Discovering the true value of power: Electricity North West’s VoLL project

Ahead of the Low Carbon Network Innovation (LCNI) Conference, taking place from the 6th – 7th December in Telford, we will be posting introductions to some of the ground-breaking innovation projects that will be presented there by our members.

Kate Quigley, Electricity North West’s Innovation customer delivery manager, explains why different customers place different values on power cuts, and how the research they are undertaking in this area will help them better plan ongoing network investment and customer strategies.

From boiling a kettle to keeping the wheels of industry turning, a safe and reliable supply of electricity plays a huge role in our daily lives. We all know just how important electricity is to all of our customers. Or do we?

We invest millions of pounds on the distribution network to ensure homes and businesses stay switched on now and in the future and to help keep power cuts to a minimum.

Our network is 99.99% reliable. A property in the North West will typically experience a power cut once every three years and, on average, is without power for about an hour. A report published earlier this month shows that we have delivered our best reliability ever over the past year.

Despite this, power cuts still happen; largely due to circumstances beyond our control, such as severe weather, damaged equipment and vandalism.

Power cuts can be extremely disruptive and affect different customers in different ways. Loss of electricity supply is always inconvenient and can be costly for businesses and domestic customers. It can also be distressing or even life threatening for some customers who may have medical or other needs.

No one likes power cuts at any time, but the impact of a power cut can differ, depending when it occurs. For example, loss of electricity on a summer afternoon is likely to be less disruptive to domestic customers than when it occurs on a cold, dark, winter evening. Similarly, a power cut might affect a small business very differently, disrupting production on a busy summer afternoon but having little or no impact during the evening.

Understanding this impact and the ‘value of lost load’ (VoLL) is important as it is used to determine network planning and investment strategies. At present the electricity industry uses a financial model to calculate the cost and impact of power cuts which guides many important investment decisions. The model values one customer’s power cut the same as another. For example, the impact of a power cut affecting the home of a working couple is valued the same as a nursing home with 100 residents.

At Electricity North West we have been conducting an extensive piece of research which will lead to a better understanding of the unique impact of power cuts on a diverse range of domestic and business customers.

This research will help us develop a revised financial model that more accurately reflects specific customer segments. This will ensure that future investments are targeted at areas of the network which will benefit our customers the most. The new model could be used by other network operators to ensure that all British networks meet the future needs of our customers.

The findings may also influence changes in the way customers are compensated after a power cut and the penalties imposed on network operators to improve the reliability of electricity supplies.

We are currently analysing the findings from a large scale survey conducted with 6,000 customers, 3,000 from our own operating region and 3,000 from other parts of Great Britain.

The study was designed to gain a much richer understanding of the value that all sectors of society place on their electricity supply. Understanding the relative VoLL components at a much more granular level could allow greater efficiency in future investment decisions, driven by customer need.

Early indicators from the survey show distinct variations in VoLL across a broad spectrum of customers.

We will publish a comprehensive assessment of how VoLL should be defined in January 2018. This should inform a potential revised model to help DNOs better plan their network investment and customer strategies.

The findings are also likely to have an impact on our social obligations and influence how we adapt our response to customers on our priority services register and develop solutions to address fuel poverty.

For more information about the VoLL project, please click here.

Electricity North West will be presenting the VoLL project at the LCNI conference on Thursday 7th December.

For more information about LCNI, and to buy tickets, please click here.







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