Life Cycle Cost Analysis of Substation Automation

Implementation
Farias, V. S. , Fernandes, N. C.
GTECCOM/MidiaCom - Department of Telecommunications Engineering (PPGEET/TET)
Universidade Federal Fluminense (UFF)
Niteroi, RJ - Brazil
AbstractThis paper proposes a quantitative evaluation of
the classic discussion on cost-benefit and risk management
involved in the implementation of telecommunications networks
for Substation Automation Systems (SAS). The goal is to find
the optimal point for investing in quality and reliability in order
to maximize the profitability of the project. Various IEC 61850
substation automation system (SAS) architectures are compared
in terms of price, reliability, and their impacts in the power grid
quality and cost of ownership of the project. The method used
in this paper is the life cycle cost analysis (LCCA). It enables an
objective decision of the topology options considering the high
reliability requirements of SAS networks. This paper discusses
how to make the best out of this new approach in protection and
supervision of power systems.
KeywordsSubstation automation system, life cycle cost, availability analysis, IEC 61850

I.

I NTRODUCTION

IEC 61850 is gaining strength as standard for communication in substations. It defines requirements for a smart and
reliable replacement for the existing substation automation
systems (SAS). A well planed and implemented SAS will
improve safety, reliability, and reduce downtime for a substation. This is achieved by performing countermeasures in case
of critical failures faster than by manual operation. Indeed
the automation system functions are divided into two groups:
control/monitoring functions and fault clearance/protection
functions. The first are responsible for gathering information
about the state of the substation electrical equipment and
the other for taking action to clear an abnormal condition,
maintaining the grid sanity in case of an exceptional situation.
There is a multiplicity of proprietary communication protocols to perform automation in SAS, most using hardwired connections to the power equipments. Usually, these
solutions do not provide interoperability between different
manufactures, increasing costs in maintenance and substation
expansions. The IEC 61850 standard enables interoperability,
service definitions, and conformity tests. Assuring that devices
from different vendors will work in the same network, the
communication and basic services are thoroughly mapped
and defined, thus ensuring quality and safety. Also, the use
of a mainstream communication such as Ethernet instead of
hardwired point to point connections provides high flexibility,
reduction in the number of cables, and ease of installation.
This paper proposes a methodology to perform a quantitative analysis of the cost-benefit and risk management in

the implementation of telecommunication networks for the

Substation Automation System (SAS). Better supervision and
faster action ensures a better power delivery, reducing outages
and thus reducing the costs associated with failure. A careful
SAS dimensioning must be made to ensure the return of the
investment.
Our analysis is based on the life cycle cost analysis. The
goal is to find the optimal point for investing in quality and
reliability in order to maximize the profitability of the project.
Various IEC 61850 substation automation system (SAS) architectures are compared in terms of price, reliability, and their
impacts in the power grid quality and cost of ownership of the
project, considering the Brazilian scenario. The method used
in this paper is the life cycle cost analysis (LCCA). It enables
an objective decision of the topology options considering the
high reliability requirements of SAS networks. This paper
discusses how to make the best out of this new approach in
protection and supervision of power systems.
This paper is organized as follows. Section II shows the
state of art and Section III presents the requirements of
SAS. Section IV explains the life cycle cost theory, while
Section V shows the proposed methodology. The results using
our approach are in Section VI. Section VII concludes the
paper.
II.

R ELATED W ORK

A good understanding of the statistical behavior of the SAS

are needed for an efficient project. Reliability is the probability
that the device can perform its function for a specified interval
under stated conditions [8]. An important methodology used to
evaluate the system reliability is the Reliability Block Diagram
(RBD). In this model, device reliability is modeled as a
random variable with exponential distribution and devices are
logically connected in way to mirror the system functioning
in case of device failure. Hence the device is displayed in
series with other components or it appears in parallel to
represent redundancy. Lundqvist and Aab show the different
availability criteria and reliability definitions relevant to a
power system [5] and their impact in the power system
are shown in [7]. In this paper, the authors calculate the
annual downtime in a SAS considering different topologies.
Reliability calculations for SAS using the Reliability Block
Diagram (RBD) are shown in [4]. In this work, Hoseinabadi
shows quantitative results of the impact of the automation
system over the annual downtime of a substation.

