Proactive Network Planning in Medium Voltage Level Introduction Analysis Methods Exemplary Examinations Conclusion M.Sc. Marius Sieberichs 40th Annual IAEE International Conference Singapore, 20. June 2017

Background – Tasks of Network Planning Introduction Background – Tasks of Network Planning Current Network Projects Reference Network Development of Network Utilization Time 10 years 1 2 Reference Network Planning Identification of network structure with long-term minimal costs Compliance with regulations for secure and reliable network operation Network Expansion Planning Determination of planning measures and selection of economical realization times Compliance with regulations for secure and reliable network operation

Introduction Motivation Development of the Supply Task Increase in distributed and renewable generation units in medium voltage level Integration of novel consumers such as electromobility and heat pumps Development of the supply task requires network expansion measures by distribution system operator Impact of the Regulatory Framework Regulatory Framework aims to guarantee secure and cost-efficient electricity supply Incentive Regulation decouples cost-minimization strategy from value-oriented strategy Distribution System Operators (DSO) have to adapt network expansion planning to the impacts of the regulatory framework Improvement of Data Quality in Planning Process Increasing need for precision of network data in the planning process Availability of dedicated data platforms providing precise, processible topographical data DSOs should integrate topographical boundaries into the planning process § Extension of an approach for proactive network planning with regard to topographical restrictions and impacts of the regulatory framework

Cyclical Cost Review and Efficiency Factor Analysis § Regulatory Framework Cyclical Cost Review defines the initial level of the revenue cap for following regulatory period Efficiency Factor determines the level of reduction of the revenue cap by comparisons of DSOs Cyclical Cost Review and Efficiency Factor Payments Time 2019 2023 Base Inefficient Costs Costs1 Efficient Costs Focus Year 2016 Free Cash Flow to investors (positive) Free Cash Flow to investors (negative) Expenditures Revenue Cap 1: Legislation for Networks Fees of Electricity Networks (StromNEV)

Cyclical Cost Review and Efficiency Factor Analysis § Regulatory Framework Cyclical Cost Review defines the initial level of the revenue cap for following regulatory period Efficiency Factor determines the level of reduction of the revenue cap by comparisons of DSOs Quality Element interperiodically grants a bonus / a sanction on the revenue cap depending on the reliability Expansion Factor interperiodically adjusts the revenues depending on the change of the supply task Cyclical Cost Review and Efficiency Factor Quality Element and Expansion Factor Payments Time 2019 2023 Base Inefficient Costs Costs1 Efficient Costs Focus Year 2016 Free Cash Flow to investors (positive) Free Cash Flow to investors (negative) Expenditures Revenue Cap 1: Legislation for Networks Fees of Electricity Networks (StromNEV)

Economical Evaluation of Planning Projects Analysis § Economical Evaluation of Planning Projects Cost-Optimization Calculation of costs associated with all M planning measures Determination of Net Present Value (NPV) over all years N Minimization of total NPV over observation period DFCF-Optimization Company and project evaluation by Discounted-Free-Cash-Flow-method (DFCF) Method evaluates future free cashflow for payout to investors Determination of DFCF for expected return on equity (ROE) Maximization of total DFCF for given ROE Previous Approaches 𝑁𝑃𝑉= 𝑏=1 𝑀 𝑡=1 𝑁 𝐶 𝑡 (1+𝑖) 𝑡 Revenue Operating payments Payments for Taxes and Borrowed Capital Payments for Investments Free-Cash-Flow (FCF) to equity provider Cashflow Calculation in Year 1 When we look to previos approaches then we will see taht all´planing toools assume, that we have a pefect regulations framewokr thwt means -.. Is sufficienz But in pratice., ther are some imperfections and thats the reason that we need to modell ther egualteion framwork… Therefore we have integratet a discounte.. Method in the cuirrent planiung tool. This methods take.. 𝐷𝐹𝐶𝐹= 𝑏=1 𝑀 𝑡=1 𝑁 FCF (1+ROE) 𝑡

Cost Drivers of a Medium Voltage Network and Topographical Data Analysis Cost Drivers of a Medium Voltage Network and Topographical Data Cost Drivers Costs for underground cables are the main cost driver in cable networks Trench construction holds high share of underground cable costs Multiple utilization of one trench for multiple cables has a significant potential for cost reduction (Especially consideration of empty tubes) Evaluation of topography is beneficial for the planning process to optimize multiple utilization of trenches Topographical Data for Line Routings Digital data for topographical structures available on public data platforms (example: Open Street Map) Capturing of real topographical data such as streets, rivers, buildings, railroad lines etc. Filtering and preparation of the data enables automatized processing in the planning process Consideration of topographical data in the planning process to design reliable, secure and cost-efficient target network Costs Exemplary investment costs for trench and cable % trench cable Possible line routing Building Railroad line And this two influencing facotrs have been integratet into an exsiting methodolgy.

