Economically justified locational criteria of the security of supply

Assuring security of supply (resource adequacy) of a bulk power system is one of the main criteria of system planning. Traditionally, system planners study resource adequacy of the system using such probabilistic criteria as Loss of Load Hours (LOLH), and similar metrics which then lead to the determination of the planning reserve margin requirement. Installed capacity equal to that requirement assures the desired probabilistically measured level of resource adequacy. The paper demonstrates that this approach is not applicable to system with transmission constraints. For transmission constrained systems, the paper provides a formal derivation of locational resource adequacy indicators both for generation and load locations and for transmission connections. These locational indicators are defined in the form of dual variables in the problem of reliability dispatch and developed both for generator locations and for transmission constraints; they provide the foundation for determining locational planning reserve margin requirements and for establishing the need for transmission upgrades from the security of supply perspective. The theory is based on the stochastic minimization of the total cost criterion incorporating the cost of system expansion and the damage caused by the loss of load.