467

Economic Framework For Power Quality

CIGRE/CIRED
Joint Working Group
C4.107

June 2011

Economic Framework for Power Quality

JWG CIGRE-CIRED C4.107

Members
Jose Gutierrez Iglesias (ES) - (Convener), Detmar Arlt (DE), Gerhard Bartak (AT),
Math Bollen (SE),Dave Byrne (EI), David Chapman (UK), Alice Delahunty (UK),
Philippe Eyrolles (FR), Elena Fumagalli (IT), Mats Hager (SE), Zbigniew Hanzelka (PL),
Bill Howe (US), Rafal Jahn (BE), Alex McEachern (US), Ian McMichael (AU),
Jovica V. Milanovic (UK), Patxi Pazos (ES), Roman Targosz (PL), MarioTremblay (CN),
Jasper Van Casteren (NL), Mathieu Van Den Bergh (US),
Raghavan Venkatesh (IN), Paola Verde (IT)

Copyright 2011
Ownership of a CIGRE publication, whether in paper form or on electronic support only infers right of
use for personal purposes. Are prohibited, except if explicitly agreed by CIGRE, total or partial
reproduction of the publication for use other than personal and transfer to a third party; hence
circulation on any intranet or other company network is forbidden.
Disclaimer notice
CIGRE gives no warranty or assurance about the contents of this publication, nor does it accept any
responsibility, as to the accuracy or exhaustiveness of the information. All implied warranties and
conditions are excluded to the maximum extent permitted by law.

ISBN: 978- 2- 85873- 157-2

EXECUTIVE SUMMARY
Electric power quality disturbances can have significant economic consequences for many different types
of facilities. Although power quality is widely recognized as an important issue, there is no consensus on
its total economic impact. Indeed, there is not even consensus on how to measure the impact.
A wide range of potential solutions, with varying degrees of cost and effectiveness, are available to
mitigate the consequences associated with poor power quality. Power quality solutions can be applied at
different levels or locations within the global electrical system.
The evaluation of power quality improvement alternatives is an exercise in economics. Facility managers
and utility engineers must evaluate the economic impacts of the power quality variations against the costs
of improving performance for the different alternatives. The best choice will depend on the costs of the
problem and the total operating costs of the various solutions.
In general, the costs of these solutions increase as the power level of the load that must be protected
increases. This means that economies usually can be achieved if sensitive equipment or controls can be
isolated and protected individually from equipment that does not need protection.
Each solution technology needs to be characterized in terms of cost and effectiveness. In broad terms, the
solution cost should include initial procurement and installation expenses, operating and maintenance
expenses, and any disposal and/or compensation value considerations.
Improving facility performance during power quality variations can result in significant savings and can
be a competitive advantage. Therefore, it is important for customers and suppliers to work together in
identifying the best alternative for achieving the required level of performance.
A methodology for performing a comparative economic analysis is featured in this report.
A joint working group, JWG C4.107, has been formed between CIGRE (electric power transmission
emphasis) and CIRED (electric power distribution emphasis) to develop a systematic approach to this
issue.
The JWG works to develop a framework for analysis of the economics of power quality, and has created a
bibliography of existing references. However, gathering specific values and data to assess the economics
of power quality is beyond the scope of the Group; the work will be limited to developing a framework.
Different technologies are evaluated by estimating the improved performance that can be expected after
the technology has been applied. The power quality cost savings are calculated for each technology along
with the costs of applying the technology.
JWG C4.107 aimed to produce this report that summarizes available information about cost-benefit
analysis of power quality, and to propose a framework for how to assess costs, how to assess the
economic impact of mitigation, and how to assess the economic impact of immunity.

TABLE OF CONTENTS
EXECUTIVE SUMMARY ........................................................................................................................2

1. Introduction to the Economics of Power Quality .............................................................................5

1.1. SCOPE OF THE REPORT ...................................................................................................................5
1.1.1. The Economic Importance of Power Quality............................................................................5
1.2. ECONOMIC CONSEQUENCES OF POOR PQ FOR END USERS ..................................................6
1.3. ECONOMICS OF POWER QUALITY FOR POWER NETWORKS .................................................7
1.4. ECONOMICS OF POWER QUALITY FOR SOCIETY .....................................................................8
1.5. ROLE OF REGULATION....................................................................................................................9
1.6. OVERVIEW OF THE DOCUMENT .................................................................................................10

2. Overview of Methodologies for Assessment of Economic Impact End User Perspective.........12

2.1. METHODOLOGY FOR QUANTIFYING THE ECONOMIC IMPACT OF VOLTAGE SAGS AND
SHORT INTERRUPTIONS.......................................................................................................................12
2.1.1. Introduction.............................................................................................................................12
2.1.2. Overview of Existing Methodologies .....................................................................................12
2.1.3. IEEE Guidelines......................................................................................................................14
2.1.4. Analytical Economic Analysis................................................................................................14
2.1.5. Indirect Economic Analysis ....................................................................................................17
2.1.6. Reported PQ-Related Losses from Around the World............................................................19
2.2. METHODOLOGY FOR QUANTIFYING THE ECONOMIC IMPACT OF HARMONICS ...........23
2.2.1. Introduction.............................................................................................................................23
2.2.2. Overview of Existing Methodologies .....................................................................................24
2.3. METHODOLOGY FOR QUANTIFYING THE ECONOMIC IMPACT OF OTHER PQ
PHENOMENA...........................................................................................................................................29
2.3.1. Voltage and Current Unbalance ..............................................................................................29
2.3.2. Surges and Transients .............................................................................................................34
2.3.3. Flicker .....................................................................................................................................35
2.4. CONCLUSIONS .................................................................................................................................36

3. Overview of Existing Methodologies for Assessment of Economic Impact Public Distribution

Network Perspective.................................................................................................................................37
3.1. INTRODUCTION...............................................................................................................................37
3.2. REVIEW OF LITERATURE AND DOCUMENTED METHODOLOGIES.....................................38
3.3. COSTS ASSOCIATED WITH PQ .....................................................................................................38
3.3.1. Costs Incurred by the Utility to Mitigate PQ Issues................................................................39
3.3.2. Costs Associated with Improving Reliability but not PQ .......................................................45
3.3.3. Costs for Responding to PQ Issues .........................................................................................46
3.4. SUMMARY ........................................................................................................................................47
3.5. CONCLUSIONS .................................................................................................................................47

4. Methodology for Collecting Power Quality Economic Data..........................................................49

4.1. INTRODUCTION...............................................................................................................................49
4.2. IMPORTANCE AND MOTIVATION ...............................................................................................49
4.3. END-USER PERSPECTIVE ..............................................................................................................50
4.3.1. Technical Data ........................................................................................................................50
4.3.2. Economic Data........................................................................................................................52
4.4. DNO PERSPECTIVE: DATA COLLECTION ..................................................................................60
4.5. CONCLUSIONS .................................................................................................................................62

5. Methodology for the Economic Assessment of Power Quality Solutions......................................63

5.1. INTRODUCTION...............................................................................................................................63
5.2. ECONOMIC ANALYSIS OF THE COSTS OF PQ...........................................................................63
5.2.1. Economic Impact of Power Quality Variations ......................................................................63
5.3. END-USE PQ SOLUTIONS...............................................................................................................71
5.4. CHOOSING THE OPTIMAL PQ SOLUTION ..................................................................................79
5.5. CONCLUSION ...................................................................................................................................80
APPENDIX 1 ............................................................................................................................................81

COMMON PQ PHENOMENA.......................................................................................................81
A.1
Categories of Power Quality Variations .............................................................................81
B
RESPONSE OF SENSITIVE EQUIPMENT TO PQ EVENTS......................................................87
B.1
Data Processing and Communications Equipment .............................................................87
B.2
Variable-Speed Drives........................................................................................................88
B.3
Lighting ..............................................................................................................................88
B.4
Solenoid-Operated Contactors............................................................................................89
C
ADDITIONAL LOSSES CAUSED BY POOR PQ ........................................................................89
C.1
Cables .................................................................................................................................89
C.2
Transformers.......................................................................................................................90
C.3
Motors ................................................................................................................................90
APPENDIX 2 ............................................................................................................................................91
A
OVERVIEW OF INTERRUPTION COST CALCULATION........................................................91
B
PROBABILISTIC VOLTAGE DIP COSTS CALCULATION......................................................92
C
OVERVIEW OF EQUIPMENT SENSITIVITY.............................................................................92
D
UNCERTAINTY INVOLVED WITH EQUIPMENT SENSITIVITY..........................................93
E
COUNTING OF PROCESS TRIPS ................................................................................................94
F
COST ASSESSMENT.....................................................................................................................96
G
NUMERICAL EXAMPLE.............................................................................................................96
I
TYPICAL LOSS VALUES ...........................................................................................................102
J
TYPICAL FINANCIAL LOSS VALUES - SUMMARY.............................................................108
K
FORMULAE FOR COMPUTING HARMONIC LOSSES FOR THE MAIN ELECTRICAL
COMPONENTS.......................................................................................................................................113
L
METHODS FOR PROBABILISTIC EVALUATIONS................................................................116
APPENDIX 3 ..........................................................................................................................................123
A
COST ASPECTS ...........................................................................................................................123
B
HYDRO-QUEBEC-IREQ REPORT FOR ECONOMICAL ASPECT OF HARMONICS ON
DISTRIBUTION AND TRANSMISSION SYSTEM .............................................................................128
B.1 Harmonics Power Losses Evaluation .......................................................................................128
B.2 Harmonics Losses Evaluation ..................................................................................................128
B.3 Harmonic Losses Cost Evaluation............................................................................................129
B.4 Conclusion................................................................................................................................129
APPENDIX 4 ..........................................................................................................................................131
A
STRUCTURING THE DATA COLLECTION PROCESS ..........................................................131
B
EXECUTING DATA COLLECTION PROCESS END USER PERSPECTIVE ......................133
C
CONCLUSIONS ...........................................................................................................................134
APPENDIX 5 ..........................................................................................................................................136
A
ILLUSTRATIVE CASE STUDY .................................................................................................136
A.1
Base Case: Facility Data and Base Case Calculations......................................................136
A.2
Case 1: Redundancy in the Utility Supply........................................................................137
A.3
Case 2: Applying a Battery UPS ......................................................................................138
A.4
Case 4: Using Distributed Energy Resources (DER) .......................................................140
B
CASE COMPARISON AND SENSITIVITY ...............................................................................141
REFERENCES .......................................................................................................................................143
ACKNOWLEDGMENTS......................................................................................................................150

1. Introduction to the Economics of Power Quality

1.1. Scope of the Report
Various independent studies have been undertaken by power companies, consultants, regulators, and
research organizations to estimate the cost of power quality problems to the power companies and their
customers. A good understanding of the basis for determining these costs is important in assessing
appropriate interventions (either by the distribution network operator or by the customers themselves).
A joint working group has been launched with CIRED, where the question has been a subject of a 2001
round-table discussion. This is supported by the convener of CIRED S2 (EMC & Power Quality).
The scope of the proposed JWG was to:

Review and document the economic implications of the power quality parameters: voltage dips, short
interruptions, and voltage waveform quality. Long interruptions were not considered.

Review and document methods of assessing these costs that have been used to date, including aspects
such as:
I. Direct and indirect costs to customers (e.g. production losses and plant damage).
II. Energy losses associated with poor power quality.
III. Cost of energy not supplied.
IV. Methods of collecting customer costs.
V. Actual customer costs collected to date for various industry sectors.

Propose a standardized method of collecting the above information, based on the experience of
various international studies.

Recommend a methodology of using this data to cost and motivate power quality interventions on the
power system or within the customer plant.

Provide indicative costs for specific industry sectors, where possible.

Many professionals, including industry regulators, consultants, system and installation designers,
maintenance managers, production managers, and financial mangers, are concerned about the impact of
the costs of poor power quality on businesses and how these costs can be managed. Techniques for
avoiding or reducing the impact of power quality issues are well known and the cost of their deployment
relatively easily determined. However, assessing the potential cost impact of power quality (PQ) issues is
difficult because, for example, the incidence of problems, the response of equipment, and the effect on
process continuity are statistical in nature and are difficult to quantify. Although there have been
numerous case studies, there has been, so far, no consensus on how the calculation or assessment of these
costs should be approached.
This report provides a methodology for examining the economic framework for PQ. It will enable all
interested parties to establish costs and benefits of PQ improvement and mitigation measures in a
consistent and open manner.

