Development and application of a cost-benefit framework for energy reliability using probabilistic methods in network planning and regulation to enhance social welfare : the N-1 rule

M. Nooij, de, B. Baarsma, G.A. Bloemhof, J.G. Slootweg, H. Dijk

Research output: Contribution to journalArticleAcademicpeer-review

6 Citations (Scopus)
1 Downloads (Pure)

Abstract

Although electricity is crucial to many activities in developed societies, guaranteeing a maximum reliability of supply to end-users is extremely costly. This situation gives rise to a trade-off between the costs and benefits of reliability. The Dutch government has responded to this trade-off by changing the rule stipulating that electricity networks must be able to maintain supply even if one component fails (known as the N-1 rule), even in maintenance situations. This rule was changed by adding the phrase "unless the costs exceed the benefits." We have developed a cost–benefit framework for the implementation and application of this new rule. The framework requires input on failure probability, the cost of supply interruptions to end-users and the cost of investments. A case study of the Dutch grid shows that the method is indeed practicable and that it is highly unlikely that N-1 during maintenance will enhance welfare in the Netherlands. Therefore, including the limitation "unless the costs exceed the benefits" in the rule has been a sensible policy for the Netherlands, and would also be a sensible policy for other countries.
Original languageEnglish
Pages (from-to)1277-1282
Number of pages6
JournalEnergy Economics
Volume32
Issue number6
DOIs
Publication statusPublished - 2010

Fingerprint

Planning
Costs
Electricity
Energy
Social welfare
Probabilistic methods
Cost-benefit
The Netherlands
Trade-offs
End users
Costs and benefits
Government
Grid
Interruption

Cite this

@article{f74a9ad22cd548fbbdd89d5857968ad1,
title = "Development and application of a cost-benefit framework for energy reliability using probabilistic methods in network planning and regulation to enhance social welfare : the N-1 rule",
abstract = "Although electricity is crucial to many activities in developed societies, guaranteeing a maximum reliability of supply to end-users is extremely costly. This situation gives rise to a trade-off between the costs and benefits of reliability. The Dutch government has responded to this trade-off by changing the rule stipulating that electricity networks must be able to maintain supply even if one component fails (known as the N-1 rule), even in maintenance situations. This rule was changed by adding the phrase {"}unless the costs exceed the benefits.{"} We have developed a cost–benefit framework for the implementation and application of this new rule. The framework requires input on failure probability, the cost of supply interruptions to end-users and the cost of investments. A case study of the Dutch grid shows that the method is indeed practicable and that it is highly unlikely that N-1 during maintenance will enhance welfare in the Netherlands. Therefore, including the limitation {"}unless the costs exceed the benefits{"} in the rule has been a sensible policy for the Netherlands, and would also be a sensible policy for other countries.",
author = "{Nooij, de}, M. and B. Baarsma and G.A. Bloemhof and J.G. Slootweg and H. Dijk",
year = "2010",
doi = "10.1016/j.eneco.2010.06.005",
language = "English",
volume = "32",
pages = "1277--1282",
journal = "Energy Economics",
issn = "0140-9883",
publisher = "Elsevier",
number = "6",

}

Development and application of a cost-benefit framework for energy reliability using probabilistic methods in network planning and regulation to enhance social welfare : the N-1 rule. / Nooij, de, M.; Baarsma, B.; Bloemhof, G.A.; Slootweg, J.G.; Dijk, H.

In: Energy Economics, Vol. 32, No. 6, 2010, p. 1277-1282.

Research output: Contribution to journalArticleAcademicpeer-review

TY - JOUR

T1 - Development and application of a cost-benefit framework for energy reliability using probabilistic methods in network planning and regulation to enhance social welfare : the N-1 rule

AU - Nooij, de, M.

AU - Baarsma, B.

AU - Bloemhof, G.A.

AU - Slootweg, J.G.

AU - Dijk, H.

PY - 2010

Y1 - 2010

N2 - Although electricity is crucial to many activities in developed societies, guaranteeing a maximum reliability of supply to end-users is extremely costly. This situation gives rise to a trade-off between the costs and benefits of reliability. The Dutch government has responded to this trade-off by changing the rule stipulating that electricity networks must be able to maintain supply even if one component fails (known as the N-1 rule), even in maintenance situations. This rule was changed by adding the phrase "unless the costs exceed the benefits." We have developed a cost–benefit framework for the implementation and application of this new rule. The framework requires input on failure probability, the cost of supply interruptions to end-users and the cost of investments. A case study of the Dutch grid shows that the method is indeed practicable and that it is highly unlikely that N-1 during maintenance will enhance welfare in the Netherlands. Therefore, including the limitation "unless the costs exceed the benefits" in the rule has been a sensible policy for the Netherlands, and would also be a sensible policy for other countries.

AB - Although electricity is crucial to many activities in developed societies, guaranteeing a maximum reliability of supply to end-users is extremely costly. This situation gives rise to a trade-off between the costs and benefits of reliability. The Dutch government has responded to this trade-off by changing the rule stipulating that electricity networks must be able to maintain supply even if one component fails (known as the N-1 rule), even in maintenance situations. This rule was changed by adding the phrase "unless the costs exceed the benefits." We have developed a cost–benefit framework for the implementation and application of this new rule. The framework requires input on failure probability, the cost of supply interruptions to end-users and the cost of investments. A case study of the Dutch grid shows that the method is indeed practicable and that it is highly unlikely that N-1 during maintenance will enhance welfare in the Netherlands. Therefore, including the limitation "unless the costs exceed the benefits" in the rule has been a sensible policy for the Netherlands, and would also be a sensible policy for other countries.

U2 - 10.1016/j.eneco.2010.06.005

DO - 10.1016/j.eneco.2010.06.005

M3 - Article

VL - 32

SP - 1277

EP - 1282

JO - Energy Economics

JF - Energy Economics

SN - 0140-9883

IS - 6

ER -