Risk Assessment Methods for Power Utility Planning
Wednesday, April 25, 2007
More than 15 years ago, the World Bank reported in a series of papers that the planning environment for the Bank’s client electric utilities was becoming increasingly difficult. Today, the situation for power system planners is fraught with even more uncertainties about prices and costs. The continued volatility of fuel prices has significantly increased the normal risks of projecting future investment economics. In addition, the structures of the power systems themselves, formerly stable as vertically integrated monopolies, now come in a variety of states of reorganization, privatization, unbundling and market orientation.
With the traditional risks and newly identified risks over power utility planning in mind, the Energy Sector Management Assistance Program (ESMAP) put together an expert consultation workshop on June 27-28, 2006. The workshop brought together practitioners, analysts, regulators and software vendors to discuss the changes in both the external environment affecting the use of simulation models for investment planning and the advances in the art and science of such modeling over the past few years. The analytical and empirical presentations from the workshop, discussed in this ESMAP report, indicate renewed interest in the overall subject of investment assessment, especially in regard with the integration of risk analysis. The conclusions from this workshop point towards greater use of more detailed and integrated approaches to modeling investments in unbundled and privatized power systems.
This special ESMAP report, the first one under the Renewable Energy series, is dedicated to a friend and a very well respected professional, Mr. Shimon Awerbuch.
Contact
Tae Yong Jung
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