1.1.1. The Economic Importance of Power Quality

Power quality is the term generically used to describe the extent to which the electrical power available
at the point of use is compatible with the needs of the load equipment connected at that point. The effects
of a lack of compatibility are termed PQ problems or PQ issues. Compatibility is a two-sided equation
because both the characteristics of the electrical power supply AND the sensitivity of the load equipment
are important variables.

There are many parameters for which compatibility is necessary, including supply voltage level, voltage
stability, waveform distortion due to harmonics and interharmonics, voltage unbalance between the
phases, and long- and short-term availability of the supply.
When there is a lack of compatibility, end-user equipment may cease to function, may operate erratically
or incorrectly, or may operate outside its normal envelope at reduced efficiency or in such a way that its
operating life is reduced. The situation is further complicated by the fact that many PQ issues are caused
by the operation (or mis-operation) of end-use equipment that is connected to the network.
Electrical and electronic equipment rarely operate in isolation. Even the simplest of commercial
operations requires the interoperation of several items of equipmentthe use of a personal computer
usually requires the aid of some communications equipment, a network, and a printer, for example. In
other words, the failure of one piece of equipment usually results in the failure of a process that may or
may not affect other processes. Regardless, however, when process equipment ceases operation, the result
is a financial loss. Depending on factors such as the nature of the business, the organization of the work
flow (whether continuous processing or batch production) and the value of the product, this loss may
range from the trivially small to the extremely large.
There are two obvious approaches to ensuring 100% compatibility between electric power supply and
end-use loads: Either design and construct a perfect electric power delivery grid, or make all end-use
devices perfectly tolerant of common PQ issues. Unfortunately, for a number of reasons, neither of these
approaches represents the economic optimum. Firstly, some loads are relatively insensitive to many PQ
phenomena while being rather sensitive to others. Incandescent lighting is insensitive to harmonic
distortion but overly sensitivein combination with the human responseto flicker. On the other hand,
electronic equipment is not disturbed by the scale of voltage instability that causes flicker; however, it is
very sensitive to voltage dips and to higher levels of harmonic voltage distortion. Making every supply
suitable for every load would be expensive and is unnecessary. Secondly, although the cost of designing
and manufacturing any individual piece of equipment to be immune is not large, that cost is multiplied
by the total number of pieces of equipment in use and represents a very large economic burden on
consumers. Thirdly, the option of building a very robust, very clean power system would be extremely high
and it would be very difficult, if not impossible, to guarantee a minimum performance level at all points of
common coupling. Increased penetration of distributed generation will make this even more difficult as
generation is added at medium and low voltage levels. Lastly, many PQ issues arise within the
consumers premises, due to the characteristics of the installed equipment, sub-optimal installation of
equipment and cabling, poor electromagnetic compatibility (EMC) performance of earthing systems, etc.,
so perfection at the point of common coupling is no guarantee of adequacy at the point of use.

1.2. Economic Consequences of Poor PQ for End Users

From the descriptions of equipment responses, it is apparent that the economic consequences of poor PQ
fall into three broad categories:

Complete or partial loss of one or more processes (e.g.

loss of control following a dip)
Poor long-term productivity or product quality (e.g. as a
result of operator fatigue due to flicker)
Increased costs due to reduction of equipment lifetime
resulting in premature failure (e.g. overheating of
transformers due to harmonics)

These consequences take effect over very different time

scales.
A process failure, triggered by a PQ event such as a dip, has
immediate consequences followed by a period of recovery,
during which further costs may be incurred. It is relatively
easy to identify the costs that result from a single event or to predict what the costs might be.

Continuous or prolonged conditions, such as flicker, can reduce long-term productivity. If the problem is
prolonged and widespread, the business may become uncompetitive and may require additional
borrowing to sustain it.
Premature failure of equipment will usually result in process failure with similar consequences to those
caused by single PQ events. The difference is that the causes are in the past and were unrecognized,
suggesting that predicting these costs is difficult unless a survey procedure is put in place.
Depending on the type of operation in question, the economic consequences may range from trivial to
catastrophic. The user can take several approaches:

Do nothing, and suffer the consequences.

Take responsibility by adding mitigation equipment or hardening measures within the installation.
Work with a supplier to improve the level of PQ by local measures specifically for, but external to,
the installation.
Negotiate with a supplier for a guarantee of a defined level of PQ, along the lines of an insurance
policy.

Doing nothingbusiness as usualis viable only for those enterprises that use batch processing for
manufacturing and data handling. Process interruptions are limited in their impact and are relatively easily
mitigated by, for example, reorganizing work schedules. The economic consequences are not zero but are
acceptable to the business.
In every other case, the first steps in analysis of the economic impact of PQ on a particular organization
or part of an organization include:

Obtaining a thorough and continuing measurements of relevant PQ parameters

Logging of process failures and their costs and relating their occurrence to PQ events
Assessing the likely failure modes and failure rates of processes and items of equipment, bearing in
mind the different time scales involved
Considering options for redesigning processes to reduce interdependence and reduce the risk of
cascading failures
Investigate options for hardening process equipment against PQ events and conditions

1.3. Economics of Power Quality for Power Networks

Network operators are usually required to maintain a certain quality of service to end-users by local
legislation or regulation. Quality of service may be defined by a number of parameters, such as
availability and voltage stability. Achieving the required level requires that the operator invest in, for
example:
a.
b.
c.

A monitoring program to identify potential failures (e.g. in transformers) so that repair or

maintenance work can be planned, and unplanned downtime can be avoided
Careful planning of maintenance to avoid excess unavailability
Maintenance work to avoid damage to lines, such as tree cutting programs

Network operators need to ensure that consumers are connected appropriately (e.g. at a suitable voltage
level) to avoid negative impacts on other local consumers from excessive harmonic currents or voltage
disturbances. This usually involves offering consumers pre-connection support so that such issues can be
avoided.
Some of the measures taken by utilities and consumers to reduce the impact of power quality issues
require the installation of additional equipment. Apart from the obvious cost issue, this equipment has
environmental consequences; electrical energy efficiency is reduced. and the additional equipment
consumes materials and energy for its manufacture. The so-called externalities need to be taken into
account.

1.4. Economics of Power Quality for Society

While the economic impact of power quality for users and for utilities is readily identifiable, the impact
on society in general is less tangible.
In the recent years, the thrust on sustainable development, clean development mechanisms, and various
other global (green) initiatives have necessitated extrapolating the local and short-term aspects to the
globe and long-term impacts to identify the true holistic impact of industrial activities.
Specific to energy, the focus is shifting from local short-term to global long-term and while computing
the impact of energy conservation it makes sense to consider the energy leverage.
Electrical energy is only an intermediate form of energy used only for bulk power transmission. Due to
this, the role of electrical energy is very critical, and due to the various transformations taking place right
from environment to end use, the impact of energy conservation at end use assumes a very high
significance.
Considering a simple case of power quality improvement (such as power factor improvement or harmonic
mitigation), the benefits to various players at different levels are as follows:

End user Reduction in utility bill, direct economic benefits

Utility Reduction in T&D loss, better asset management, higher operational efficiencies
Power generator Better asset management, higher operating efficiency
Society Lower carbon foot print, reduced global warming, sustainable development

The investment to improve the power quality could have been made at any level, by any player, but if the
holistic benefit is considered, the investment decision is expected to appear better, which is more realistic
considering the societal benefits.
The need is to drive decision making based on long-term global impacts rather than local short-term
benefits. This is expected to influence decision making, and in most cases, the benefit of PQ improvement
is expected to be more than what is being considered at present. This is expected to help in selection of an
optimal/appropriate solution for a specific PQ issue and in general to make power quality improvements
more attractive.
While methodologies can be developed to factor the long-term societal impact of power quality and
deployment of power conditioning solutions, it is also important to develop a framework that will ensure
proper application of the methodology.
Players in the arena:
Utility
Users
Manufacturers of equipment
Regulators
The roles are:
Good voltage quality at the customer bus is the utilitys responsibility.
Good quality for load current drawn from the bus in the customers responsibility.
Developing and supplying cost-effective power conditioning devices and equipment with adequate
tolerance to power quality with appropriate technology are the manufacturers responsibility.
Ensuring an efficient balance of responsibilities is the role of the regulator.
In short, the responsibility of considering long-term societal impact has to be with the regulator, and this
framework can be used to:
Drive investment decisions considering long-term societal impact rather than short-term local
benefits. This is mainly applicable for what a utility spends on improving power quality.
Drive government policies and investment decisions.
Formulate tariff guidelines as to capture the true cost of power quality, and this indirectly influences
power quality improvement initiatives.

Formulate standards and guidelines, policies, and power quality norms and ensure compliance based
on global impact of power quality.
Influence equipment standards as to enhance the compatibility and performance of equipment.

1.5. Role of Regulation

Because of the sensitivity of end-user equipment, voltage quality is of primary concern to industrial users,
service providers, and especially for parameters such as supply voltage variations, even household
consumers. In particular, productivity and competitiveness of the manufacturing and service sectors
depend highly on the quality of the electricity supply. Indeed, even after the liberalization of the
electricity market, the quality of electricity mainly relies upon transmission and distribution networks, i.e.
upon investments and operation practices of regulated firms. As a consequence, voltage disturbances are a
crucial issue not only for distribution network operators, transmission system operators, manufacturers of
electric appliances, and designers of electrical installations, but also for energy regulators.
For example, after years of work devoted primarily to commercial quality and continuity of supply, European
energy regulators are becoming increasingly involved with the regulation of voltage quality. However, regulation
in this area encounters a main difficulty. Because power quality results from the interaction between the
network and the customers equipment, a tradeoff exists between investments in the network and higher
immunity levels for end-user equipment. From a regulatory perspective, performance standards on
equipment immunity are to be defined in close relationship with voltage quality requirements for power
networks.
In this sense, the proposed introduction of the concept of responsibility sharing in technical standards
(and in particular in the EN 50160) is fundamental to enable energy regulators to define enforceable
requirements for all stakeholders [1]. This idea is easily explained with an example: in South Africa,
according to the National Standard NRS 048-2:2003, customer installations are expected to tolerate
voltage dips with residual voltage over 70% with duration up to 150 ms, over 80% up to 600 ms, and over
85% for longer durations. For all other dips, the allowed number of events is limited by the National
Standards [1,2].
In defining a responsibility-sharing curve, duties and rights of all parties should be taken into account. In
other words, the choice of a responsibility-sharing curve should be the result of an agreement between
network operators, final customers, equipment manufacturers, and energy regulators. As a result,
performance requirements given by regulators will not be in conflict with other technical standards, for
instance product, emission, and immunity standards. Moreover, these requirements will not impose
unsustainable costs on any stakeholders.
European energy regulators have begun to work in this direction, under the aegis of the European
Regulatory Group for Electricity and Gas (ERGEG). In fact, ERGEG has already suggested to introduce
several revisions to the EN 50160, among which is the introduction of a responsibility-sharing curve [3].
Although the existence of international standards is important, to design a workable regulatory
framework, regulators need information on both consumer costs for voltage disturbances as well as the
level of voltage quality provided on distribution networks and the cost of providing that quality. Indeed,
regulatory standards, for instance on the number of events, should be developed at the national level and
allow for differentiations according to network structures, protection schemes, and characteristics of
withdrawal. Several European regulators are already engaged in monitoring power quality levels and
assessing customer cost.
Others, such as the energy regulators of Norway, Hungary, and France, already enforce voltage quality
standards, which, in a number of cases, are more demanding than the values given in the EN 50160. The
work of European energy regulators on voltage quality is thoroughly described in CEER (Council of
European Energy Regulators) Benchmarking Reports on Electricity Supply [4,5,6,7]. Altogether,
significant developments are expected in this area of regulation in the incoming years.

