GUARANTY OF SUPPLY AVAILABILITY IN A COMPETITIVE ENVIRONMENT - STRATEGY AND EXPERIENCE OF A GERMAN DISTRIBUTION COMPANY

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1 GUARANTY OF SUPPLY AVAILABILITY IN A COMPETITIVE ENVIRONMENT - STRATEGY AND EXPERIENCE OF A GERMAN DISTRIBUTION COMPANY Peter BIRKNER Lechwerke AG - Germany peter.birkner@lew.de Summary -- The most crucial tasks of a system operator are sustainable optimisation of ROCE (Return on Capital Employed), competitive use-of-system charges and sustainable guaranty of supply quality. Based on this, there will be content customers as well as content shareholders who will agree to further investments in the electrical grid. Turnover as a result of third party access is regulated or at least defined by comparable markets. System costs, i.e. capital and operational costs, are influenced to a large extent by the asset management strategy of the system operator. This deals with management, organisation and technology. It includes for example change management strategies, human resource planning, workflow management, spatial resource planning, workforce management, establishment of asset management and asset service principles but also technical innovations and ideas. The most important grid is the medium voltage grid. It defines about 80 % of service availability and about 25 % of total network (including LV, MV and HV) costs. Annual investments amount to a few percent of capital employed and thus have just a limited short-term influence on the whole system. As a result, strategies concerning the optimised exploitation of existing devices are crucial in order to get shortterm improvements. Three innovative technical approaches of the German distribution company Lechwerke AG that try to compensate budget cuts and staff reductions are discussed in this paper. INTRODUCTION Free access to the electricity market in Germany led within three years to a very intensive competition. Consequently, strategies in energy procurement, distribution business and energy sales have changed dramatically. The following focuses on the consequences on the extensive medium voltage distribution system of the Bavarian regional supply company Lechwerke AG (LEW AG), a subsidiary of the biggest German interconnected company RWE AG. Lechwerke AG operate the voltage levels 0.4 kv (secondary system), 20 kv (primary system), 110 kv (regional distribution) and 380 kv (supra regional transmission) within an area of 8,245 km² (3,253 miles²) between river Danube and the Alps. Distributed energy amounts to about 10.5 TWh per year. Further business areas are hydro power generation plants (20 %), energy procurement from the market (80 %), energy trading and sales. Lechwerke AG hold about 2 % of the German market which total consumption amounts to 514 TWh per year. DEREGULATION IN GERMANY AND EUROPE Deregulation of the 2,372 TWh electricity market within the European Union started on February 19 th 1998 when the Directive on the Internal Electricity Market came into force. Within a transition period of six years a minimum of one third of member states national consumptions should be open to competition. Member states were given one year to transfer the Directive into national law. German government, however, decided to go far beyond the requirements and to open up the market immediately, totally and without any transition regime on April 29 th Over night every customer including private households had access to a competitive market place. In the beginning competition between market players focused on price. As a result, all-inclusive prices of electricity (i.e. electrical power plus distribution grid) were being reduced by approximately one third during the next two years. Today there are separate prices for electrical power and distribution via the grid. Electrical power prices have reached or even passed the bottom. They are defined by the market. There is a liquid OTC market, a power exchange with a spot and a financial market and the switching rate of (commercial) customers is increasing. As well portfolio as risk management are becoming normal businesses. Consequently, the interest of market participants and customers in the second price component of electricity, the so called use-of-system charges, has increased. CONSEQUENCES OF DEREGULATION ON THE DISTRIBUTION BUSINESS Distribution business is considered to be a natural monopoly. Due to economic considerations there is no point in constructing a parallel grid in order to increase competition. The preferred solution is to provide access to the grid based on transparent, objective and non discriminatory conditions. In order to remunerate system operators market players are charged with a cost plus fee based tariff. As a result, one may conclude that competition will not become an issue in the distribution business. Nevertheless, there are three main mechanisms that create increasing pressure on costs and tariffs. To begin with, regional supply companies are vertically integrated. Concerning the electric power and distribution businesses both current EU Directive and German law demand only separation regarding finances and accounting. Only one balance sheet and one profit and loss statement for both activities meet the legal requirement. Shareholders regard only the total annual profit and are not concerned whether it is based on the distribution or sales of electric power. Due to the dramatic drop in electricity prices all efforts to increase efficiency should be applied within the same company. Secondly, customers have alternatives, e.g. they have the right LEC_Birkner_A1 Session 6 Paper No

