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Defining Distributed Resource Planning

Charles D. Feinstein and Jonathan A. Lesser

The Energy Journal, 1997, vol. Volume 18, issue Special Issue, 41-62

Abstract: The concept and objectives of distributed utility planning, sometimes called distributed resource (DR) planning, are unclear, This paper provides a cogent definition of DR planning and explains some of the emerging fallacies over its purpose. The objective of DR planning should be to meet customers' capacity needs at the lowest expected future cost by determining an optimal investment strategy for a given area. Many advocates of DR planning have erroneously defined the objective as deferral of "traditional" transmission and distribution facilities, and have developed methodologies to determine maximum deferral times. Defining the DR planning objective in this manner will always lead to higher than necessary costs, because cost-minimization is not addressed in an appropriate manner. In general, deferral methodologies have misspecified the objective function, used quantitative tools inappropriately, and, perhaps their most critical shortcoming, failed to incorporate the effects of uncertainty on the optimal investment strategy. The solution is to treat deferral as a consequence of developing a least-expected-cost distribution plan, rather than treating deferral as an objective in itself.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 1997
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Handle: RePEc:aen:journl:1997si-a03