A study in microgrid ownership effects on investment risk in comparison with underground cabling

Tony Rosqvist, Sanna Uski, Janne Sarsama

Research output: Chapter in Book/Report/Conference proceedingConference article in proceedingsScientificpeer-review

Abstract

This paper studies the effect of joint ownership of microgrids as a means to share the owners' annual cost/profit risks and create incentives for investing in microgrids instead of underground cabling. Underground cabling is acknowledged as a costly and often times unprofitable - but unavoidable - solution for the distribution network operator (DNO) to improve the distribution network resiliency to interruptions in rural areas in Finland. The study demonstrates how the ratio of ownership and mutual agreements would affect the distribution of monetary risk between the DNO and the customers forming the microgrid (i.e. User group), which are the key shareholders. The methodological basis is the standard mean-variance analysis related to volatile assets and the Value-At-Risk concept, which reflects the risk attitude of the shareholders. The methodology presupposes and examines the DNO to be permitted have a double role as the traditional operator of power distribution, and being a small-scale power producer together with the prosumers. The demonstrated case shows how mutual arrangements of ownership shares and fees may be determined such that a joint investment in a microgrid system outperforms the underground cabling solution in terms of annual cost/profit. The study could pave a way to a systematic risk-based means of communicating risk attitude and incentive to form a microgrid in cases where underground cabling seems unfeasible.

Original languageEnglish
Title of host publication2018 IEEE International Energy Conference, ENERGYCON 2018
PublisherInstitute of Electrical and Electronic Engineers IEEE
Pages1-6
Number of pages6
ISBN (Electronic)978-1-5386-3669-5
ISBN (Print)978-1-5386-1283-5
DOIs
Publication statusPublished - 27 Jun 2018
MoE publication typeNot Eligible
EventIEEE International Energy Conference, ENERGYCON 2018 - Limassol, Cyprus
Duration: 3 Jun 20187 Jun 2018
http://www.energycon2018.org/

Conference

ConferenceIEEE International Energy Conference, ENERGYCON 2018
Abbreviated titleENERGYCON 2018
CountryCyprus
CityLimassol
Period3/06/187/06/18
Internet address

Fingerprint

Microgrid
Distribution Network
Electric power distribution
Operator
Incentives
Shareholders
Annual
Profit
Profitability
Resiliency
Value at Risk
Power Distribution
Volatiles
Costs
Arrangement
Customers
Methodology
Demonstrate

Keywords

  • Joint ownership
  • Microgrid business model
  • Microgrid investment
  • Risk-informed investment
  • Underground cabling

Cite this

Rosqvist, T., Uski, S., & Sarsama, J. (2018). A study in microgrid ownership effects on investment risk in comparison with underground cabling. In 2018 IEEE International Energy Conference, ENERGYCON 2018 (pp. 1-6). Institute of Electrical and Electronic Engineers IEEE. https://doi.org/10.1109/ENERGYCON.2018.8398777
Rosqvist, Tony ; Uski, Sanna ; Sarsama, Janne. / A study in microgrid ownership effects on investment risk in comparison with underground cabling. 2018 IEEE International Energy Conference, ENERGYCON 2018. Institute of Electrical and Electronic Engineers IEEE, 2018. pp. 1-6
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Rosqvist, T, Uski, S & Sarsama, J 2018, A study in microgrid ownership effects on investment risk in comparison with underground cabling. in 2018 IEEE International Energy Conference, ENERGYCON 2018. Institute of Electrical and Electronic Engineers IEEE, pp. 1-6, IEEE International Energy Conference, ENERGYCON 2018, Limassol, Cyprus, 3/06/18. https://doi.org/10.1109/ENERGYCON.2018.8398777

A study in microgrid ownership effects on investment risk in comparison with underground cabling. / Rosqvist, Tony; Uski, Sanna; Sarsama, Janne.

2018 IEEE International Energy Conference, ENERGYCON 2018. Institute of Electrical and Electronic Engineers IEEE, 2018. p. 1-6.

Research output: Chapter in Book/Report/Conference proceedingConference article in proceedingsScientificpeer-review

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Rosqvist T, Uski S, Sarsama J. A study in microgrid ownership effects on investment risk in comparison with underground cabling. In 2018 IEEE International Energy Conference, ENERGYCON 2018. Institute of Electrical and Electronic Engineers IEEE. 2018. p. 1-6 https://doi.org/10.1109/ENERGYCON.2018.8398777