Cost and benefit analysis for a distribution management system in electricity distribution networks

Purpose – The purpose of this paper is to examine the key outage‐cost‐influencing applications (fault location and network restoration, fault reporting, field crew management, and reconfiguration) of the distribution management system (DMS) and analyzes the benefits provided by them. The objective of the study is an evaluation of their influence on outage costs deriving from the adoption of automatic equipment in managing distribution systems. Design/methodology/approach – Cost and benefit calculations in this paper are made for a typical North European rural medium‐voltage network. The benefits are calculated in terms of outage costs for each of the above‐presented applications and compared with the investment cost, including the annual cost of maintenance, of the DMS. The empirical results and validation of the theoretical calculations are performed by an electric utility, where the DMS benefit evaluation is taking place. Findings – By capitalizing the applications of the DMS, it is possible to acquire considerable benefits in outage costs. It is shown that the greatest cost‐based benefits are obtained from the fault location and field crew management applications. The case study further shows that the DMS can reduce the operation costs of utilities. Research limitations/implications – The calculations are based on network expert assumptions about System Average Interruption Duration (SAIDI), carried out for a specific overhead‐line network operating in a specific European rural medium‐voltage environment. Sharing of utilities' de facto SAIDI results as a basis for calculations would decrease the need for subjective expert assumptions in the future analyses. Practical implications – Application of the proposed framework for decision making and lessons learned can support electric utilities when planning for unbundling and strategic target‐setting in the unbundled business model. Originality/value – There are few reports available on similar actual DMS‐application‐based cost benefits due to the nature of private utility information that is preferably not disclosed.