EMC COORDINATION
EMISSION
IMMUNITY

1.6. Overview of the Document

Chapter 2 provides a general overview of established and new methodologies used to assess the financial
losses incurred to industries by power quality (PQ) disturbances, in particular voltage dips, short
interruptions, and harmonics. The first part focuses on quantifying the economical damage suffered by
industrial customers due to nuisance process trips induced by voltage dips and short interruptions. For this
purpose, guidelines provided by IEEE standards are discussed and critically assessed to reveal their major
strengths and weaknesses. Next, methodologies recently proposed by researchers for financial loss
assessment of voltage dips and short interruptions are gathered and discussed. It is generally found that
accurate assessment involves careful consideration of three major factors: voltage dip profile at the
busbars involved, customer load susceptibility, and calculation of the losses induced by process
interruption. Finally, representative studies conducted in Europe, U.S., and Asia are investigated, with
their findings and reported losses presented, to demonstrate the scale of the losses.
The second part of the chapter deals with methods and techniques used to economically quantify the
effects of harmonics on electrical systems. The economic evaluation includes the increased losses, the
premature ageing and the malfunction of the equipment present in the system. The economical value of
the losses and premature aging versus the harmonic pollution level can give indications of the amount of
costs for equipment to be met/saved for a given increase/decrease of harmonics. Regarding the
malfunction, its economical value requires computing the effects of the malfunction on the process in
which the equipment is inserted. The analysis in most cases can be conducted adopting the methods valid
in the same case as of other disturbances, like micro-interruptions or voltage dips.
Finally, the economic consequences of unbalanced voltages and flicker are discussed.
Chapter 3 examines the economics of PQ from the network operators point of view. It identifies the
costs involved in three categories: providing a response to customer issues; mitigation of PQ issues by
network design, asset management, and maintenance; and the measures to ensure reliability. Indicative
costs of measures are given where appropriate and existing methods of collecting data are reviewed.
There is not a great experience from PQ-projects, methods and experiences with the assessment of
financial losses due inadequate quality of electricity supply.
Faults within an industry supply, or other installation, will cause voltage dips in the local supply system,
but in most cases these will not propagate upstream and affect other customers supplied from the same
HV- system. When immunity requirements and equipment immunity are discussed for a specific
installation and/or process, both sources of dips (faults in the HV supply and internal faults within a
specific industry) must be considered and equipment performance must be chosen with respect to the
actual electrical environment. It is quite obvious that the reduction of faults within the customers own

10

plant is the owners responsibility, and so is the interest to minimize economical losses due to
consequences of all faults.
Chapter 3 discusses how to find the total cost contribution of dips due to faults in the distribution and
transmission systems affecting several customers. If such total socioeconomic cost can be provided (or
at least a method of how to calculate it), identifying the most cost-effective mitigation can include actions
in the distribution and transmission systems, and perhaps open a wider perspective to the economics of
voltage-dip immunity and emission.
Chapter 4 discusses the methodology for the collection of cost data in four parts: the cost of process
interruptions resulting from discrete PQ events, the cost of operation and maintenance of mitigation
equipment and of reduced energy efficiency of equipment, the cost of reduced equipment lifetimes, and
the capital and installation cost of mitigation equipment.
To perform a PQ events cost analysis, information is needed regarding improving/mitigating cost at:
Customer (equipment/installation) level
Utilities (network) level
Measurement of power quality can be focused on:
The total number of disturbances in networks, for benchmarking purposes. Thus not all disturbances
affect equipment.
Only on the number of disturbances affecting equipment/processes.
It is necessary to limit the scope for PQ measurements to perform. Are costs accurate and well founded?
Are costs based mainly on broad assumptions and only backed up by sparse data?
It is also important to understand to whom data information will be presented. Readers could be:
customers, utilities, regulators, manufacturers, and also standardization bodies and government
institutions.
Chapter 5 provides a methodology for the economic assessment of PQ solutions. It proposes calculation
of the net present value of PQ investments, which is calculated using a nominal ten-year lifetime. A case
study is described that illustrates practical application on the method.
The costs to industrial and commercial electric power end users from unmitigated PQ and reliability
phenomena are significant and have been well documented by detailed studies These studies have
focused principally on quantifying the actual or reported cost to businesses of PQ and reliability
phenomena that result in unplanned businesses losses brought about by such factors as process
interruptions, equipment damage, extra labor costs, and increased scrap. Although many of these studies
also inquire about mitigation equipment employed by end users to try to minimize the business impact of
PQ and reliability phenomena, in general, the numbers given for the cost of PQ and reliability focus
only on the impact of unmitigated phenomena and exclude the cost of preventing unplanned business
losses. As such, an unprotected facility might be said to suffer significant PQ and reliability costs, while a
facility protected with, say, a double-redundant uninterruptible power supply (UPS) and N+1 backup
generation might be said to suffer no PQ or reliability costs whatsoevera circumstance that does not
reflect true business decision-making wherein the costs of outages are balanced against the costs of
mitigation. Because of this, a comprehensive strategy to evaluate optimization of overall PQ-related cost
is needed, including:

Costs to industry and electric power providers based on unmitigated PQ phenomena

Costs to industry and electric power providers based on prevention and mitigation of the impacts of
PQ phenomena

The key challenge is to balance both of these broad cost categories. Although any number of economic
analysis approaches may be employed to arrive at an optimum, this chapter emphasizes a simple 10-year
net present value (NPV) approach whereby all costs and benefits may be combined to determine the
mitigation scenario that optimizes todays economic performance.

11

2. Overview of Methodologies for Assessment of Economic

Impact End User Perspective
2.1. Methodology for Quantifying the Economic Impact of Voltage Sags
and Short Interruptions
2.1.1. Introduction
Voltage dips and short interruptions are major contributors to economic losses incurred by end users in
terms of power quality (PQ)-related costs. Although they are not as detrimental as long-duration outages,
voltage dips and short interruptions (up to 3 minutes) occur much more frequently. Generally, economic
losses are incurred when the supply voltage disturbances cause nuisance trips or malfunction of sensitive
equipment, which in turns affects (or completely interrupts) the production processes or service. In case
of large industrial and commercial customers, the cost of process disruption can be very high.
Reliable information regarding the economic losses incurred because of voltage dips and short
interruptions is essential to both customers and the utility. It provides the very basis for cost-benefit
analysis for all potential investments in mitigating solutions. The actual incurred economic losses,
however, are customer-specific and depend on many factors including customer category (industrial,
commercial, etc.), type and nature of activities interrupted, the extent of the interruption (both duration
and number of activities interrupted or affected), etc. Therefore, estimating the economic impact of
voltage dips and short interruptions is a daunting task that requires careful consideration of many
technical and non-technical aspects and usually requires significant deployment of personnel and
resources.
Over the years, numerous studies have been performed to address the problem of economic losses
incurred by end users by supply voltage disturbances. This chapter presents a general overview of
existing methodologies to assess the economic losses caused by voltage dips and short interruptions. It
also presents a summary of the results of cost estimates from various projects carried out around the
world.

2.1.2. Overview of Existing Methodologies

Assessing the cost of voltage dips and interruptions is a cumbersome task. Over the years, a number of
projects attempted to establish the value of economic consequences of voltage dips. Some proposed
methods to obtain network level [8, 9] losses due to voltage dips, while others concentrated on customer
plant-level losses [10-14]. Regardless of the level (network or individual plant) that the studies were
focused on, precise information about the cost of a single process failure/malfunction is essential for the
overall accurate assessment of economic losses.
Generally, to accurately assess the economic losses due to these disturbances, a thorough understanding
of customer plant and processes involved is essential. Therefore, a good methodology has to take into
account all the aspects involved, from in the supply voltage profile at the point of connection of an
industrial plant, to equipment and process sensitivity to voltage dips and to all direct and indirect costs
associated with process disruption.
A voltage-dip profile at the customer busbar provides the information regarding the frequency and
characteristics of voltage dips and short interruptions. Normally, this information is obtained from
historical data or from site monitoring. However, when there are no records available, or when the
monitoring period is too short to draw sufficient conclusions, a voltage-dip profile has to be predicted.
The fault positions method [8, 9, 15, 16] is a common method used to determine the expected
characteristics of voltage dips resulting from for the short-circuit faults in the network. Statistical
processing of existing (limited-duration) monitoring records [12], e.g. extrapolation of data, can also be
used to predict future dip performance.
The sensitivity/resilience of equipment used in industrial processes to voltage dips and short interruptions
directly influences the response of the industrial process to incoming voltage dips and interruptions, and
therefore has direct impact on the resulting financial losses. The sensitivity of equipment is normally

12

expressed in terms of the magnitude and duration of the voltage dip. The voltage-tolerance curve for an
individual device (equipment) can be obtained either from the equipment manufacturer, from laboratory
or field measurements, or if none of the previous is available, a voltage-tolerance curve from existing
standards could be used (at least as a guidance). The commonly used standards for characterizing
equipment sensitivity are the Computer Business Equipment Manufacturers Association (CBEMA) curve,
Information Technology Industry Council (ITIC) curve, and the semiconductor processing (SEMIF47)
curve [17].
Because different types of equipment exhibit different sensitivities to voltage dips and short interruptions,
equipment-specific voltage-tolerance curves [15, 18-20] have been and are being developed from
laboratory tests.
According to the IEEE Standard 1346-1998 [19], there is a range of uncertainty in the magnitude
duration plane associated with voltage-tolerance curves. To account for this uncertainty, various methods
have been developed in the past and used in assessments of equipment sensitivity to voltage dips,
including probabilistic methods [15, 16, 21], fuzzy logic [22], and voltage-dip severity indices [23].
On a higher level, process sensitivity depends on many factors, including but not limited to equipment
interconnections, composition ratio of equipment, function and significance of each equipment type, and
the relationship between equipment failure modes and process operation. To address these factors, various
approaches have been attempted by researchers around the world. The approaches include probabilistic
methods [15, 16, 20, 21], fault tree analysis [24, 25], fuzzy logic [25], loss of voltage during dip [26], loss
of energy during dip [26], and one-parameter characterization method [26].
Once the information about the voltage-dip profile and customer process sensitivity is available, the
number of process failures or malfunctions can be determined. Following the estimation of expected
number of process failures, the next step is to determine the economic losses associated with each of them
and to add up losses associated with individual events in order to come up with the annual plant exposure.
Detailed methodologies for calculation of the costs associated with voltage dips have been proposed in
[27, 28]. Cost calculation involves careful investigation of all direct and indirect costs caused by voltage
dips. Theoretical and mathematical formulae are derived to represent various causes of losses. The cost
functions of equipment, sub-processes, and processes are then incorporated into the technical states of the
processes to determine the costs of each process and the plant.
Determining the cost of voltage dips and interruptions based on previously described calculations would
generate a very accurate cost estimation for every dip providing that reliable input data is available. The
drawback is that one would require a significant amount of information regarding all direct and indirect
costs for every individual sub-process in the plant. These cost figures, however, are very difficult to
obtain without a time-consuming detailed investigation, which often involves confidentiality issues.
Alternatively, some studies relate the economic losses incurred by voltage dips with customer interruption
cost (CIC). CIC is the economic damage to customers caused by power interruptions (outages) of a
specified duration. Customer damage functions due to power interruptions are well studied and
reasonably well documented, and thus provide a convenient reference for voltage dip-related cost
analysis.
Basically, CIC can be obtained from survey results obtained from a large number of customers of various
industrial sectors. This information is then analyzed, aggregated per sector, and averaged to give plantlevel costs per voltage dip or cost per kW of power per voltage dip (normalized cost) [10] for various
industrial sectors. Studies that use cost per event for voltage-dip economic analysis include [8, 9, 15, 16,
29], while [10, 18, 29] use cost per kW power per voltage dip. A PQ index that uses CIC/kWh for
financial loss assessment is proposed in [30].
Weighted cost per dip method is used [7, 21, 24, 31-33] where different weighting factors are assigned to
different magnitudes of voltage dips. In this way, the cost of severe dips are equal to the cost of
interruptions, while less-severe dips incur a fraction of the cost of interruption.
There are also indirect ways to estimate the economic impact of voltage dips and short interruptions.
Some studies [14] use the power of a customer plant as basis for cost evaluation. The losses incurred

13

because of voltage dips and short interruptions are estimated as a percentage of the annual cost of power
consumption. Other common methods of indirect economic analysis are the willingness to pay (WTP) and
willingness to accept compensation (WTA) methods [34].

