The main function of electricity distribution is to transmit electricity from the transmission networks to the customers everywhere with an adequate quality of supply (Willis, 2004). Over the past few decades, the end-customers of electricity distribution companies have become more and more dependent on electricity, and their electricity consumption has typically increased.
Electricity distribution is a large-scale operation, which generally involves many issues such as network planning, construction, and maintenance. In principle, the distribution business can be divided into two parts; operation and planning. The focus of this doctoral dissertation is on network planning. Electricity distribution network planning is a long-term planning task, which requires information from many data systems. Data on the present state of the network, including loads, losses, and voltage drops are needed.
Further, the trends and guidelines for the long-term network development are of importance for the network planning (Lassila, 2009). Figure 1.1 introduces long-term planning and information flows in the electricity distribution.
Figure 1.1. Long-term planning of electricity distribution (Lassila, 2009).
Long-term network planning establishes the basis for the long-term distribution business.
The network investments are made over a long period of time, and the lifetimes are typically 30–40 years. The cost structure of the distribution business requires the distribution business environment to be stable and predictable. It is important for the distribution system operator (DSO) to anticipate how electricity consumption will develop in the future, because consumption impacts directly on the network planning and business. Forecasting energy consumption for years ahead provides valuable information for business planning and development of pricing models. Moreover, forecasting distribution network powers decades ahead is an important tool in the distribution network planning. The importance of forecasting will grow in the future, if the operating environment changes. Appropriate development of the future electricity distribution networks calls for identification of challenges, and it is also necessary to be able to prepare for future changes in the distribution networks (Lohjala, 2005).
The oldest parts of the present electricity distribution networks in Finland have been built over 50 years ago. In practice, this means that renovation needs in electricity distribution networks are high. In addition to the renovation needs, the new Electricity Market Act defines the limits on the reliability of electricity distribution in Finland. The law requires that the electricity distribution operators have to develop their networks such that the maximum blackout duration is 36 hours in rural areas and six hours in population centres
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by 2028 (Electricity Market Act, 2013). The ageing distribution network and reliability requirements make the network planning and load forecasting a critical and current research topic. In addition, society is more and more dependent on electricity, and challenges may be raised by high expectations of the quality of supply and cost efficiency of the electricity distribution in Finland. There are also other unstable factors, which may have an indirect influence on the distribution business environment. An example of this kind of a challenge is possible modifications in the electricity market model.
A solution to the challenges raised by the changing operating environment could be an advanced distribution network, smart grid, which can achieve a higher energy efficiency and reliability than the current networks. The distribution networks will very likely develop as smart grids in the future. Smart grids may involve different kinds of new loads and power production such as microgeneration, energy storages, and various measurements and load controls. Smart grids are considered to have potential to save energy, promote demand response and new innovations, and enhance the reliability of electricity distribution (Rahimi and Ipakchi, 2010). Ultimately, the effects and changes in the energy system can be detected only years later.
Nowadays, more detailed data of the end-customers’ electricity usage are available. Smart meters will provide more data on customers’ consumption and other related issues. This will revolutionize information of the customers’ electricity usage. In Finland, the majority of automatic meter reading (AMR) installations were made by the end of 2013. Hence, there is already some evidence that changes in the energy sector are in progress. New technologies will have different effects on the DSOs’ operation and networks. For instance, some devices and technologies like electric vehicles (EVs) will increase the amount of electrical energy transmitted through the distribution network. On the other hand, some other solutions such as microgeneration will decrease the amount of electrical energy transmitted through the distribution network.
The key elements for the DSOs are the total electrical energy consumption, peak powers, costs, security of supply, and revenue. Energy consumption is an informative indicator of the business development in the electricity distribution. The highest peak loads in the electricity networks are the most essential element in the dimensioning of the network.
Similarly, peak loads are a major aspect in the network construction and renovation.
Further, it is emphasized that the electricity distribution business is a capital-intensive trade. A majority of the expenses are comprised of network investments. Investments of this kind typically require significant economic resources, and they are made in the long term. The major part of the distribution costs depend on powers on the distribution network. The higher are the loads, the higher are the costs. The majority of the electricity distribution revenues, on the other hand, come from distribution tariffs. Distribution tariffs and the DSO’s revenue, again, typically depend on energy consumption.
This doctoral dissertation aims at developing methodology to forecast changes in energy and power volumes. This way, we can produce more information for distribution planning and business management. Up-to-date knowledge is highly important because of the
efforts put into planning and huge investments made both at the moment and in the future.
Despite the considerable changes, people will still be dependent on electricity distribution for many years ahead. However, the evolving operating environment poses certain challenges, and new information of the future trends is urgently needed. If wrong decisions and investments are made now, they may prove very costly and difficult to rectify. Therefore, information and approximations of the future electricity use and operational changes in the electricity distribution network are required. This research will introduce new tools to enhance and facilitate DSOs’ operations and planning work. The doctoral dissertation also provides new options for DSOs to plan their future strategies.