Exploring the Transition Towards an

Electricity Smart Grid

Using Evolutionary Parameter Optimisation in a
System Dynamics Model

Master Thesis Defense

Dominik Jung

Nijmegen, 15th of August, 2014

Agenda
Research Problem & Relevance
Background
Research Design
- SD Model & Optimization
- Scenarios

Findings & Integration into Theory

Policy Recommendations
Validity / Limitations / Further Research

Research Problem: Uncertainty over SG Transition

Political Desire for transition towards Smart Grid
- open-heart surgery

However: Uncertainties about many aspects

- Rollout Regulation: Features to expect
- Passive or Active transition (Deadline?)
- Asset segments to be transformed
- Bearer of costs
- Smart Assets: Dynamically relevant features (possibly unfavorable)
- Extent
- Impact
- Adverse effects for end customer from reaction of Distribution System Operators
(DSOs)?

Conception of a Transition: From one equilibrium to another

Transition
Phase
Towards
Smart Grid

Smart Grid in a Nutshell

Integration of ICT into grid assets for
[]automatic measurement, communication, control and optimisation of
all aspects of [electricity grid] usage
(Ekanayake et al., 2012).
Enabling technology for integration of renewable sources and new services

Relevance of Research Problem:

A current problem in a complex field affecting many
stakeholders
Characteristics of Long-Life-Network Infrastructure
-

Decisions have long-lasting effects (Practitioner: blind alleys)

Many stakeholders, critical infrastructure
Large Financial Sums
Strongly regulated environment
Germany: Grid in good condition ( USA)

Costs
- Will be passed on to the end customer in all likeliness
- Simultaneously: Extra cost from transition towards renewables

Regulation for rollout is expected / overdue

- Features are uncertain
- EU Recommendation: 80% Smart until 2020

Research Design ( 1 / 2 )
Development
- Practical approach
- In conjunction with DSO consultancy
- Advice
- Software
- Advise from 3 Asset Management experts from large DSO

Scope
- Germany
- Distribution part of electricity grid (DSO)

Quick Positioning: Location of the Distribution Grid

Research Design ( 2 / 2 )
Exploratory Analysis
- No fixed hypothesis
- Scenario Approach: Base Case + 7 Scenario groups
- Scientific use of scenario-making : Brjeson et al. (2006)

Synthetic Case Study

- Aim: Representation of average German DSO
- Synthetic: Combined / Averaged Data

Combination of two methodologies

- SD: Aging Chain for physical assets, influenced by chosen AM Strategy
- Parameter Optimisation using evolutionary algorithms: Finding close-to-optimal
strategies / probable DSO adaptions

SD-Model Structure
Aging Chain through 4 quality conditions

Assets with technical and financial parameters

- As close as possible to average German DSO
- Dynamically relevant properties of new assets: Based on assumptions coming from
experts

10

Asset List

4 Asset Segments to be transformed

Conventional Smart

Conventional Assets (Grid) to evaluate

indirect effects

11

Steps of Analysis

Scenario Groups

Steps of Analysis

Scenario Groups

1 - Establish Reference Point

Base Case (No transition)

2 - Test adequacy of passive approach

Group 1&2:
Passive (Replacement on failure, replacement on
entering condition 4)

3 Test active: Establish likely outcome, when

transforming
without a cost limit

Group 3&4
(Fast = 15 years and slow =25 years)

4 - Establish minimum yearly budget for

transitioning without quality loss

Group 5 & 6
(Found at ~ 17 Million /yr)

5 - Investigate effects of transforming with

progressively smaller budget

Group 7 (Variable Budget)

6 - Try realistic compromise scenario

12

Evaluation of Results: Asset Mgmt. Magic Triangle

Cost

Management Risk

13

Service Quality

Key Findings (1 / 2) A choice between active and passive

Passive Transition would be cost-efficient, but clashes with present
regulation (too slow, requires ~ 40yrs)
Active Transition comes with strong extra strain on finances
- At some points up to 500% of normal yearly budget (unlimited budget scenario)
- Case of 15 years for transition: Threshold for transition without loss of (aggregate)
service quality at 170% of budget
- Essentially: Service improvement at a high price