2 to build a direct line to a 110/20 kv transformer station in order to overcome the last mile or to build a 20/0.4 kv substation. Furthermore, the grid tariff system is very transparent. It is easy to compare use-of-system charges of about 900 system operators. Moreover, bigger customers may build their own generating plant and use the grid just as backup. All these prices are used as benchmarks for the tariffs of the local system operator. They are applied in the bilateral price fixing process of negotiated third party access. Thirdly, there is a comparison market scheme for the 900 German system operators that allows customers to appeal to an arbitration tribunal if use-of-system charges are considered too high. Additionally, customers can bring the case into court. On top of this, there is a strict and independent ex post supervision of charges by the Federal Cartel Authorities. Lechwerke AG started cost management programs in 1995 in expectation of the new competitive environment (three years before the EU Directive was approved). The result is a reduction in capital investments by about 60 % and a staff reduction by about 25 %, without any significant increase of outsourcing. On the other hand, maximum transmitted electrical power rose 19 % from 1,500 MW up to 1,780 MW within the last six years. These figures clearly demonstrate the increasing requirements on the system (higher performance at lower costs) and decreasing resources. Therefore, regional supply companies must find ways to drastically improve their efficiency. This includes a strategy to direct resources exactly to those points where the maximum return is achieved. The medium voltage distribution system plays a key role in such a strategy. ASSET MEDIUM VOLTAGE DISTRIBUTION SYSTEM As far as power quality aspects go the quality of frequency is defined by the transmission system. Voltage quality, i.e. sinusoidal shape, symmetry between phases, constant amplitude, is mainly influenced by the low voltage (secondary) system and to a much lower extent by the medium voltage (primary) system. Availability, however, is strongly tied to the medium voltage distribution system. A reliable medium voltage distribution system is the backbone for a reliable and stable supply with electrical energy. Focusing on the system costs of the medium voltage distribution system of Lechwerke AG it represents about one quarter of the total costs of all voltages and transformations (full costs). The low voltage system contributes about one third while high and extra high voltage systems represent together only one sixth. The remaining quarter is assigned to the transformers of all voltages. Age distribution of electrical devices in typical German distribution system shows that about half of all devices are older than 20 years. About one quarter is older than 30 years. In the near future an increasing demand of maintenance, refurbishment or replacement has to be expected. Consequently, the medium voltage distribution system not only represents a significant percentage of total system costs, but also defines the supply availability. Strategies concerning the expansion of the system are as crucial as strategies concerning the exploitation of existing devices. AVAILABILITY ASPECTS Today s availability has a very high standard. Utility s investment and operation costs are above customer s costs of supply interruptions. In order to cut down grid costs it is not acceptable to reduce availability. Following fig. 1 this would increase customer s costs ( I ). It seems more adequate to reduce grid costs by the application of new intelligent methods without a significant reduction of availability ( II ). In other words, the gradient of utility s cost curve has to be minimised. [1] and [2] give some reflections on this subject. Costs Reduction of Grid Costs due to Competition Fig. 1: Costs of Grid Based Availability Discussion about availability is also influenced by the legal framework. As long as customers have to bear the costs of supply interruptions there is very little incentive for utilities to provide a quality level above international standard like EN However, if the utility is obligated to pay compensation, monitoring and improvement of availability become a much higher priority. Some established reliability metrics are defined in Table 1. Metric Description SAIFI - system average The average number of sustained outages per year and interruption frequency index per customer for a defined area (i.e. a utility system) CAIFI - customer average For customers who experienced sustained outages, interruption frequency index the number of outages they SAIDI - system average interruption duration index CAIDI - customer average interruption duration index Table 1: Established Reliability Metrics I Today s Position II Minimum of Total Costs Availability Utility s Capital and Operational Costs Application of New Intelligent Methods Customer s Costs of Supply Interruptions experienced per year The average length of a sustained customer outage in minutes For those customers who experienced sustained outages the average length of the outage LEC_Birkner_A1 Session 6 Paper No