Life Cycle Cost Analysis as determining factor for optimization in system design is applied in [1] and documented
in [2]. Hinow and Mevissen use LCC to determine the
substation layout using genetic algorithms [1]. This work,
however, does not apply to SAS, but to substation bus,
composed of electrical equipments. An application example of
the LCCA for process bus topology, which includes part of the
telecommunication equipments of a substation, is shown in [3].
In this paper, the authors test three topologies for the process
bus of a substation. The analysis, however, is preliminary and
further details are required to specify the cost-benefits of these
topologies. Also, many parameters used in the analysis are not
correlated to any real scenario.
This paper proposes a way to quantify the cost benefit of
a SAS based on the analysis of the downtime through LCC.
We used the topologies described in [4], which provides the
basis for the failure probability in a SAS used in our paper.
This paper, however, does not treat the downtime analysis.
As in [7], we calculate the substation downtime, but we
consider LCC applied in the Brazilian scenario using the
main substation telecommunication network topologies. Also,
while [7] is focused in availability and reliability, we evaluate
cost benefit and funding.
III.

T ELECOMMUNICATION N ETWORKS FOR S UBSTATION

AUTOMATION S YSTEMS

A. SAS and IEC 61850

1) Protection and Supervisory Systems: The substation
system reliability and its impact in the life cycle cost depends
on the proper function of two layers: the communications layer
and the power equipment layer. Its important to understand
that the relevant service outages, the ones that will result in
heavy financial penalties and affect clients, are the power delivery failures. An outage in the communications layer might
lead to an insecure state, or fail to prevent propagation of a
fault in the power system. Most of the time the occurrences
will be minor failures and in very unlikely situations, critical
failures. So, a fault in the communications layer might have
no effect in the power delivery if the substation is operating
normally.
In order to have a full comprehension of the risks involved,
a quantitative analysis of the impact of each possible outage
must be performed. Probabilities considering the possible
events are calculated as follows:

redundant bays should come into operation. Rapid switching

enables fast recovery in case of failures and depends on
communication between bays. Such functions are mapped in
station/interbay bus. The functions that communicate inside
the bay are mapped in the process bus.
Each network topology presents some particular advantages and disadvantages when applied to process or station
buses. The relevant parameters to take into consideration when
deciding the best topology include:

Latency - IEC 61850 has strict latency specifications

with times as low as 3ms. The number of nodes
impacts the project as well as network expansions.

Availability - This parameter is specially important for

SAS application due to the dependence of communication between intelligent electronic devices (IEDs)
to perform safety critical distributed functions such
as interlocking.

Cost - With so many difficulties to comply the standard requirements, the cost to implement and maintain
an SAS Ethernet network rises rapidly. Performing
an effective analysis of cost is mandatory in order to
assure a profitable project.

A qualitative analysis shows that the strict latency and availability requirements of the substation automation applications
might demand approaches with redundancies for critical components. The basics of some popular architectures are the
following[11]:

Cascade - Low cost as single advantage. No redundancies lower overall availability and the single path will
rise the latency if the network has too many elements.

Ring - Low cost also and better availability when

compared to cascade due to the redundancy. Requires
managed switches that implement Rapid Spanning
Tree Protocol to avoid packages to loop indefinitely
on the network. This fairly raises the latency and cost.

Star - Has lowest latency among the simple topologies, fairly higher cost and a single point of
failure[11].
IV.

L IFE C YCLE C OST T HEORY

Power equipment works;

The power equipment fails, but the SAS is able to

clear the fault successfully;

Life-cycle cost analysis (LCCA) is a tool to determine

the optimal point of cost-effectiveness considering all possible
characteristics of each technological alternative in terms of
their impacts in the Present Value of the project. Comparing
initial costs and recurring costs and selecting the minimal cost
value.

The SAS becomes unavailable, and before its repair,

a fault in the power system occurs. This event is the
case in which theres power outage due to problems
in the communication system and penalties apply.

The optimal cost efficient solution for the system implementation and ownership (CLC ) will take into consideration
the acquisition cost CA (t), the maintenance cost CR (t), and
the operation and renewal cost CO (t) [1]:

B. Station, Bay, and Process Bus Requirements

Bay is the physical separation of the electrical equipment
in the substation for safety purposes [9]. A Substation has
many bays depending on its load capacity. In case of failure,

CLC (t) = CA (t) + CR (t) + CO (t)

(1)

The acquisition cost is the price of implementation of the

system. This analysis will evaluate the equipment price only,

since the commissioning and human material cost should be

similar for the different architectures presented.
The component renewal cost (CR (t)) is the sum of prices
of acquisition of all components divided by its expected life.
Hence,

CR (t) =

X CA i(t)
Lifei

(2)

This cost assumes the components are replaced when they

reach the end of their expected life independent of failure.
The operation cost can be divided in preventive maintenance CM P (t) and corrective maintenance CM C (t), according
to

CO (t) = CM P (t) + CM C (t),

(3)

where the preventive maintenance has a fixed value equal

to a percentage of the acquisition cost (CM P (t) = CA (t)).
The corrective maintenance or fault cost is subdivided into
penalty cost Cf p (t) and equipment replacement cost Crep (t),
according to:

CM C (t) = Cf p (t) + Crep (t).