2.1.3. IEEE Guidelines

The IEEE Standard 1346-1998 [19] provides guidelines to assess economic losses at customer facilities
due to voltage dips. The aspects considered there include the voltage-dip performance at the utility and
the industrial plant level, the equipment susceptibility to voltage dips, and economic evaluation of the
losses incurred because of process-disruptive dips. A method of representing a voltage-dip profile at the
customer facility using contour lines and comparing it with equipment voltage-tolerance curves to obtain
the number of disruptive dips is presented. In terms of financial aspect, a list of all direct and indirect
costs was given in a standard cost of disruption evaluation form [19] to aid economic assessment of the
losses incurred.
Initially, a voltage-dip profile of the facility concerned is acquired from either utility data, measurements,
monitoring, or prediction. Using this dip data, the supply dip performance contours are drawn, where each
contour represents the number of voltage dips per year. Next, equipment sensitivities (voltage-tolerance
curves) are overlaid on the supply dip performance contours to form dip-coordination charts. The
sensitivity of the process is defined by the most sensitive component, with the knee point located at the
upper most left hand portion of the chart. The subsequent step involves cost estimation of process
disruption. All losses involved are listed in a cost of disruption evaluation form, which should be
completed by those who are familiar with the operational impact of process stoppage (frontline workers,
supervisors), finance, accounting, sales, and marketing personnel to ensure that all aspects of economic
losses are considered. Briefly, the costs of disruption in industrial processes are made up of downtimerelated costs (lost production, idled labor, equipment damage, recovery cost), product quality-related
costs (scrap and rework costs), and other indirect costs (customer dissatisfaction, employee and customer
safety, fines and penalties). Finally, the total financial losses of the facility are obtained by multiplying
the cost of process disruption and the number of disruptive dips per year.
The method proposed by this standard is useful for estimation of economic losses due to voltage dips.
However, there are a few important issues yet to be addressed. These issues include:

The sensitivity of the entire industrial process is determined by the most sensitive equipment in the
process. This assumption may not be appropriate because the process sensitivity also depends on the
function and significance of the equipment involved. Tripping of the most sensitive equipment does
not necessarily disrupt the entire process.
The interconnections between equipment and sub-processes could have significant impact on process
operation, but these are not considered in this standard.
It is shown that all equipment types have a range of voltage-tolerance curves. This range (of
uncertainty) is not considered in the method when evaluating the number of disruptive dips.
The cost values used for economic assessment are based on historical data or experience; this may
not be useful for evaluation of new industries at the planning stage.

2.1.4. Analytical Economic Analysis

In the past decade, new methodologies have been continually developed with the promise of improved
accuracy in assessment. In analytical economic analysis, losses due to PQ disturbances are often
calculated or estimated through detailed assessment processes. These assessment processes may consider
the probability of PQ events occurring, characteristics of events, equipment and process sensitivities to
events, cost of process disruption, cost and benefit of mitigations, and other indirect costs subsequent to
the event.
2.1.4.1. Assessment of Equipment and Process Sensitivity
For most PQ disturbances, economic losses are incurred when equipment or industrial processes are
tripped or disrupted. Hence, equipment and process response to PQ disturbances directly influence the
magnitude of economic losses. However, predicting equipment and process response to disturbances is
not entirely straightforward due to various uncertainties involved in equipment sensitivity. Therefore,
properly representing these uncertainties helps reduce assessment error.

14

Probabilistic Assessment of Financial Losses due to Interruptions and Voltage Dips

This methodology [15, 16] uses a probabilistic approach to assess the economic losses due to
interruptions and voltage dips. The cost of interruptions and voltage dips are assessed separately and then
combined to estimate the total economic losses in the network. This methodology can be used to assess
both customer-level losses and network level losses. It takes into account the uncertainties associated with
voltage-dip calculation, equipment sensitivity, interconnection of equipment within an industrial process,
and customer type and location of the process in the network.
The fault positions method is used to obtain voltage-dip performance of the system. Process equipment is
grouped into four categories of equipment types, and the voltage-tolerance curves of these equipment
types are obtained through a series of laboratory tests. The main equipment types tested are personal
computer (PC), programmable logic controllers (PLCs), adjustable-speed drives (ASDs), and AC
contactors. The impact of voltage dips at a particular site in the network is estimated through three basic
steps. They include fault analysis, voltage-dip analysis, and economic analysis. Fault analysis is typically
performed using the fault positions method to simulate various types of faults at various locations
throughout the system network. The corresponding voltage magnitude and duration during of each fault is
determined.
Voltage-dip analysis is performed at the point of common coupling (PCC) between the network and the
buses of interest. The historical fault performance (fault per kilometre per year) of all network buses,
overhead lines, and underground cables is then used to determine frequency of dips of specified
magnitude and duration over a period of interest. Dip durations depend on fault-clearing times of
protection devices used in the network.
The economic analysis is performed in two stages. First, sensitive equipment is classified into various
categories based on device type. The voltage tolerance characteristic of four main equipment types,
namely personal computer (PC), PLC, ASD, and AC contactors are determined through a series of
laboratory tests. General voltage-tolerance characteristic is used to represent each equipment type. Next,
dip performance charts of the network buses of interest are prepared using the results from voltage-dip
analysis (Step 2). The dip-performance charts are compared with the equipment voltage-tolerance curves
to determine equipment response (failure probability of equipment) to voltage dips. After obtaining the
failure probabilities of equipment, the probability of a process trip is calculated. Finally, the total
economic losses can be determined using (2.1).

Total financial loss = Total process trips Cost per trip

(2.1)

A major advantage of this method is that the uncertainties regarding equipment sensitivity are represented
using probability density functions. Probabilistic representation is more realistic and efficient as
compared to the deterministic approach, especially when a large number of equipment is to be evaluated.
Furthermore, this methodology provides the flexibility for different equipment sensitivity levels to be
represented using different probability density functions.
This methodology is probably one of the most comprehensive methodologies developed so far that takes
into account many aspects of the system. An example of its application is given in Appendix 2-A.
However, there are still some problems that were not fully resolved even with this relatively
comprehensive methodology. They include the choice of appropriate probability distribution functions for
equipment sensitivity evaluation (which are yet to be determined) and interdependence between
equipment controlling a process or sub-process.
Prob-A-Dip Method
The Prob-A-Dip method [21] manipulates two-dimensional arrays to represent all parameters for
economic loss management. This method allows equipment sensitivity to be represented using both
discrete states (on or off state) and probabilistic values. Different cost values can be assigned to voltage
dips of different characteristics, which enables more realistic evaluation of losses as costs such as
equipment damage that occurs only for a certain characteristic of voltage dip. The method also takes into
account the interconnections between equipment in a probabilistic manner and the effect of mitigation
devices.

15

It is worth noting that Prob-A-Dip is more of a management tool rather than an assessment tool. All input
values have to be acquired through other means before they can be processed by this Prob-A-Dip.
Basically, the user has to acquire information regarding equipment sensitivity, annual dip frequency,
process-related information, and the consequential economic loss associated with different voltage dips.
With this information, the Prob-A-Dip method can be used to determine sensitivity of the industrial
process, the frequency of dip-induced plant interruptions, and the total economic losses incurred due to
voltage dips and short interruptions. The main advantages of this method include the following [21]:

All quantities are presented in a uniform format.

It is applicable to all environments from a single customer to a complete power distribution system.
It delivers flexible accuracy, from a rough estimate to exact values.
It allows probabilistic processing of data.
It can be implemented in power system software platforms.
It enables assessment of the effectiveness of mitigating solutions to a certain degree.

Estimating the Economic Impact of Voltage Dips

The methodology for estimating the economic impact of voltage dips proposed in [24] was built on the
assumption that different voltage dips have different impacts on customer process. It is postulated that the
behavior of process equipment varies with the severity of voltage dips, thus causing different failure
modes of the customer plant.
First, in order to characterize process equipment behavior when exposed to a voltage dip, the voltagetolerance curves of different equipment are obtained and converted into a component behavior function.
The function represents the state (On or Off) of the equipment when subjected to a voltage dip with
specific dip magnitude and duration. Next, the behavior of the customer load is categorized into different
failure modes, where certain combinations of equipment behaviors and dip conditions (causes) will lead
to certain failure modes (consequence). The cause and consequence are related using fault trees. A
cost function is assigned to each failure mode. The economic impact of a voltage dip is estimated by
combining the cost function with information regarding voltage-dip frequency.
The use of fault tree analysis provides more space for subjective judgement in process sensitivity
evaluation. The user would not need to deal with complex equipment interconnections to determine the
consequences of equipment failure. Using different failure modes for different voltage-dip levels would
also yield more realistic results. However, it is worth noting that the equipment, even of the same type
and brand, exhibit very different responses to a voltage dip. So, it is virtually impossible to generalize
equipment behavior into a common working state. Also, the number of failure modes increases rapidly
with size of customer plant, and hence increases the complexity of evaluation.
PQ Index Based on Equipment Sensitivity, Cost, and Network Vulnerability
The ideas of load drop index (LDI) and load drop cost (LDC) [18] are proposed with the objective of
capturing load vulnerability and the cost impact of voltage dips. These indices are calculated using
customer equipment composition data, load information, equipment sensitivity curves, and historicalderived cost data.
Basically, voltage dips are first categorized into various duration classes (instantaneous, momentary,
temporary, and sustained interruption) consistent with the classification of interruption events given in
IEEE Standard 1159 [35]. For each duration class, various regions of voltage dip class areas are defined
based on the voltage-tolerance curves of sensitive equipment involved. Next, the historical voltage-dip
profile of the bus of interest is processed to obtain the number of events that fall in each defined area.
With this information, the load drop index for each duration class k is calculated using (2.2) [18].
r

LDI ( k ) = N kj Lkj ,

j = 1, 2,...r

(2.2)

j =1

Where Lkj represents load composition ratio and Nkj represents the number of events that falls in the area
defined by duration class k and sensitivity curve of load type j. r is the number of load type.

16

Different cost indices are derived for different duration classes based on average cost of interruption in
each duration class. These cost indices are multiplied by the corresponding LDI of each duration class to
obtain LDC [18].
4

LDC = Ck LDI ( k )

(2.3)

k =1

Where Ck is the cost index reflecting the average cost of interruption in a given duration class. The
average cost of power interruptions reported in [18] are given in Table I-1 of Appendix 2-I.
LDC is particularly useful for assessment of economic losses due to voltage dips and interruption events.
As a PQ index, it can be easily translated into cost figures for evaluation of all general industrial plants.
The merits of using LDI and LDC also include:

Instead of using the most sensitive equipment to define process sensitivity, the impact of a voltage
dip on all equipment types is considered.
Composition ratios of equipment are considered.
Capable of processing probabilistic values of equipment sensitivity.
Different economic impacts of different voltage-dip severities (dip duration) are considered.
Only involves data processing and does not require additional instrumentation.

It is worth noting that the effects of equipment interconnections and the importance level of individual
equipment in process operation are not modeled in LDI and LDC. This might prevent accurate assessment
because equipment interconnections and importance are significant factors that affect process
vulnerability to voltage dips.
Unified Reliability and PQ Index
The unified reliability and PQ index method proposed in [36] combines the costs incurred by interruption,
voltage dip, voltage deviation, and harmonics into a unified reliability and PQ index. In terms on voltagedip cost, the factors considered include voltage dip rate, the load size at customer busbar, and sector
customer damage function for voltage dips (SCDF(dip)) at customer busbar.
The dip rate is calculated utilizing sustained interruption rate and momentary interruption rate at the
customer busbar. Two types of system configuration are considered (loop and radial), both protected by a
reclosing system. SCDF(dip) depends on the sector where the cost is to be assessed. Seven sectors are
classified, namely large user, industrial, commercial, agricultural, residential, government installation,
and office buildings. This methodology is suitable for fast estimation of economic losses at network level.
Due to the fact that many important factors are not considered, the accuracy of estimation is not too high.
2.1.4.2. The Cost of Process Interruption
Regardless of the type of disturbance in an industrial process (voltage dip, transients, short interruption,
or long interruption), economic losses are incurred every time the process trips. The cost per trip should
include only those costs that are above and beyond the normal production costs, net of potential savings.
An example of how economic losses for an industrial customer can be determined is suggested in [37]
and elaborated on in more detail in Appendix 2.

2.1.5. Indirect Economic Analysis

When the information required for analytical economic analysis is not available, indirect economic
analysis is the only option to estimate the financial losses due to PQ disturbances. Common ways of
analysis include the customer willingness to pay method [34], customer willingness to accept method
[34], and cost estimation from the size and value of mitigating solutions.
2.1.5.1. Customers Willingness to Pay
The customers willingness to pay (WTP) method has been used in several studies [34, 38, 39] to obtain
the costs of power supply interruptions. Usually, customers are given several hypothetical outage
scenarios and asked to express the amount of money that they are willing to pay in order to avoid each
outage scenarios. In terms of PQ, customers are asked to express their willingness to pay for different
levels of PQ improvements. Though the WTP method may not be as technical as the analytical
approaches, it reflects the value customers place on electricity supply and PQ.