3 As an example of innovative technical approaches the following three activities of the German distribution company Lechwerke AG are discussed: Condition and availability centred maintenance program of a 20 kv XLPE distribution system in order to reduce interruption frequency (SAIFI, CAIFI) Operation of selected disconnectors in a 20 kv distribution system via mobile phone modems in order to reduce interruption duration (SAIDI, CAIDI) and Improvement of system information by using fault distance location relays in 110/20 kv transformer stations also in order to reduce interruption duration (SAIDI, CAIDI) in a 20 kv distribution system RELIABILITY CENTERED MAINTENANCE PRO- GRAM OF A 20 kv XLPE DISTRIBUTION SYSTEM Electrical distribution systems must be considered assets with a long depreciation cycle. Typically, the time delay between the implementation of a change in strategy and the recognition of its sustainable impact will take at least between five and ten years. Improvements of grids can be accomplished through the extension and the development of existing resources. Development of resources means inspection, service, upgrading and replacement of devices, as well as making use of grid reserves and simpler grid structures. As far as financial aspects in terms of profitability and return go it is important to distinguish between capital investments which reduce the annual profit by their annual depreciation and expenditures which reduce the bottom line at their full face value in any given year. Typically, both budgets are limited and part of a midterm planning scenario. Asset management focuses on minimum life cycle costs through the optimal utilisation of the involved assets. A strong correlation exists between the availability of an asset and its management. Any particular maintenance strategy must include a schedule and activities (inspection, service, upgrading, replacement). Failures trigger non scheduled activities. Depending on the effectiveness of the performed activities the natural ageing process in conjunction with operational aspects, e.g. overload conditions may result in new failures and service interruptions. This process defines both service quality, i.e. availability and grid costs. Organisational timing and quality issues (inspection, service) must be addressed with regard to a meaningful maintenance process. There are some basic strategies: Time-based maintenance or preventive maintenance of devices within fixed time periods Condition based maintenance based on the results of a self-monitoring or a diagnostic system Corrective maintenance which will only react when failures occur Reliability centred maintenance which takes into account the functional importance of the device regarding service availability as well as its condition Fig. 2 shows the principles of reliability centred maintenance. Every single device within one class is evaluated on the basis of its importance for service availability and its condition [3]. The result determines the order of necessary maintenance activities. Extreme cases are time-based maintenance for very important devices and corrective maintenance for unimportant devices. Condition based activities are inspection, service or replacement. Reliability centred maintenance integrates all the other strategies and directs resources exactly to the critical points. As a result and with regard to operational and capital costs,this is the most economic maintenance strategy. Inspection low high Device Importance Concerning Service Availability Fig. 2: Reliability Centred Maintenance Problem Based on Condition Underground cables are divided according to fig. 3 into required and not required ones. The category required encompasses important and unimportant cables with respect to system operation and service availability. Evaluation of requirement and importance is based on practical ex- Replacement Service Device Condition Based on outage statistics km of underground cable (8.3 %) out of 3,156 km total system length are characterised by an increased (natural) outage rate (without external effects) of 0.30 km -1 yr -1 compared to a typical rate of about 0.01 km -1 yr -1. In this connection outage statistics can be considered as a sort of online monitoring. In absolute numbers this means about 8.3 % of all cables are responsible for 74 % of all outages occurring. The km represent 875 three phase sections, commissioned between 1970 and 1983, mainly produced by two manufacturers (out of