(4)

It is important noticing that Crep (t) is relative to replacements due to failures in the equipments, while CR (t) corresponds to replacement because of ageing. Thus the component
replacement cost (Crep (t)) is the sum of the component prices
(Crepi) weighed by the component failure probability (Fpi).

Crep (t) =

n
X

Crepi.F pi

(5)

n=1

V.

P ROPOSED EVALUATION OF THE L IFE C YCLE C OST

The objective in this analysis is to determine the economical viability of the investment in SAS. The cost calculations
will reveal when and how to implement the protection system.
Its expected that very important substations will demand
higher investments in reliability. On the other hand, for small
substations, the high costs of automation on the moment of
the present study might be prohibitive for implantation.
We apply our model considering the Brazilian scenario. A
failure that causes interruption of transmission functions has
a penalty of energy delivery interruption. In Brazils specific
case, Cf p (t) (Eq. 4) is also known as PVI (Parcela Variavel
por Indisponibilidade) - the unavailability variable parcel [14].
The government establishes a fine based on the duration of
interruption and amount of energy not delivered. The value to
be discounted from the companys receipt due to interruption
in the energy delivery is calculated as follows:

BP
PV I =
Kp
1440D
BP
+
1440D

NO
X
i=1

NP
X
i=1

DV DPi

Koi DV ODi

(6)

Where the first parcel is a discount due to programmed

interruption. Kp is the multiplicative constant for programmed
interruptions, NP is the Number of (Programmed) interruptions and DV DPi is the duration of programmed interruption.
The second parcel is the interruption due to other events. This
includes failures and will be used for fault penalty calculation.
D is the number of days in the interruption interval, BP is
the Base Payment of the transmission functions, NO is the
Number of (Other) interruptions, DV ODi is the duration in
minutes of the interruption, and Koi is multiplicative factor for
the kind of interruption in question[14]. For the transformation
transmission function Koi is 150 D is 365 days in a year,
for the study accounts the total fines in an entire year.
Hence, the equation considering the non programmed
interruptions and that will yield the annual failure costs is:
BP
Cf p (t) =
(Ko.F P (t).tr (t)),
(7)
1440 365
where F P (t) is the System failure probability obtained
with the Reliability Block Diagrams and tr (t) is the system repair time in minutes. So, F P (t).tr (t) is the annual downtime,
the sum of all interruptions in the period of a year. Assuming
all interruptions have a duration of less than 300 minutes, Ko
is 150 for all the terms in the sum. The value of F P was
obtained from [4].
The final formula used for the evaluation proposed in this
study is:
BP
CLC (t) = CA (t) + CM P (t) +
(Ko.F P (t).tr (t))
1440 365
n
X
X CA i(t)
+
Crepi.F pi +
(8)
Lifei
n=1
A. Substation Layouts & Automation System Architectures
Eight substation layouts are considered. Each has different
annual downtimes and respond differently to the implementation of SAS [7]. The SAS architecture also has impact over the
system life cycle cost according to the substation layout. The
IEC 61850 norm states that due to the principle of graceful
degradation, a single point of failure should be avoided [10]
in the SAS. Hence it suggests that every component in the automation system should be duplicated. This strategy, however,
is very expensive and may compromise project profitability.
We use previous studies [7] about the use of the different
topologies (Fig 1) in the different substation layouts as input
for the life cycle cost calculation.
Hoseinabadi et al evaluated the impact of each SAS
topology in several substation layouts. The automation leads to
less downtime for all layouts, but the effectiveness varies [7].
We use these downtime values to analyze costs according to
the system life cycle.

(a) Centralized Ring.

(b) Simple cascading

(c) Redundant cascad- (d) Decentralized Star.

ing.

(e) Centralized Star.

(f) Redundant Star.

Fig. 1. Main network topologies for SAS, which are evaluated using the proposed life cycle cost analysis. The switches (ESW) are colored blue; BCUs are
green. Connected NCCSs, IPCs, and HMIs.

We analyze the SAS implementation in order to compare

these costs with the system operation and fines due to electrical
system outages. We use the following values, described in
Table I, in calculations:
Acquisition cost - Estimated value of substation
equipment in Brazilian Reais (BRL)1 . We consider
the equipments: IPC - Industrial Personal Computer,
ESW - Ethernet Switch, EI - Ethernet Interface, BCU
- Bay Control Unit, HMI - Human Machine Interface,
and NCCS - National Control Center Server

Renewal cost - Uses the equipment lifespan. Lifespan

is the estimated time for aging and subsequent replacement of the device.

Preventive maintenance - Deemed 20% of the acquisition cost.

Corrective maintenance - Equipment fault probability.

Rate of failure per year (Fpi) and considered constant

during the lifespan of the equipment [4].
TABLE I.

