Power System Development and Economics

This chapter addresses the power system of future several decades ahead from the perspective of system planning, economics, and asset management: The Paris Agreement on climate protection will likely lead to renewable energy sources dominating electricity systems; decarbonization of the entire energy system with sector coupling and electrification of heating and transport; the strong effect of the energy transition on citizens and stakeholder relationships; continental-scale interconnections and microgrids; and the balance between the goals of reliability, economics, and the environment. Eight key themes are identified as enablers of the evolutions needed: 1. Joint data and processes are needed across transmission and distribution, across asset management and planning, and increasingly across all energy sectors. 2. Price signals will likely need to become higher resolution in time, location and system services, and need to be modeled in system planning now. 3. Scarcity pricing and eventually appliance-specific price elasticity become the basis of highly reliable, renewables-dominated systems characterized by frequent very low energy prices and occasional price spikes, and planning must anticipate that in its modeling before it becomes reality. 4. Improved consistency of price and cost signals across energy sectors can help to achieve 2050 climate neutrality with less controversy and economic inefficiency. 5. Engagement and understanding of customers, market/system participants and stakeholders is crucial to being able to implement the system plans. 6. Planning will likely move from target networks in transmission and distribution via consideration of multiple time steps toward decision tree concepts and stochastic optimization. 7. Big data, improving computational and algorithmic capabilities, and data hubs, with data privacy-controlled access to data for market actors, improve asset management, forecasting, and planning. 8. The global goal of limiting climate change to 1.5° but also other economic, social, environmental, and reliability criteria will be fully incorporated into system planning and asset management through multi-criteria cost-benefit analysis approaches.