17

However, one should anticipate the amount a customer is willing to pay to be lower than the actual
financial damage caused by a PQ disturbance [34]. This is because economic benefit could only be
achieved if the financial damage due to power interruption is more than the amount paid to avoid the
damage. Therefore, from the customers point of view, the WTP amount will always be less than the
actual damage due to PQ disturbances.
Besides, the WTP method makes sense only when customers understand the damaging effects of power
supply interruptions on their processes. Usually, the effects of a total power interruption are more
apparent and well known. However, the effects of other PQ disturbances such as voltage dips that cause
partial disruption of processes are not straightforward. In most cases, customers do not know the financial
damages due to PQ disturbances, and therefore cannot place an accurate WTP value on them.
In the customers willingness to accept (WTA) method, electricity users are given various imaginary
outage scenarios and asked to estimate the amount of compensation that they are willing to accept for
each outage scenario. The WTA is similar to the WTP method because they both require customers to
place a monetary value on hypothetical outage scenarios. However, in most cases, the WTA method gives
substantially larger values compared to the WTP method. According to [34], the reason behind this is that
customers consider electricity supply as a social right rather than a market commodity. It is also
recommended in [34] that the two methods can be used together to produce upper and lower limits for
power interruption costs.
Both WTP and WTA methods are heavily dependent upon the customers subjectivity in placing a value
on PQ costs, and may be influenced by other considerations, such as the customers perception of the
electricity supply, their knowledge on PQ disturbances, and their ability to pay.
2.1.5.2. Cost Estimation from Historical Events
Over the years, numerous surveys have been carried out around the world to gather information regarding
economic losses of various industrial, agricultural, commercial, and even residential customers. By
reviewing the past studies, the financial loss information can be gathered and aggregated to represent
different customer types and sizes. This information can be conveniently used to estimate PQ-related
costs of a particular customer.
To obtain a realistic cost estimation from historical events, one would have to use historical values from
the customer type that best resemble the customer of concern. Ideally, the historical values used should be
obtained from customers of similar type and size, and within the same geographical region as the
customer of concern. Unfortunately, information gathered from historical events available today is still
insufficient to meet the abovementioned requirements. Most studies produced cost values for total power
interruption, not considering the impact of other PQ disturbances. Some studies managed to produce cost
values of voltage dips but have yet to obtain cost values for different severity levels of voltage dips.
Overall, cost estimates from historical events without considering sensitive equipment in a customers
plant and process sensitivities will not produce accurate financial loss values.
In [29] an original approach was used to estimate economic losses for industrial users. The authors
designed a questionnaire, in the form of a journal. The main innovative aspects of this instrument are:
1.
2.
3.

The questionnaire was not of the usual scenario type. Instead, it entailed the registration, for a
specified time period (at least three months), of the consequences experienced by the end-user during
process disruptions caused by very short interruptions and voltage dips;
The questionnaire required the end-users to provide a structured description of what happened at
the production site during the voltage disturbance (see below), together with per-unit economic data
(for instance, hourly wages). It did not request direct cost estimations from the respondents.
The questionnaire did not demand to identify precisely what type of voltage disturbance brought the
process to a halt. This information was extracted, at a later stage, from the data recorded by a power
quality recorder, installed at the customers connection point.

The questionnaire included a technical section, to be filled in by personnel working on the production
line(s). The description requested was structured in a time sequence:

At the occurrence of the event: damaged equipment and defective WIP (and its destination: recycling,
second-hand goods, etc.).

18

During downtime: duration and number of workers inactive (or engaged in restarting the process).
During the restarting of the process: defective WIP and lost production (if the process requires time
to return to the nominal production quality and speed).
After the event: time and number of workers necessary to recover lost production (or other means to
recover it).

The questionnaire included also an economic section, to be filled in by a manager or by an accountant.

This section investigated the per-unit costs of several production inputs, such as raw material, labor, and
energy (but also the cost of repairing the damaged equipment).
With this approach, the authors were able to retain full control over the cost assessment: they did not ask
industrial users to estimate their costs, because it is normally done in surveys, but to provide a structured
description of the process disruptions, together with per-unit economic information. The calculation of
costs was performed by the authors according to a standardized methodology. Overall, the approach
resulted in an improvement in terms of feasibility and robustness with respect to previous surveys.

2.1.6. Reported PQ-Related Losses from Around the World

In the past decade, many studies have been conducted around the world to determine the cost of voltage
dips and short interruptions.
The experience gained from
these studies is very valuable
and can be used for carrying
out similar studies in the
future. This section
summarizes the major
findings of those studies. A
few studies that focused on
obtaining the cost of
interruptions (outages) only
are also included in this
summary as the information
gathered can be further postprocessed and used for the
assessment of cost of voltage dips and short interruptions.
Numerical data from the surveys is reported in Appendix 2. The surveys confirm high sensitivity to short
interruptions and voltage dips in many processes, with particularly high losses in the production of
electrical and electronic equipment, chemical products, food products, and motor vehicles. Generally,
survey results are presented in the following ways:

Direct cost per kW of plant per disturbance (Table -J-1)

Direct cost per kVA of plant per disturbance (Table J-2)
Direct cost per disturbance event (Table J-3)
Annual cost of disturbance (Table J-4)
Cost per hour of process interruption (Table J-5)

Though high losses, processes are commonly identified in most surveys, the magnitude of the losses is
rather inconsistent. For example, huge differences in losses can be seen in different surveys reported for
chemical products and electrical products manufacturing. This disparity is due to the difference in
circumstances while conducting the surveys. In particular, there are differences in the country in which
the surveys are conducted, the categorization of industries, the type of disturbances included, the year of
survey, the size of the industries involved, and the base currency used for loss representation. These
differences prevent the surveys from being compared effectively and meaningfully.
With increasing need for accurate loss estimation for the industrial sector, a common standard in
conducting surveys is crucial to ensure a consistent outcome in future surveys. In the meantime, a
methodology capable of grouping and analyzing the surveys is urgently required.

19

2.1.6.1. Studies in Europe

In 2007, the Leonardo PQ Initiative (LPQI) team published results of a pan-European PQ survey [40]
comprised of 62 face-to-face interviews across eight European countries. A total of 16 industrial and
services sectors were covered in the survey, which essentially represents 38% of the EU-25 turnover and
70% of the regions final electricity consumption. The costs of all major PQ disturbances (dips, swells,
short and long interruptions, harmonics, flicker, surges, transients, unbalance earthing, and EMC
problems) were obtained considering direct and indirect cost components. It was found that dips and short
interruptions account for 60% of the overall cost for industrial samples and 57% for the total sample.
Further regression analysis concluded that PQ cost is directly correlated to the annual turnover of the
affected customer, with industrial and services customers wasting around 4% and 0.142% of their annual
turnover respectively to PQ disturbances. Major findings of this study are summarized in Fig. I-1 and I-2
of Appendix 2-I.
Indeed, it is considered a good practice to put PQ costs in context. Moreover, it is a necessary step when
one is interested in understanding the significance of the problem over the economy of a country (relevant
information, for instance, for regulators) or society in general. Several studies compare PQ-related costs
with the costs of long interruptions (e.g., [41]), others with other economical parameters such as the
annual electricity expenses (e.g., [14]), or the cost of annual sales or value added (e.g., [29]). The
methodology for projecting plant-level costs (the usual outcome of a survey) to the national economy
should be addressed with care. Normally the sample of respondents in a survey is neither large nor
stratified for any relevant dimension so as to be representative of the universe. It follows that a great
caution should be used in reading the results of the analysis.
A survey [42] conducted by UMIST, UK since October 1992 assessed the outage cost of various
customer categories due to electricity supply interruption. The survey covered three regional electrical
company areas, and customer sectors are categorized as residential, commercial, industrial, and large
user. A customer interruption cost (CIC) was defined as the perceived individual customer or average
sector customer costs resulting from electricity interruption [33]. The survey provided CIC values for
each customer sectors for various duration of interruption, as given in Table I-2 of Appendix 2-I.
A separate study by researchers of UMIST investigated the influence of process equipment composition
on economic losses due to voltage dips [28]. Detailed formulas were proposed to calculate the direct and
indirect damage costs associated with industrial process disruption due to voltage dips. The study was
simulated on a generic distribution system consisting of 295 buses. Four types of sensitive equipment are
considered, namely personal computers (PC), PLCs, ASDs, and AC contactors. It was observed that
different load compositions at customer plant sites result in significant variation in dip costs.
In year 2000, researchers from Helsinki University of Technology, Finland conducted studies [8, 9] to
estimate the annual frequency and cost of voltage dips for customers of five Finnish distribution
companies (three rural and two urban networks). Customers were divided into five categories of
domestic, agricultural, industrial, commercial services, and public services. The method of fault
positioning [8] was applied for the calculation of voltage-dip frequency. Economic consequences were
obtained by multiplying the dip frequency, the cost of a single voltage dip, and the number of customers.
The cost of a single voltage dip was taken from a survey in the mid-1990s in three Nordic countries.
Different cost values were used for different customer categories. Results obtained indicated much higher
losses than expected. It was also suggested that more accurate results can be obtained by more precise
representation of customers dip-related inconvenience and actual economic losses. Results of the study
are given in Fig. I-3 of Appendix 2-I Aggregated data is given in [41], as the results of a new Norwegian
survey carried out in the years 2001-2003.
A report by STRI AB, Sweden [43] presented a structural way to investigate voltage dip immunity of
industrial processes and their related costs. Basically, a cost index and a fault index are assigned to each
industrial process. A cost index indicates process contribution to the overall cost due to voltage dips,
while a fault index represents the fault frequency of the process. A process box is used to represent the
process, with information regarding cost index and fault index clearly stated in the box. The economic
losses of a process due to voltage dips can then be evaluated using (2.4) [34].

Si = Ci Fi + Ck Fi

(2.4)

(k )

20

Where Ci is the cost index (/voltage dip) of process i, Fi is the fault index of process i, and k is the
processes affected by tripping of process i.
This method can be effectively used to determine the economic losses of processes due to voltage dips
and identify the most sensitive or the most expensive process. It can be further used to include the
interconnections of sub-processes inside a process. Besides presenting methods to calculate costs, the
report also summarized general voltage dip-related cost for different industries, as presented in Fig. I-4 of
the Appendix 2-I.
In year 2000, Italian researchers [14] published estimates of the costs associated with poor PQ. These
estimates were built on a survey conducted by a semiconductor and pharmaceutical facilities construction
company. The survey included around 30 production plants located in Europe, the USA, and the Far East
that do not have any measures in place to mitigate against PQ disturbances. Having analyzed the results
of the survey, three categories of voltage-dip profiles were determined as the most meaningful for
estimation of costs. The categories are:

Category A includes 10 or fewer voltage dips per year with residual voltage less than 40% of
nominal and dip duration shorter than 100 ms.
Category B - includes 10 or fewer voltage dips per year with residual voltage less than 40% of
nominal and dip duration shorter than 100 ms, and five or fewer voltage dips per year with residual
voltage less than 70% of nominal and duration ranging from 100 ms to 300 ms.
Category C includes one interruption with duration of three minutes or more.

