The socioeconomic impacts of recent climate change have placed the environmental issue at the forefront of international debate. Climate change has changed the probability distribution associated to extreme weather events – the high impact and low frequency events, such as hurricanes, wildfires, snowstorms, floods, tornadoes and heat waves, have been more frequent and projections indicate greater intensity, duration and frequency over the coming decades. This global phenomenon threatens urban infrastructure and causes economic damage to companies operating on these sectors.
In the context of energy supply, these phenomena are already a reality and pose risks to the quality of supply (MOHAGHEGHI & DAELI, 2023). The challenges require responsive strategies capable of mitigating the effects and recovering quickly from the disasters that generated the interruption in supply - however the current regulatory framework lacks adequate instruments for recognizing investments in resilience. The situation is not different when we consider market design issues (LO PRETE & BLUMSACK, 2023).
Therefore, it is important to evaluate and develop reliability and resilience metrics that allow the regulator to understand how the prudent classification of investments in the electrical distribution network is affected by risks and climate events. This kind of research is essential to avoid misaligned incentives for investments in resilience, which could compromise the sustainability of the operation. A new challenge also arises for planning and operation management that demands the formulation of public policies that consider climate change on a large scale as an element of analysis, involving cost-benefit issues, risk modeling, attribution of responsibilities and coordination among different social actors. It is not just about physical investments; it involves the creation of specific protocols and policies.
In this paper we describe a specific framework for cost-benefit analysis of resilience investments, applicable to a generic electrical utility - a guide for the application of the basic principles of cost-benefit analysis in the evaluation of investments associated with the resilience of electricity grids. For this purpose, the paper is organized as follows: i) a literature review about infrastructure and power systems resilience; (ii) the step-by-step proposed for applying the methodology, inspired by the field of “Disaster Risk Management”; (iii) a hypothetical quantitative case study, that indicates which type of data is needed from a Distribution Company (DISCO) in order to implement the methodology at feeder’s level; (iv) the presentation of an Enterprise Risk Management dashboard for resilience, capable to map and analyse critical risk for different areas covered by the utility.
The results, therefore, allow to the decision makers the choice of the best investments needed to increase the grid resilience – those that present a net social benefit greater than other alternatives, including maintaining the status quo.
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