load.

• Not only must the reserve be sufficient to make up for a generation-unit

failure, but the reserves must be allocated among fast-responding units

and slow-responding units. This allows the automatic generation control
system to restore frequency and interchange quickly in the event of a
generating-unit outage.
4.3 Priority list method /Merit order of scheduling
• The simplest unit commitment solution method consists of creating a

priority list of units. As we saw in the previous example, a simple shut-

down rule or priority-list scheme could be obtained after an exhaustive
enumeration of all unit combinations at each load level.

• The priority list could be obtained in a much simpler manner by noting the

full-load average production cost of each unit, where the full-load average
production cost is simply the net heat rate at full load multiplied by the
fuel cost.

• The average production cost of the units given in the previous example is

given in the following table

• A strict priority order for these units, based on the average production

cost, would order them as follows:

• and the commitment scheme would (ignoring min up/down time, start-up

costs, etc.) simply use only the following combinations.

• Most priority-list schemes are built around a simple shut-down algorithm that might

operate

i. At each hour when load is dropping, determine whether dropping the next unit on
the priority list will leave sufficient generation to supply the load plus spinning-reserve
requirements.

ii. Determine the number of hours, H, before the unit will be needed again. That is,
assuming that the load is dropping and will then go back up some hours later.
• If H is less than the minimum shut-down time for the unit, keep commitment as is
and go to last step; if not, go to next step.

• Calculate two costs. The first is the sum of the hourly production costs for the
next H hours with the unit up. Then recalculate the same sum for the unit down and
add in the start-up cost for either cooling the unit or banking it, whichever is less
expensive. If there is sufficient savings from shutting down the unit, it should be shut
down, otherwise keep it on.

iii. Repeat this entire procedure for the next unit on the priority list.
 End

Thank You