Estimated costs for the industrial sectors considered in the survey are given in percentage of the total
yearly power cost, as can be seen in Table I-3, Appendix 2-I.
As for Italy, researchers performed a survey in different areas of the North-East part of the country
between year 1999 and 2002 [10]. The survey focused on 200 small industrial customers of various
sectors. The costs due to voltage dips are presented in normalized cost per voltage dip per kW power to
ease comparison between industrial sectors and sizes. It was found that most sensitive plants have
normalized cost per dip in the range of 0.25-1.5 Euro/kW. Detailed results of this survey are given in Fig.
I-5 of the Appendix 2-I. Based on this survey, the same group of researchers proposed a method for
computation of the interruption costs caused by supply voltage dips and interruptions in small industrial
plants [27]. The assumptions made were that industrial plants have only one shut-down model, and that
each voltage dip or interruption that trips the process requires equal restart time. This further implies that
severe voltage dips and momentary interruptions cause equal interruption costs. The error introduced by
these assumptions is thought to be reasonably low. A large portion of the paper focuses on producing
equations for cost calculation. The costs considered include cost of lost production during supply
disruption and restart time, cost of wasted materials, imperfect product, damaged equipment, and extra
maintenance resulting from the disturbance. The savings on raw material, energy not consumed, and
recovery of lost production were also considered. Using this method, a production plant in the plastic
sector was investigated [10, 27]. It was found that the cost of a nuisance voltage dip is 517.5 Euro. This
value is about 66% of the losses due to a one-hour unplanned interruption.
In 2007, Politecnico di Milano of Italy [29] conducted a field survey on 50-MV industrial customers in 13
(potentially sensitive) manufacturing sectors, to determine the direct costs due to voltage dips and
momentary interruptions (less than 1 second). The first objective of the work was to obtain cost indicators
for sensitive manufacturing sectors. Results are presented in terms of plant-level cost indicators that are
normally found in the literature: annual direct costs per kW, direct cost per event per kW, annual direct
cost per production plant, and direct cost per event per production plant. Table I-4 in Appendix 2-I gives a
sub-sample that excludes responses with zero costs.
A second objective was to estimate the weight of these costs on the Italian economy. Country-level direct
costs were estimated by projecting plant-level cost indicators to the Italian economy. Indirect costs (i.e.,
costs for protecting the production plant) were assessed through market-based analysis, whereby the
annual amortization costs for mitigation (UPS) were used as an indicator of cost. The total annual costs
sustained by the Italian production system was estimated to be comprised between a minimum of 449 and
a maximum of 809 million Euros. The impact of direct costs on the economy of sensitive sectors is
certainly not negligible. The incidence of direct costs on the level of sales of these sectors is 1.5-1.7 for
every 1,000 of sales (6.8-8.1 for every 1,000 of value added). Note that these costs are more than

21

four times higher than those in a generic sector. Finally, it emerges that direct costs are a very specific and
concentrated problem. In other words, very short interruptions and voltage dips result in important direct
costs only for a portion of the whole Italian production system. Sensitive sectors account for 16.97% of
national sales (and 14.98% of value added).
Based on the report published by the Copper Development Association and sponsored by the copper
producers and fabricators, [44], a 10-month study carried out by a major generator in Europe on 12 sites
of low-technology manufacturing operations logged a total financial loss of 600,000. Some of the
findings of this report are summarized in Table I-5 in the Appendix 2-I.
2.1.6.2. Studies in the USA
An on-site survey of 299 U.S. large commercial and industrial customers was carried out in 1992 to
determine the financial losses incurred by interruption and voltage dips [45]. Interruption costs for the
following scenarios were investigated:

A 1-hour interruption starting at 3 p.m. on a

afternoon without advance notice.
A 1-hour interruption starting at 3 p.m. on a
afternoon with 1 hour advance notice.
A 4-hour interruption starting at 3 p.m. on a
afternoon without advance notice.
A 2-hour interruption starting at 7 a.m on a winter
without advance notice.
A 1- to 2-second momentary interruption on a
afternoon in clear weather.
A 10% to 20% voltage dip for 15 cycles.

summer
summer
summer
morning
summer

Summary of the survey results is given in Table I-6 in the Appendix 2-I.
In year 1993, Clemmensen [46] provided the first-ever PQ cost estimate for U.S. manufacturing sector.
The estimate derived that annual spending on industrial equipment due to PQ problems could sum up to
$26 billion dollars for the U.S. manufacturing sector. It was estimated that for every manufacturing sales
dollar, 1.5 to 3 U.S. cents (i.e., 1.5% - 3%) are spent to mitigate PQ problems.
A few years later in 1998, Swaminathan and Sen [46], in a Sandia National Laboratory report, estimated
that U.S. annual power interruption cost reaches $150 billion. This estimate was based on a 1992 Duke
Power outage cost survey in the U.S. that manipulated industrial electricity sales as the basis for the
estimate.
Later in year 2001, EPRIs Consortium for Electric Infrastructure to Support a Digital Society (CIEDS)
[47] produced a report based on a Primen survey in the United States. The report identified three sectors
of the U.S. economy that are particularly sensitive to power disturbances:

The Digital Economy (DE): telecommunications, data storage and retrieval services, biotechnology,
electronics manufacturing, and the financial industry.
Continuous Process Manufacturing (CPM): paper, chemicals, petroleum, rubber and plastic, stone,
clay and glass, and primary metals.
Fabrication and Essential Services (F&ES): all other manufacturing industries, plus utilities and
transportation facilities.

These three sectors collectively lose $45.7 billion a year due to outages and another $6.7 billion a year
due to other PQ phenomena. It is estimated that the U.S. economy losses between $104 billion to $164
billion due to outages and another $15 billion to $24 billion due to PQ phenomena.
In the meantime, EPRI Solutions (formerly EPRI PEAC) [48] conducted PQ investigations on the
continuous process manufacturing (CPM) sector of U.S. industries to identify industry-specific cost data
resulting from PQ disturbances. CPM involves manufacturing facilities that continuously feed raw
material at high temperature. Results of this investigation are summarized in Fig. I-6 in the Appendix 2-I.
According to [49], a consulting firm specializing in evaluating technology markets, estimated over $20

22

billion of annual voltage disturbance cost by U.S. industries. Estimated losses for various industries per
voltage dip are also provided in the study, as shown in Table I-7 in the Appendix 2-I.
A comprehensive summary of the outage cost is given in an EnerNex Corporation report [50] in year
2004. It includes outage costs obtained from different surveys. Detailed results are given in Table I-8 in
Appendix 2-I.
2.1.6.3. Studies in Asia
Survey results of interruption costs for 284 high-tech industries in Taiwan were published in [51] in year
2001. Six categories of high-tech industries were studied. They included semiconductor (SC), computer
and peripherals (CP), telecommunications (TC), optoelectronics (OE), precision machinery (PM), and
biotechnology (BT). The report also compares the obtained interruption costs with the interruption costs
from other countries. Summary of the results is given in Table I-9 in Appendix 2-I.
The results of this survey were also presented in a separate paper published in 2006 [32]. The cost of
interruptions was represented as a customer damage function, which gives interruption costs as a function
of interruption duration. These customer damage functions are given in Fig. I-7 in the Appendix 2-I. The
same paper also presented results of a PQ survey conducted on the same industries. Financial analysis for
voltage dips used weighting factors for different voltage-dip magnitudes. Besides, voltage-dip sensitivity
factors were derived based on the survey results. It is concluded that high-tech industries are sensitive to
supply quality, and that the semiconductor industry suffers the highest losses for interruptions of less than
three seconds. The dip-sensitivity factors are given in Table I-10 in Appendix 2-I.
In South Korea, the Korea Electrotechnology Institute in cooperation with Gallup Korea conducted an
interviews-based survey on 660 industrial customers [52] of various sizes and sectors. The survey resulted
in successful estimation of interruption costs for the industries surveyed.
2.1.6.4. Other Reported Losses
A case study on two industrial plants in Egypt was published in 2004 [11]. It was reported that for each
voltage dip costs manufacturing plant (size of 1MVA) a cost of $5,800 and $8,060 a 200kVA polyester
factory. The data gathered by the ABB [53] related to different industries and sensitive loads shows that
the financial consequences of voltage disturbances can range between 3 and 120 $/kVA per event. More
details are shown in Table I-13 in the Appendix 2-I. The results of the similar assessment provided in
EPRIs PQ Applications Guide for Architects and Engineers are summarized in Table I-14 and those
from U.S. Department of Energy [37] in Table I-15 and Table I-16 in Appendix 2-I.

2.2. Methodology for Quantifying the Economic Impact of Harmonics

2.2.1. Introduction
Economically quantifying the effects of the harmonics in an electrical system requires the computation of
all the consequences that the harmonics of current and of voltage have on all the equipment and
components. The effects of the voltage and current distortion on any equipment or component fall in three
classes: additional energy losses, premature aging, and malfunction . The term additional means that
these losses are superimposed to the ones at the fundamental; the term premature refers to the
possibility of aging rate accelerated by the rise of stress level with respect to the nominal service
conditions. The term malfunction pertains to the loss of
the equipment performance in respect to the nominal
conditions.
For each class, the methods to be followed can be of two
types: deterministic or probabilistic. Deterministic
methods are adequate when all the items of the analysis,
from the operating conditions of the system to the discount
rate value, are known without uncertainty. This can be the
case of ex post analyses performed on existing systems
whose operating conditions are repetitive and well stated.
Some real cases can refer to industrial systems.
Probabilistic methods are instead needed when some of the problem variables are affected by

23

uncertainties. This clearly happens for non-existing systems or also for existing systems where some
expansions have to be planned. However, technicians are often involved in estimating the costs to face for
the future operation of existing systems when both cash flows and operating conditions of the system vary
over a range and thus introduce a degree of uncertainty.
First proposals of methods to economically quantify the harmonics in a system [50-52] dealt with the
deterministic evaluation of the cost to the electric utility to contend with the harmonic pollution. The costs
include the total active power losses value as well as the capital invested in the design and construction of
filtering systems. Even if these first studies recognize the premature aging of the equipment can lead to
potential additional costs, it was not included. Several successive studies [53-55] proposed probabilistic
methods, also extending the costs due to harmonics, to take into account the premature aging of the
equipment. Unfortunately, few contributions can be found regarding the economics of malfunction [56,
57] that recently [58] has been addressed, approaching it like reliability costs.

2.2.2. Overview of Existing Methodologies

The effects of the voltage and current distortion on the equipment that can be economically quantified the
energy losses, premature aging, and malfunction. The related economic value represents the searched
quantities. Sections 2.2.2.1 to 2.2.2.3 give an overview of deterministic approach, while section 2.2.2.4
discusses the main steps involved in probabilistic analysis of economic losses due to harmonics.
2.2.2.1. Deterministic Methodologies
Economical Values of Energy Losses
To compute the economic value of the additional energy losses arising for an operating period in
question, it is required to have the information on the following:

System operating conditions in the study period, i.e. network configurations, typical duration of
system states, and so on.
Type, operating conditions, and absorbed power level of linear and nonlinear loads.
The rate of variation of the electric energy unit cost and present value of discount rate.

As aforementioned, when uncertainties affect some of the variables involved in the economical analysis, a
probabilistic approach is needed. In the following, we firstly recall deterministic methods because they
offer the frame of study also useful for probabilistic methods, outlined in paragraph 2.2.2.4.
Let us initially refer to the case of a single electrical component continuously subject to hmax harmonics
h1
h max
in the time interval T . The operating costs Dwk are:
of voltage or current G ,..., G

Dwk = Dwk G h1 ,..,G h max = Kw Pk ( G h1 ,..,G h max )T

(2-5)

Where Kw is the unit cost of electrical energy and Pk ( G h1 ,..,G h max ) represents the losses due to the
h1
h max
on the kth component. Appendix 2-K reports the formula useful to compute
harmonics G ,..., G
such losses for the main electrical components

The operating costs in T for the whole system, in which m components and equipment operate, can be
computed as the sum of each one:
m

Dw = Dwk

(2-6)

k =1

To evaluate the operating costs of the system components with reference to more yearsusually the
electrical system lifeit is then necessary to take into account both the variation of the unit cost of the

24

electric energy in the years and the present worth of the costs taking place in every year of the system life.
The following relationships can be assumed for the variation of the electric energy unit cost:

( Kw) n = ( Kw) 1 (1 + ) n 1

(2-7)

and for the present worth value:

(Dw)npw =

Dwn
(1 + ) n 1

(2-8)

Where is the variation rate of the electric energy unit cost and is the present worth discount rate.
Finally, the present worth expected value of the operating costs of harmonic losses, referred to the whole
electrical system period of NT years, is:
NT

NT

Dwn
,
n 1
n =1 (1 + )

Dw = (Dw) pw =
n

n =1

(2-9)

Where Dwn is the sum of the operating costs for the whole system in all the time intervals Tj that
occurred in the generic year n.
The present worth expected value of the operating costs of harmonic losses, referred to the whole
electrical system period of NT years, is:
Nr

Dw =
n =1

Dwn

(1 + )n1

(2.10)

Where Dwn is the sum of the operating costs for the whole system in all the time intervals Tj that
occurred in the generic year n and is the present worth discount rate..
The recalled relations evidence that computing the economical values of losses due to harmonics imposes
h1
h max
on each component
the knowledge of several quantities; among them, the harmonics G ,..., G
are the currents and/or voltages. For most real cases, the main contributions to the total economical value
of harmonics are due to the current harmonics flowing into series components of the system like cables or
overhead lines. However, dielectric losses linked to voltage harmonics can play a not negligible role, for
example in transformers or also in medium-voltage (MV) cables when the thickness of insulation material
is particularly large [59, 62, 63, 86].
2.2.2.2. Economical Value of Premature Aging
To compute the economic value of substituting damaged components due to their premature aging, it is
required to know:

The system operating conditions in the study period, i.e., network configurations, typical duration of
system states, and so on.

