Applying financial risk controls for power system operation and planning

In this paper we discuss how statistics and measures that are used to limit risk in the financial industry can be applied to the problem of power system adequacy. We explain how these measures work, how they can be applied to measure power system reliability, and why they are superior to traditional metrics such as expected energy not served when evaluating generation and transmission system effects. In addition, we discuss how these tools can be used in both a planning and operational setting to minimize the costs of possible power interruptions.