IPC
ESW
EI
BCU
HMI
NCCS

EQUIPMENT ESTIMATED PRICES AND FAILURE

PROBABILITIES

Price (BRL)
13000
1800
128
24000
3000
13000

Lifespan
20
15
25
15
20
20

VI.

CR(year)
650
120
5,12
1600
150
650

Fpi
0,06993
0,08696
0,00333
0,00966
0,10000
0,06993

Crep (year)
909,09
156,528
0,42624
231,84
300
909,09

In this paper, all the calculations are made assuming the

substations have 8 bays. In fact, the Ethernet switches used
for this estimate are 8 ports unmanaged switches. 24 ports
managed switches cost around 4 times more. The choice of
8 bays per substation simplifies the calculations and is a
reasonable number for comparing the SAS topologies, since
the costs vary in function of the number of bays.
Figures 2(a) and 2(b) show the recurring costs on the first
year plotted in function of the Base Payment of the substation.
For a typical substation layout. The Life Cycle Cost functions
do not consider inflation and escalation. Resulting in linear
equations (mx + b), where the slope m is a constant value
150/(1440 365) multiplied by the annual downtime. The
constant term is the sum of all operational and renewal costs.
x 10
2.36
2.34
2.32
2.28
2.07

2.08

2.09 2.1 2.11 2.12

Base Payment (R$)

2.13

2.14
6
x 10

(a) Centralized SAS Costs

x 10

The analysis methodology compares first year cost for

different implementations, observing the cost rise as a function
of the energy supplied by the substation or Base Payment,
as previously stated. We model the fault penalty for Brazils
regulatory and economic scenario. We apply the following
normalization operation in the results:
C(yr)i
.
C(yr)min

Manual
Centralized Ring
Redundant Star
Centralized Star

2.3

R ESULTS

N C(yr)i =

2.38

Annual Costs (R$)

So the curve with the minimum annual cost has value

always equal 1.

Annual Costs (R$)

B. Costs in SAS implementation

2.8
2.78
Manual
Simple Cascading
Redundant Cascading
Decentralized Star

2.76
2.74
2.72

(9)

2.48

2.49

2.5
2.51 2.52
Base Payment (R$)

2.53

2.54
6
x 10

(b) Decentralized SAS Costs

Where N C(yr)i is the ith Normalized Cost, C(yr)i is the

ith annual cost and C(yr)min the minimum annual cost.
1 Data

used was collected from SEL website values in US Dollars[15].

Fig. 2. Network topologies evaluated using the proposed life cycle cost
analysis.

1.008

Manual
Centralized Ring
Redundant Star
Centralized Star

Relative Cost

1.006
1.004
1.002
1
2

4
6
Base Payment (R$)

10
6
x 10

(a) Normalized costs for a substation layout with centralized SAS topologies

1.02

Manual
Simple Cascading
Redundant Cascading
Decentralized Star

Relative Cost

1.015
1.01
1.005
1
2

4
6
Base Payment (R$)

10
6
x 10

(b) Normalized costs for a substation layout with decentralized SAS topologies
Fig. 3. Network topologies evaluated using the proposed life cycle cost
analysis.

The graphs shows the operational and renewal costs of the

first year and Fault penalty. Its applied to the substation layouts
and compares Centralized and Decentralized SAS topologies
as different categories. All substation layouts have very similar
behavior when centralized topologies are implemented, so dual
supply radial-single bus layout is taken as example in Figure
3(a). For decentralized topologies, the same layout is made
example in Figure 3(b).
As seen in Figures 2(a) and 2(b), all the SAS topologies will eventually become a better option than of manual
switching as the BP grows, but some topologies are always
minimal in terms of the LCC. For the values estimated, the
average thresholds are:

BP(yearly) < R$2,2 million - Investment not justifiable

R$2,2 million < BP(yearly) < R$5,0 million - The

recommended investment is a simple topology such
as centralized star

R$5,0 million < BP(yearly) - The recommended

investment is the most reliable topology such as
redundant star

These average thresholds values apply to all substation

layouts except the layout single radial. The impact of implementation of SAS in this kind of layout is very light.
VII.

C ONCLUSION

The fine due to supply interruption caused by a failure

in a substation determines its relevance. The investment
in automation isnt justified for small substations, where
the additional maintenance costs would surpass the penalty
costs. As the penalty cost rises, a simple topology without
redundancies becomes a good investment. For very important
substations the better option is to invest in the most reliable
SAS as possible, a topology with redundancies.
ACKNOWLEDGMENT
The authors would like to thank CNPq, FAPERJ, CAPES,
ANEEL, and FURNAS for financial support. Thanks also to
Lopes, Y. and Boucinhas, R.C. for the valuable critics and
suggestions.
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