Integrating customers' differentiated supply valuation in distribution network planning and charging

Due to the lack of observability and controllability in current distribution networks, the traditional planning and charging framework makes the oversimplifying assumption of uniform supply valuation for every customer of the same sector and every unit of supplied energy. Building on the advanced metering and control capabilities of the emerging smart grid, this paper explores the impact of integrating the differentiated valuation of electricity supply for different customers and different levels of supplied energy in distribution network planning. Customer interruption costs are reduced, since supply interruption of customers with low supply valuation and the non-critical part of their demand is prioritized during network failures. As a result, the need for capital intensive network reinforcements is limited and the total network expenditure is reduced. Furthermore, a cost-reflective network charging scheme based on the principles of locational marginal pricing is proposed, enabling an equitable treatment of customers with differentiated supply valuation.