eight) and having the types A2YHSY, NA2YSY (PE insulation), NA2XS2Y (XLPE insulation) (out of 18 types). The location of cable sections in the grid are well-known. Impurities at the inner semiconductor have led to a growth of vented trees which often change into electrical trees. Ground faults compensated with Petersen coils, which is applied by Lechwerke AG, promote this occurrence. Average replacement costs are estimated 60 EURO/m (20 EURO/m to 140 EURO/m). Regarding km this amounts to 15.8 million EURO total replacement costs. A five-year-concept would require about 3.2 million EURO per year which correspond (not acceptable) to about 8 % of full annual medium voltage costs. Furthermore, current service quality, i.e. availability, has to be guaranteed. Categorisation of Cables bad good Corrective Maintenance Order of Maintenance Time-based Maintenance LEC_Birkner_A1 Session 6 Paper No

4 perience. In order to standardise the evaluation a list of criteria was set up. Additionally, there are calculation tools regarding outage probability [4]. Underground Cables with an Increased Outage Rate Underground Cables Concerning System Operation Not Required Required Not Required Required Decommissioning or dismantling Important Not Important E.g., redundant cables which supply 20/0.4 kv substations with alternative backup (via LV grid or mobile emergency power plant) or which could be temporarily switched off Fig. 3: Necessity and Importance Evaluation of Condition via IRC-Analysis IRC-Analysis, which means Isothermal Relaxation Current, is a non destructive method that allows classification of XLPE and PE cable in IRC discreet ageing classes PERFECT, MID LIFE, OLD and CRITICAL. Ageing classes evaluate the global status of a cable and correlate to the residual dielectric strength of the cable insulation which is a parameter to assess lifetime. A detailed description is given in [5] and [6]. The cable under test is switched off and polarised with a DC voltage of 0.1 V R (1,800 s) and discharged (5 s). Subsequently, the depolarisation current or relaxation current based on different types of trapped charges is measured (1,800 s) and analysed by a complex algorithm in three steps. These three steps run automatically and their combination will result in one ageing class. The equipment to conduct the IRC-Analysis in the field is portable. One device can analyse two (three phase) cable sections per day which requires two technicians in the Lechwerke AG organisation, one for the switching operations and the other one to carry out the IRC-Analysis. The typical cable to be analysed is up to 500 m (1,500 feet) long and has joints every 150 m (450 feet). The cost per analysis is about 500 EURO. Based on the experience of about 480 analysed three phase cable sections, results of IRC-Analysis are very reliable. Rate of non correct diagnosis is below 0.5 %. Replacement Strategy Important E.g., cable is part of the feeder system or supplies important or sensible customers Not Important E.g., cable is part of a tie between two feeders According to fig. 4, underground cables which have been classified not required for system operation and showing increased outage rates are decommissioned or dismantled. For required but unimportant cables, no activities are performed and the risk of restricted outages is accepted. Only required and important cables are tested with the IRC- Analysis. Fig. 4: Reliability Centred Maintenance Program If the result PERFECT or MID LIFE is rendered by the IRC-Analysis the cable is submitted to a potentially destructive VLF test. This test provides additional information on distinct big electrical trees. The 0.1 Hz trapezoidal VLF test accelerates growth of electrical trees and promotes the transition from certain types of water trees to electrical trees and their growth until a short circuit occurs. This test is used at a test voltage of 2 V R. Test duration amounts to a maximum of 3,600 s. Selected deficiencies are repaired and the cable is considered free of defects for the next three years. If the result is OLD or CRITICAL the cable is replaced. Depending on cost considerations (cable not in conduit, high restoration costs of surface) the cable cure process, i.e. injection of silicone, may also be used. A cable section may also be decommissioned or dismantled if a redesign of the grid structure is planned. Concerning the cable cure process it has to be mentioned that average costs (including a ten-yearwarranty, new terminations and joints) amount up to 30 EURO/m. Compared to an exchange of cable this represents roughly 50 % of costs. On the other hand, additional lifetime amounts to about 20 yr while a new cable has a 40-year-lifeexpectancy. Results IRC ageing class; residual strength: PERFECT, MID LIFE further analysis OLD, CRITICAL measures No measures; corrective maintenance For five years Lechwerke AG have been practising reliability centred maintenance within their 20 kv underground cable distribution system. Approximately 480 IRC-Tests of three phase cable sections show that 79 % of all investigated cables fall in the IRC ageing classes OLD or CRITICAL. Furthermore, 120 km, i.e. 45 % of all cables with increased outage rates are considered required and important. Replacement costs of 95 km (79 % out of 120 km) amount to 5.7 million EURO, i.e million EURO per year within a fiveyear-program. This budget is sufficient to guarantee performance and service quality of the distribution system. The costs for the IRC-Analysis amount to between 40,000 EURO and 50,000 EURO per year. This approach allows to postpone LEC_Birkner_A1 Session 6 Paper No

