A New Method for Analysing Financial Damages Caused by Grid Faults on Individual Customers

Disruptions in electricity supply can cause significant social and economic damages to individual customers connected to the electricity grid, causing loss of income, productivity, and material damages. In this context, considerable investments are required for improving the reliability of the electricity network, and appropriate methods are needed for evaluating the cost-benefit of such investments. This paper proposes a new method for analysing financial damages caused by loss of electricity supply for individual customers, consisting of (i) a model for representing individual customers and their grid connection, and (ii) a method for expressing the reliability of a grid connection in terms of financial damages caused by the loss of electricity supply, defined as Customer Outage Cost, CCOST. These two proposed approaches are combined in a probabilistic method for evaluating the economic impacts of grid faults on individual customers. Representing grid reliability in financial terms supports the decision-making process of improving the reliability of electricity supply. The methodology is tested with a case study for a rural dairy farm in Finland, where two alternatives for improving the reliability of electricity supply are evaluated: investments in underground cables and in a microgrid, including a cost-benefit analysis of these investments against their yielded reduction in CCOST. The results from the case study show that the proposed methodology appropriately represents an individual customer and its grid connection reliability. In the context of this study, the microgrid approach was the most cost-effective alternative to mitigate the customer damages incurred by grid faults.