Time limit is the defining criterion in regulation

a)
b)

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Higher momentary capital demand

Less time More decommissioning of functioning (conventional) infrastructure

Example for Impact of Time limit:

Percentage of new assets being replaced when time
is scarce vs. longer time

Fast
Transformation
(15 yrs)
Slow
Transformation
(25 yrs)

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Key Findings (2/2) Possibility of adverse effects

Adverse effects happen when budget is limited but transformation is forced
-

Conventional assets degrade

End customer quality declines (SAIDI 15min 30 min)
Heterogeneity of asset condition (Smart Conventional)
Stronger towards end of transition period

Central characteristic of transition period for DSO: Coping with rising management risk
through asset condition

EU Recommendation 80% until 2020 will be challenging

Algorithm prefers to invest in lumpy fashion

Also: Tendency towards investing early

16

Assortment Findings in Theory

Macroeconomic Theory
Asset Management Theory
Cost of Grid Reliability

17

Assortment Findings into Cost of Reliability-Theory:

The price of higher quality (Budget unlimited)

2014

Cost Optimum

18

2030

Policy Recommendations
For Regulators: Overlap transition as far as possible with refurbishment
-

Perspective: Refurbishment as far as possible

Time as long as possible
Account for regional differences in grid condition (Pavel, 2011)
All new assets to be installed should be smart

For Distribution System Operators

- Awareness of rising percentage in risk, especially towards last years of transition
- Plan for transition period early
- Disaggregated strategies necessary
- Old assets first
- Upgrade where possible
- Awareness of heterogeneity
- Data requirements
- Lumpy investments
- Possibly: Investments early on

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Validity and interpretation of findings

Qualitative insights from quantitative model
- Broad characteristics and impact of transition
- Some preliminary insight regarding finer details (eg. Sequence, lumpiness, )

Role: Contribution to larger policy discussion

- Detailed elaboration of DSO situation / perspective
- Possibly part of macro-economic Cost-Benefit-Analysis of Smart Grid

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Limitations / Further Research

Scope/Model Structure
- Dynamics inside DSO (Eg. manpower requirements, budget development)
- Macroeconomic Dynamics (Ford et al., 2007)
- New Equlibrium

Methodologically
- Computing Power
- Tools to analyse (investment strategy) parameter space
- Statistically
- Algorithms

Data
- Price development of new assets
- Closer analysis when uncertainties are cleared

21

Thank You!
Supervisors
Partners at Entellgenio
Partners at DSO
Family
Friends

Questions or comments?

22

BACKUP

23

Integration into Theory of Scientific Use of Scenario-Making

(Brjeson et al. , 2006)

What can happen as a

result of our chosen
strategies?

24

How do we reach
SG integration?

Optimization Example

25

Steps of Analysis
1.
2.
3.

4.
5.
(6.

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Establish Base Case (no transition)

Test adequacy of passive approach (replacement on failure,
replacement on entering condition 4)
Establish likely outcome when transforming without a cost limit (Fast =
15 years and slow =25 years)
Establish minimum yearly budget for transition without quality loss
Investigate effects of transforming with smaller budget
Try arbitrary compromise scenario)

Scenario Groups
1.
2.
3.
4.
5.
6.
7.

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Base Case (No transition)

Passive (Transform on equipment failure)
Passive (Transform on entering asset condition 4)
Active Slow (25 years), no cost limit
Active Fast (15 years), no cost limit
Active Fast: Boundary Case
Active Fast: Variable Cost Limit

Cost Passive Transition

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Cost Development Active Transition

(Unlimited Budget)

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Reliability when Forcing Transition w/ limited Budget

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Heterogeneity of Asset Condition

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