The type, operating conditions, and absorbed power level of linear and nonlinear loads.

The appropriate life models of equipment and components in order to estimate the failure times of
their electrical insulation.

The costs of the replacement (new) components together with the cost variation rate.

The premature aging caused by the harmonic pollution involves incremental investment costs to face
during the observation period. Also for this analysis, it is useful to firstly recall deterministic methods,
assuming all problem data is known without uncertainty.
Referring initially to a single component, let these incremental costs be defined as the aging costs Da k :

Da k = C k ,ns C k ,s

(2.11)

25

In (2.11), Ck,s and Ck,ns are the present worth value of the total investment costs for buying the kth
component during the system life in sinusoidal and non-sinusoidal operating conditions, respectively. The
values of Ck,s and Ck,ns can be at once evaluated when the useful lives Ls and Lns are known. In fact, once
they are known, both the number of times that the component has to be bought in the system life and the
years in which the purchases have to be done are fully estimated.
The useful lives Ls and Lns of an insulated electrical apparatus can be estimated summing the relative life
losses L, which come in succession until reaching the unity. It is important to highlight that electrical
power system components are subjected to different service stresses (electrical, thermal, mechanical, and
so on), which can lead to degradation of electrical insulation. The degradation (aging) of solid-type
insulation, like it is for MV/LV distribution system components, is an irreversible process, involving
failure and, thus, breakdown or outage of the whole component.
However, electrical and thermal stresses (i.e., voltage and temperature) are, in general, the most
significant for insulation in MV/LV power systems. Moreover, the interaction between electrical and
thermal stresses can lead to a further increase of electrothermal aging rate with respect to the effect of
these stresses applied separately; such a phenomenon is called stress synergism [59]. Aging rate can be
accelerated by the rise of the stress level with respect to the nominal service conditions. This can be due
just to voltage and current harmonics, which may lead to an increase of electrical and thermal stresses on
the insulation, thus shortening insulation time-to-failure, i.e., component useful life.
In a distorted regime, the life models of equipment and components can take into account only thermal
stress, leading to Arrhenius law-based models, or can take into account also electrical stresses, leading to
more complex life model.
Let us first assume that the useful life of an insulated device is only linked to the thermal degradation of
the insulation materials. Thermal degradation can be represented by the well-known reaction rate
equation of Arrhenius [58, 59] when the absolute temperature of the materials is constant. From the
Arrhenius relationship, in [62, 63] it has been demonstrated that the thermal loss of life of the k-th
t
component Lk in a time period Tc characterized by different operating conditions, each at given
temperature and of given duration, can be expressed as the summation of relative losses of life:
q t
i ,k

i = 1 ( i ,k )

Ltk =

(2.12)

Where q is the number of operating conditions in Tc; tik is the duration of operating condition of the k-th
component at constant temperature i,k; and finally

(i ,k ) is the useful life of the k-th component at

temperature ik, obtained from the Arrhenius model. The temperature of each insulated components i,k
can be determined considering the heat balance relationships, in which the losses at the fundamental and
at the harmonics are the forcing terms.
The present worth value of the additional aging costs arising in the whole system for N components, is
computed as the sum of the cost of each component:
N

Da = Dak

(2.13)

k =1

Where the value of Dak is calculated, via (2.6), starting from the knowledge of the useful lives of the
various components.
When both thermal and electrical stresses have to be accounted for, the procedure does not modify, but
the life models to be used in relation (2.12) change in electrothermal model. In such a condition, the
et
relative loss of life of the MV/LV power system component in the time period Tc, Lk , can be again
expressed as the summation of fractional losses of life:

26

ti

i = 1 L(Ei , i )

Let k =

(2.14)

Where L(Ei , i ) is the life that the component would experience if constant values of electric and
thermal stresses Ei and i were continuously applied until failure.
In the literature, the electrothermal models of the most common equipment and components of MV and
LV systems can be found; in particular, the electrothermal models that explicitly account for voltage and
current harmonics are in [53, 64-66].
2.2.2.3. Economic Value of Misoperation
The economical evaluation of the misoperation is the most complex subject and, maybe, the least
explored one. The complexity of the cost estimation is strongly linked to the absence of exact knowledge
of the cause-effect linkage between harmonics and degradation of performance of equipment for the real
difficulty of the concrete discrimination of harmonics as the only cause of the disturbance. The harmonics
as the origin of several degradations of the equipment performance remain obscure for all the equipment
life. Indeed, in [67, 68] there are reported some categories for which the performance degradation due to
harmonics can be more easily discriminated: electronic equipment operating with voltage zero crossing,
meters, lighting devices.
Generally, the economical impact of misoperation involves financial analysis of all the effects that
misoperation has on the process/activity where the equipment is inserted. Typically, the misoperation
costs can be estimated for existing systems whose duty cycle is well known. Unexpected tripping of
protections, for example, can result in stopping a whole industrial process. The cost of such an event
includes several items, like cost of downtime, cost of restoring/repairing, cost for replacing the
equipment, where applicable. Some interesting values can be found in [68], which mostly referred to
existing systems in Spain, where extensive investigation was carried out among a wide range of
commercial and industrial sectors. The findings of the research confirm that to estimate the misoperation
cost requires deep knowledge of:

The equipment malfunctioning in presence of harmonics.

The process/activity where the equipment is inserted.
The economical value of all the items involved in lower productivity.

Looking at the problem of evaluating the misoperation costs with this point of view, it is evident that
several analogies arise with the problem of evaluating the economical effects of micro-interruptions or of
voltage dips. At least for all the cases where the lower productivity is due to partial or complete stoppage
of the process, the methods and the components of the financial analysis are the same.
Recently [67] proposed to include the supply unreliability costs into the category of misoperation. This
interesting proposal is based on the concept of sector customer damage and allows estimating the
misoperation cost in function of well-stated figures in reliability studies, like sustained failure rate and
momentary failure rate. The model is particularly suitable for distributors that, in the planning stage, can
use the economical metrics to choose the best solution among future alternatives.
2.2.2.4. Main Steps Involved in Probabilistic Evaluations
When faced with uncertainty, it often unavoidably affects the input data in real systems for changes of
linear load demands, of network configurations, and of operating modes of nonlinear load. It is needed to
translate the economical models on a probabilistic ground. This implies the introduction of random
variables and application of probabilistic techniques of analysis, as well as other terms to introduce
probabilistic methods.
The first step in a probabilistic approach is to recognize that output economic figures to be computed are
statistical quantities. In the most general cases, their probability density functions (PDFs) completely
describe their statistical features. However, for the sake of estimating the economic value of losses and
premature aging due to harmonics, it is adequate referring to the total expected value as:

27

E ( D) = E ( Dw) + E ( Da)

(2.15)

Where symbol E(.) indicates the expected value of the quantities already introduced in the paragraphs
2.2.2.1 and 2.2.2.2. When estimating expected values for a period of time, it is needed to consider their
present worth values as:

E ( D) pw = E ( Dw) pw + E ( Da) pw

(2.16)

The present worth expected economical value of losses due to harmonics losses, E ( Dw)
the whole electrical system life of NT years, is:
NT

pw

, referred to

NT

E ( Dw) n
n 1
n =1 (1 + )

E ( Dw) pw = E (Dw)n =
pw

n =1

(2.17)

pw
Where E (Dw)n is the present worth expected value of the harmonic losses in the nth year, and

E ( Dw) n is computed summing the economical value of harmonic losses of each component in each jth
combination characterized by mj components operating in the same time period Tj:
mj

E (Dw) j = E (Dw)k , j .

(2.18)

k =1

For the gncombinations taking place in year n, it is:

gn

gn m j

j =1

j =1 k =1

E (Dw)n = E( Dw ) j = E( Dw )k , j

(2.19)

It is clear from relation (2.19) that it is necessary to compute the expected value of harmonic losses for
each component of the system, that is E( Dw )k , j . Considering each single electrical component

,G h 2 ,..,G h max
h max , E( Dw )k , j .

continuously subject to an hmax harmonics of voltage or current harmonic G

h1

by the joint PDF f h1

G ,..,G
For the most common components of industrial energy systems, the harmonic losses
Pk , j ( G h1 ,..,G h max ) , with their expressions reported in Appendix 2 - L (L-7), can be obtained by

characterized in the time interval

summing up the losses due to each harmonic.

pw
, is evaluated summing the
The present worth economical value of premature aging in (2.16), E ( Da )
present worth expected value of the aging costs of each of the N components of the system:

E( Da ) pw = E( Da )kpw

(2.20)

k =1

pw
Where the value of E( Da )k is calculated starting from the knowledge of the useful lives of the

various components by the relation:

28

E(Da)kpw = E(Cns )kpw - E(Cs )pw

k

(2.21)

pw
pw
Where E (C s ) k and E (Cns ) k are the present worth expected value of the costs for buying the

component during the system life in sinusoidal and non-sinusoidal operating conditions, respectively.
The actualization of the costs can be effected in a similar way as in the previous equations (L-11) and (L12) of Appendix 2 - L. considering both the discount rate and the cost variation for buying the
component; the expected value of cost to be met for buying each component at year n in sinusoidal and
non-sinusoidal regimes is linked to the expected value of the component life in these conditions,
respectively. To estimate these figures again, the cumulative damage theory can be applied, as in the case
of deterministic methods. In such a case, we have to refer to the expected value of relative loss of life in
the study period, E[RL]. A more complete analytical formulation is reported in Appendix 2-L.

2.3. Methodology for Quantifying the Economic Impact of Other PQ

Phenomena
2.3.1. Voltage and Current Unbalance
The sensitivity of electrical equipment to unbalance differs from one appliance to another. A short
overview of the most common problems is given below:
Induction machines: The magnitude of the internally induced rotating magnetic field in induction
machines (IMs) is proportional to the amplitude of the direct and/or inverse components. The rotational
sense of the field of the inverse component is opposite to the field of the direct component. Hence, in the
case of an unbalanced supply, the total rotating magnetic field becomes elliptical instead of circular and
consequently could lead to three types of problems in IM operation. First, the machine cannot produce its
full torque as the inversely rotating magnetic field of the negative-sequence system causes a negative
braking torque that has to be subtracted from the base torque linked to the normal rotating magnetic field.
Secondly, the bearings may suffer mechanical damage because of induced torque components at double
system frequency. Finally, the stator and, especially, the rotor are heated excessively, possibly leading to
faster thermal aging. This heat is caused by induction of significant currents by the fast rotating (in the
relative sense) inverse magnetic field, as seen by the rotor, and is also accompanied by vibrations. To be
able to deal with this extra heating, the motor must be derated, which may require a machine of a larger
power rating to be installed. In general, if voltage unbalance is permanently higher than 2%, the losses of
fully loaded IM are likely to cause damage.
Synchronous generators: Synchronous generators are exposed to similar stress as IM when subjected to
unbalance. However, they mainly suffer from excess heating. Special care must therefore be devoted to
the design of stabilizing damper windings on the rotor, where the currents are induced by the indirect and
homopolar components.
Capacity of transformers, cables, and lines: The capacity of transformers, cables, and lines is reduced due
to negative-sequence components. The operational limit is in fact determined by the RMS rating of the
total current, being partially made up of useless non-direct-sequence currents as well. This has to be
considered when setting trigger points of protection devices, operating on the total current. The maximum
capacity can be expressed by a derating factor, to be supplied by the manufacturer, which can be used to
select a larger system, capable of handling the load.
Transformers: Transformers subject to negative-sequence voltages transform them in the same way as
positive-sequence voltages. The behavior with respect to homopolar voltages depends on the primary and
secondary connections and, more particularly, the presence of a neutral conductor. If, for instance, one
side has a three-phase four-wire connection, neutral currents can flow. If at the other side the winding is
delta-connected, the homopolar current is transformed into a circulating (and heat-causing) current in the
delta winding. The associated homopolar magnetic flux passes through constructional parts of the
transformer, causing parasitic losses in parts such as the tank, sometimes requiring an additional derating.