Two-step Approach for Proactive Network Planning Method 6 Two-step Approach for Proactive Network Planning Combined reference network and network expansion planning Determination of long-term cost-minimal network structures in reference network planning Utilization of results of Reference Network Planning in Network expansion Planning as input parameters Determination of optimal realization times of expansion measures to approach long-term cost-minimal structure Network / Supply tasks Degrees of freedom in regulation and planning Reference Network Planning Determination of street graph Development of reference network Technical / Economical Evaluation Network Expansion Planning Identification of expansion measures Development of expansion plan Technical / Economical Evaluation Shwo u. Optimal expansion measures and realization plan

Two-step Approach for Proactive Network Planning Method 6 Two-step Approach for Proactive Network Planning Combined reference network and network expansion planning Determination of long-term cost-minimal network structures in reference network planning Utilization of results of Reference Network Planning in Network expansion Planning as input parameters Determination of optimal realization times of expansion measures to approach long-term cost-minimal structure Network / Supply tasks Degrees of freedom in regulation and planning Determination of the initial street graph Amalgamation of network and street data Calculation of the shortest paths Reference Network Planning Determination of street graph Development of reference network Technical / Economical Evaluation Optimal expansion measures and realization plan

Two-step Approach for Proactive Network Planning Method 6 Two-step Approach for Proactive Network Planning Combined reference network and network expansion planning Determination of long-term cost-minimal network structures in reference network planning Utilization of results of Reference Network Planning in Network expansion Planning as input parameters Determination of optimal realization times of expansion measures to approach long-term cost-minimal structure Network / Supply tasks Degrees of freedom in regulation and planning Reference Network Planning Determination of street graph Development of reference network Technical / Economical Evaluation Network Expansion Planning Identification of expansion measures Development of expansion plan Technical / Economical Evaluation Optimal expansion measures and realization plan

Two-step Approach for Proactive Network Planning Method 6 Two-step Approach for Proactive Network Planning Combined reference network and network expansion planning Determination of long-term cost-minimal network structures in reference network planning Utilization of results of Reference Network Planning in Network expansion Planning as input parameters Determination of optimal realization times of expansion measures to approach long-term cost-minimal structure Network / Supply tasks Degrees of freedom in regulation and planning Network Expansion Planning Identification of expansion measures Development of expansion plan Technical / Economical Evaluation FCF § Revenue Expenditures Optimal expansion measures and realization plan

Exemplary Examinations Supply Task Current Network: Rural distribution system on medium-voltage level Total Load: ~ 50 MW Total Feed-in: ~ 3 MW Current supply task characterized by the load of the customers Development of the supply task in the observation period of 10 years 13 % increase of loads and number of customers 175 % increase of feed-in peak power Significant expansion of feed-in over the planning horizon Current Network Primary substation Medium-Voltage line

Results of Reference Network Planning Exemplary Examinations Results of Reference Network Planning Functional structure of reference network Combined ring- and branch-structure 4 medium-voltage rings, 3 medium-voltage branches Line routings of current grid and target grid Line routings of new lines follow courses of roads High correlation of line routings between the grids  Multiple utilization of trenches possible (empty tubes) Primary substation target grid line current grid line Substations: S < 300 kVA 300 kVA < S < 600 kVA S > 600 kVA Primary substation target grid structure Substations: S < 300 kVA 300 kVA < S < 600 kVA S > 600 kVA

Effects of the Regulatory Framework on the Realization Plan Exemplary Examinations Effects of the Regulatory Framework on the Realization Plan Shift of the economically optimal realization times depending on the underlying economical evaluation Concentration of expansion measures in specific years of Incentive Regulation Ordinance for DFCF-Optimization Cost-optimization leads to lower return on expansion measures Value-oriented DSOs should implement optimization towards regulatory framework to maximize economical outcome Number of planning measures T. € DFCF 7 % Cost-Optimization DFCF-Optimization

§ Conclusions Conlcusion and main results Aim of the Study Advanced proactive network planning for consideration of supply task Development Analysis Topographical data provides potential for improved efficiency in reference network planning Regulatory framework impacts the economical evaluation for planning projects Method Combined two step approach consisting of reference network planning and network expansion planning provides long-term cost reductions while maintaining short-term profitability of the network operator Results The integration of geographical data enables the design of a practically applicable reference networks The optimization towards the underlying regulatory framework impacts Discounted-Free-Cash-Flow §

DISCUSSION M. Sc. Marius Sieberichs Institute for Power Systems and Power Economics RWTH Aachen University - Germany Phone: +49 (0) 241 80-97880 E-Mail: MS@iaew.rwth-aachen.de http://www.iaew.rwth-aachen.de co-authors B. Sc. Robin ashrafuzzaman Univ.-Prof. Dr.-Ing. Albert Moser