5 substantially the spending of 10.1 million EURO in addition to the interest income of approximately 0.5 million EURO per year on this amount Number of IRC-Analysis Number of Outages Fig. 5: Number of IRC-Analysis, Outages (Related to Three Phase Cable Sections) and Failure Trend the feeder three minutes later. After these unsuccessful attempts a permanent short circuit can be assumed. This one has to be located with the help of operators based in 24 service points spread over the grid area of Lechwerke AG. If the feeder is a cable the engineers will not try to switch on the system as it is clear that the insulation will not restore itself. 20/0.4 kv Substation; Standard is two Connections via Disconnecting Switches to the Grid 110/20 kv Transformer Station; Operated via Remote Control Disconnecting Switch; Between two Independent Circuit Breaker in a Branch Up to now 35 km i.e. one third of relevant cables have been replaced or rejuvenated by applying the cable cure process. In addition, Lechwerke AG investigate a direct grounding design instead of installing the Petersen coil in some subgrids. Also, ground fault detection and locating is being improved and accelerated by introducing a new method based on the analysis of harmonics in the zero sequence system [7]. Both approaches intend to reduce the exposition time of cables to increased voltages. Since the reliability centred maintenance has been implemented systematically the number of outages due to failures in underground cables has been reduced by about 50 % compared to the maximum in 1998 despite the increasing age of the cables. Fig. 5 shows also the increasing failure trend up to 1996 when only corrective maintenance was practised. OPERATION OF 20 kv DISCONNECTORS VIA MOBILE PHONE MODEMS Lechwerke AG operate a radial 20 kv grid divided into about 100 subgrids fed by about 100 transformer stations 110/20 kv. All 20 kv radial subgrids have (open) ties between their feeders and to the feeders of adjacent 20 kv subgrids. Neutral points are grounded via Petersen coils. The total length of underground cables is 3,156 km (44,6 %) and of overhead lines 3,920 km (55,4 %). All transformer stations are connected via two (glass fibre) keying lines to the control room of Lechwerke AG. All 110 kv and 20 kv circuit breakers as well as all 110 kv switches are controlled and operated by remote control. On the other hand, all disconnecting switches in the 20/0.4 kv distribution substations are manually operated under supervision of the engineers in the control room. All 20 kv feeders are equipped with a 20 kv circuit breaker which is connected to a distance relay. In the case of a short circuit the feeder is automatically switched off within 200 ms to 300 ms. If the feeder is an overhead line the instantaneous reclosing option is activated. Presuming a still existing failure the engineers in the control room once again try to switch on Fig. 6: Structure of Medium Voltage Grid of Lechwerke AG As a rule, two operators are alarmed and they open and reclose disconnecting switches in the substations according to the orders of the control room. They are equipped with cars, mobile and radio phones. Searching strategy is to open the disconnecting switch which divides the feeder into two parts as well as testing the part of the feeder between the 110/20 kv transformer station and the open disconnector by switching on the circuit breaker. Step by step the failure is encircled by a combination of trial and error and opening and reclosing disconnecting switches. The operators are assisted by short circuit current indicators in the substations. In order to reduce interruption duration disconnectors (stand alone or part of a 20/0.4 kv substation) between two adjacent feeders are equipped with an electric drive powered by a small transformer and controlled via a mobile phone modem. No additional infrastructure is needed. The used modem works from 20 C to +70 C and builds together with a docking system in the control room a second low cost remote control. System availability of about 99.5 % is sufficient because the remote control has just to work in the case of infrequent short circuits. The not very likely and thus accepted worst case scenario is the status before the improvement of the system. Upgrading costs per disconnector amount approximately up to EURO. Presuming a necessary upgrading of two switches per 110/20 kv transformer station leads to an investment of about EURO for the whole medium voltage grid. A reduction of average interruption time per concerned customer of about 25 % is expected. Currently two disconnecting switches are being successfully tested. In branches of 20 kv overhead lines Lechwerke AG employ independent circuit breakers, powered by a small transformer LEC_Birkner_A1 Session 6 Paper No

6 and capable of automatic instantaneous reclosing in the case of a short circuit. These remote situated breakers can also be connected via a mobile phone modem to the control room. This provides a low cost opportunity to automate a nodal point in the grid (about EURO per line). A further extension of the low cost remote control in order to integrate short circuit current indicators is being investigated. IMPROVEMENT OF SYSTEM INFORMATION VIA FAULT DISTANCE LOCATION RELAYS Lechwerke AG try to compensate reduction staff, i.e. number of service points in the grid area, by installing step by step digital distant relays with integrated fault position finders in the feeders of 110/20 kv transformer stations / / / / / / / /1995 (3) (4) (2) (1) (1) Zollenkopf Criterion [MVA min] (2) Non Delivered Energy per Outage [MVA min] (3) Number of Service Points with Staff [-] (4) Percentage of Feeders Equipped with Fault Distance Relays [%] Fig. 7: Effect of digital distant relays with integrated fault position finders According to fig. 7, since the fiscal year 1994/1995 the number of service points has been reduced by approximately 35 %. This means less operating staff are at the disposal of the control room in the case of a failure in the 20 kv grid. Furthermore, the remaining staff are responsible for a greater grid area. Carrying out the instructions of the control room is more time consuming. This finally increases average interruption time and non delivered energy per outage, respectively, as demonstrated in fig. 7 between 1994/1995 and 1997/1998. The improvement of the information on the fault position by increasing the number of digital distant relays with integrated fault position finders leads to a turnaround of this development instead of a continuing reduction of the number of service points. To a certain extent this can be called spatial resource planning. Currently, with 32 % of all feeders upgraded with such relays grid performance with regard to non delivered energy per outage is about 25 % better compared to 1994/1995. For comparison it has to be mentioned that the basic Zollenkopf criterion that considers 60 MVA min non delivered energy per outage as acceptable for customers has always been respected. Lechweke AG have a long-term program to substitute all aged mechanical relay by digital ones. The relay provides the complex impedance between the 100/20 kv transformer station and the short circuit. This has to be transformed into a position. Currently this is done by the control room engineers with the help of tables. A solution based on a Geographical Information System (GIS) is being prepared. Based on experience more than 95 % of all failure positions are correctly indicated. CONCLUSIONS Deregulation puts pressure not only on electric power prices but also on distribution business although it can be considered a natural monopoly. It is crucial for system operators to establish low life cycle costs and full utilisation for all assets. This is especially important for the medium voltage distribution system because it represents a considerable share of total grid costs and defines availability of service as well. Focusing on underground cable replacement concepts based on commissioning dates, age distribution or individual manufacturers are too general and too expensive. By combining importance and condition of a given cable reliability centred maintenance has demonstrated to be a very successful strategy. It is possible to focus the available budget to the critical points in an electrical grid. Furthermore, an increasing degree of automation of the medium voltage distribution system improves efficiency of system operation as well as availability. REFERENCES [1] P. Birkner: Energy Storage for Improving Power Quality, CIGRE Symposium 99 Working Plant and Systems Harder, 07/08/09 June 1999 London, UK, Paper [2] P. Birkner, G. Marquis: Regional Energy Distribution in a Competitive Environment (in German), Enegiewirtschaftliche Tagesfragen, No. 5, 2000, [3] G. Balzer, M. Brandl, D. Lehmer: Maintenance of Medium Voltage Switchgears (in German), Elektrizitätswirtschaft, Vol. 15, 1999, [4] S. Asam, P. Birkner, T. Schmidtner: Simplified Method to Evaluate Availability of Distribution Grids (in German), Energiewirtschaftliche Tagesfragen, No. 9, 2000, [5] G. Hoff, H.-G. Kranz: Interpretation of Dielectric Response Measurement Data from Service Aged XLPE-Cables, 7 th IEEE International Conference on Solid Dielectrics, Eindhoven, NL, June [6] P. Birkner: Field Experience with a Condition Based Maintenance Progamm of 20 kv XLPE Distribution System Using IRC-Analysis, to be published in IEEE Transactions on Power Delivery, [7] P. Birkner, R. Förg, T. Schmidtner, G. Druml; Earth Fault Detection via Analysis of Harmonics (in German) Elektrizitätswirtschaft, Vol. 17/18, 2002, LEC_Birkner_A1 Session 6 Paper No