29

Electronic power converters: These are present in many modern devices such as adjustable-speed drives,
PC power supplies, efficient lighting, etc., and the amount of power electronic converters is bound to
increase further in the future. As a consequence of unbalanced supply, they can be faced with additional
uncharacteristic harmonics, although, in general, the total harmonic distortion remains more or less
constant. The design of passive filter banks dealing with these harmonics must take this phenomenon into
account.
The table below specifies percent of extra losses from load unbalance as a function of neutral current
resulting from unbalance to average phase current.
Ratio of neutral current to
average phase current
0,5
1,0
1,5
2,0
3,0

Table 2-1 Extra losses due to unbalance

% of additional losses from load unbalance
Transformers
Low-voltage lines
6-8
40-50
15-20
70-140
35-50
140-260
70-90
200-500
150-200

2.3.1.1. Classification of Unbalance Costs

Economic losses due to voltage and current unbalance, i.e., the economic costs of unbalance ( K as ), can
''

'

be divided into two categories, namely technological losses ( K as ) and electromagnetic losses ( K as ).
The technological losses include losses resulting mostly from changes in the slip and torque of induction
motors and consequential decrease in the output of motor-driven production equipment, a decrease in the
induction motors maximum torque, reduced efficiency of single-phase electrical heating equipment, and
reduced efficiency and lower quality of production due to changes in electric lighting. They also depend
on the load type and should be calculated taking into account specific features of production processes.
The electromagnetic losses associated with voltage unbalance result mainly from an increase in
active power losses, as well as increase in the active and reactive power demand, reduction of capacitors
and synchronous machines reactive power with respect to the required value, accelerated aging of
insulation, and reduced in-service time of light sources.
'

The annual costs of losses K as due to unbalance can be expressed as the sum:
m

j =1

j =1

j =1

K as' = K Pj + K Aj + K Rj + K Q + K 0
Where

(2.22)

K Pj = additional cost of power losses in the j element (equipment, load) in the considered
K Aj

facility due to voltage and current unbalance

= additional cost of energy losses in the j element due to voltage and current unbalance

K Rj

= costs of restoration of the j element caused by aging of its insulation due to voltage

KQ

and current unbalance

= cost of the reactive power reduction due to unbalance

K0

= cost of light sources replenishment due to detrimental effects of voltage unbalance

'

The overall unbalance costs ( K as ) include costs of the negative-sequence unbalance ( K as 2 = K as 2 +

K as' ' 2 ) and zero-sequence unbalance.

30

2.3.1.2. Additional Costs of Power Losses and Electric Energy Losses

Annual cost of additional losses in the j element (loads, the series and shunt transmission, and distribution
equipment) is:

K Pj = k pj P2 j
Where: P2 j

k pj

(2.23)
= maximum additional losses in a year, caused by voltage unbalance (loads, shunt
equipment, no-load losses in transformers, etc.) or current unbalance (transmission and
distribution series equipment)
= unit cost of power losses at the level of the power system in which the j1 element is
connected

Annual costs of additional energy losses in the j element are:

K Aj = k Aj A2 j
Where: A2 j

k Aj

(2.24)

= annual additional cost of energy losses in the j element caused by the voltage or
current unbalance
= unit cost of energy losses at the level of the power system in which the j element is
connected

For practical purposes, A2 is often calculated from the formula:

A2 j = j P2 j

(2.25)

Where j is the annual duration of maximum losses P2 j .

The relative power losses P2 =
*

P2
100 , where PN is the nominal losses, under permissible
PN

voltage unbalance conditions (i.e., the measured negative-sequence unbalance factor 2%) are negligible.
For example, according to [100] these losses are: (a) 6-kV and 10-kV induction motors with rated powers
above 100 kW P2 = 2.4% ; (b) synchronous motors with rated powers above 100 kW 4.2%; (c)
*

transformers in industrial networks 1 to 4%.

2.3.1.3. Costs of Equipment Restoration
The voltage or current unbalance causes additional heating of electrical equipment components that
results in shortened in-service time of the equipment insulation. The equipment in-service life will also be
shortened because of the intensification of ionizing processes caused by the voltage increase due to
unbalance.
Under balanced supply conditions, the equipment in-service time equals TS (in years). The operability
costs of this equipment during time TS , i.e., total annual costs of expanded reproduction and operating

The method of determining the losses P2 for various types of loads and transmission and distribution
equipment is outside the scope of this report.

31

costs, are K us , and discounted costs (constant over time) are K uar . Under unbalanced conditions, the
equipment in-service time equals Ta < TS , total annual costs are K ua , and annual discounted costs are

K uar :
K us = TS K usr = TS pS K i
K ua = Ta K uar = Ta pa K i
Where: K i

(2.26a)
(2.26b)

= investment expenditures associated with the equipment installation

pS and pa = coefficients of the equipment reproduction (fixed operating costs taken into
account); pS pa because of different depreciation periods in each case.
After elapse of time Ta , the equipment should be repaired or new identical equipment should be installed.
The expected cost of repair or installation of new equipment is K m . Total annual costs incurred during
the period ( Ta - TS ) are:

K R = (TS Ta ) pn K ni

(2.27)

Where: pn = expanded reproduction coefficient as pS and pa but related to the new or restored
equipment.
Total discounted costs associated with premature replacement or necessary repair of equipment, the socalled annual costs of equipment restoration, are:

KR =

K R TS Ta
=
pn K ni
TS
TS

(2.28)

In practical calculations, pn pS pa can be assumed. As evident from the formula (2.28), the relative
time of shortening the equipment life due to voltage and current unbalance has considerable influence on
the costs K R 2:

T * =

T TS Ta
=
TS
TS

(2.29)

As follows from research [69], under voltage unbalance conditions and the voltage unbalance factor of
2%, the average values of time T are: (a) induction motors 9.1%; (b) synchronous motors 10.2%;
*

(c) distribution transformers 2.3%; transmission transformers 3.4%; converters 3.4%; power
capacitors 20 to 25%.

2.3.1.4. Cost of Reduction of the Reactive Power Value

The reactive power of a capacitor bank is changing as a result of the voltage unbalance. Compared to the
reactive power under the balanced supply voltage conditions, this power often decreases by QK . The
unbalance of currents in synchronous machines reduces their inductive reactive power by QG .
2

The method of determining the time T or T * for various types of loads is outside the scope of this
report.

32

The deficit in reactive power Q = QK + QG should be replenished by means of additional

compensation equipment, e.g. installation of additional capacitor banks. Total annual discounted costs
associated with the installation and operation of additional capacitor banks are:

K Q = pQ K Qi + K PA + K ZQ + K pQ + K RQ
where:

(2.30)

K Qi = investment expenditures for the equipment to compensate the reactive power Q

pQ = the expanded reproduction installment, including fixed operating costs
K PA = cost of power losses and energy losses in the compensation equipment
K ZQ = costs of undependability caused by the compensation equipment unreliability

K pQ = other costs associated with installation of the compensation equipment (positive or

negative) concerning e.g. consequences of changes in the PQ parameters

K RQ = costs of restoration of the compensation equipment resulting from the voltage unbalance
effects
The costs K Qi are essentially dependent on the compensation equipment, i.e. , K Qi = f ( Q ) .
Under the voltage unbalance conditions, the reactive power of a capacitor bank ( QK ) can be larger or
smaller than its rated power ( QKN ) or the power under the balanced supply voltage conditions ( QKs ).
The value of QK = QKN QKs can therefore be positive or negative. Consequently, the costs K Q can
also be positive (additional loss) or negative (an extra profit).
For a synchronous machine operated under 2% voltage unbalance and the system p.u. negative-sequence
reactance equal 0.24, the negative-sequence symmetrical component of machine currents is 8% [69],
which for some types of machines (turbogenerators) is intolerable. This problem occurs particularly in
industrial cogeneration plants with unbalanced load. In such cases, it is necessary to reduce the reactive
power generated by synchronous machines. With voltage unbalance exceeding 3% at the terminals of a
synchronous motor, both the motor current and the generated reactive power shall be reduced. Under
voltage unbalance equal to 2%, the reduction of reactive power generated by a synchronous motor is 5 to
23% [69].
2.3.1.5. Costs of Replenishment of Light Sources
Voltage unbalance in lighting installations causes the voltage rise in one or sometimes in two phases. It
results in shorter in-service time of lamps, increased active power demand, and in the case of discharge
lamps, increased reactive power. A reduced voltage (in one or two phases) results in reduction of the
luminous flux, reduction of power, and losses in lighting installation.
Total luminous flux ( ns ) of all light sources, supplied from different phases under the voltage
unbalance conditions, may differ or differ insignificantly from the luminous flux ( s ) in the case of
balanced voltages. If the flux under unbalanced conditions is lower, additional light sources with power

Pd 0 and luminous flux output = S ns shall be installed in order to provide a luminous flux

33

required by standards. The annual discounted costs associated with this installation, i.e., annual costs of
additional light sources, are:

K d 0 = f p (Pd 0 ) = f ( ) = pd 0 K d 0i + K inne

(2.31)

Where: K d 0i = the cost of installation of additional light sources

pd 0 = coefficient of expanded reproduction (operating costs taken into account)

K inne = other costs components (the cost of power and electric energy, the cost of power and
electric energy losses, etc.)
The costs of replacement of light sources ( K w 0 )3 are the cost incurred in connection with premature
replacement of incandescent or fluorescent lamps, or even entire luminaries, due to shortened in-service
time. The number of light sources (lamps) to be prematurely replaced ( L ) is associated with the
considered facility and depends essentially on the form of voltage unbalance.
The annual discounted costs of replacement of lamps can be calculated in a similar way as costs of
compensation equipment (capacitor bank) restoration because of their premature wear-out due to voltage
unbalance, i.e.:

K w0 =

T0
pw 0 K w 0 i
T0 s

Where: T0 s

(2.32)

- in-service time of lamps supplied with balanced phase voltages

K w0i - costs of replacement of lamps (light sources)

pw0 - coefficient of expanded reproduction (operating costs taken into account)
The costs of replenishment of light sources ( K 0 ) are the sum of additional light sources ( K d 0 ) and costs
of replacement of light sources ( K w 0 ):

K 0 = K d 0 + K w0

(2.33)

The issue of economic losses due to voltage and current unbalance still remains an open issue that
requires analyses and experimental research.

2.3.2. Surges and Transients

Most transients arise from the effects of lightning strikes or switching of
heavy or reactive loads. Because of the high frequencies involved, they
are considerably attenuated as they propagate through the network so
that those occurring close to the point of interest will be much larger
than those originating further away. Protective devices in the network
ensure that transients are generally kept to a safe level, and most
problems arise because the source of the transient is close to or within
the installation.

The method of determining the shortening of in-service time ( T0 ) for various light sources under
voltage unbalance conditions is outside the scope of this report.

34

The damage that results may be instantaneous, such as the catastrophic failure of electrical plant or
appliances, or the corruption of data within computers or in network cabling, or it may be progressive
with each event doing a little more damage to insulation materials until catastrophic failure occurs. The
cost of replacing the failed equipment and the cost of the downtime involved must be considered.
If a surge or transient does not pause the process, still it could create dielectric stress in cables, which
accumulate in the form of extra insulation aging. Similarly, the same could happen to capacitors. Such
effects are, however, difficult to assess. The approach described in [18] can be used.
Surges and transients even if not halting the production process may cause some process and equipment
cost. Surge arresters need maintenance and replacement of activated parts, production equipment and also
protection and controls need checks or resets and sometimes additional maintenance. This can be
addressed by process and equipment costs approach as discussed above.

2.3.3. Flicker
The voltage of an electrical network varies all the time under the influence of various switching
operations of electrical equipment connected to the supply network. It can be slow or fast, depending on
whether it is a progressive variation of the total load supplied by the grid or it is an abrupt variation of a
large load. The level of voltage variations emitted by connected electrical equipment into the supply
network depends on the network impedance. With increasing impedance, the level of voltage variations
will increase.
The variations of the voltage creates flicker, a perturbation which affects the lighting equipment and
creates an impression of unsteadiness of the visual sensation. Voltage fluctuations in the power systems
cause a number of harmful effects of technical and ergonomic nature. Both types of effects may involve
additional costs in the production process. Several selected adverse effects of voltage fluctuation are
shortly described. Also, frequently occurring, irregular operation of contactors and relays should be
mentioned, as their economic effects could be damaging.
Electric machines: Voltage fluctuations at the induction motor terminals cause changes in torque and slip;
as a consequence, they influence technical processes. In the worst of cases they may lead to excessive
vibrations and therefore to a reduction of mechanical strength and shortening the motor service life.
Voltage fluctuations at the terminals of synchronous motors and generators give rise to hunting and
premature wear of rotors; they also cause additional torque, changes in power, and increase in losses.
Static rectifiers: A change of supply voltage in phase-controlled rectifiers with DC side parameters
control usually results in a lower power factor and generation of non-characteristic harmonics and
interharmonics. In the case of a drive braking in an inverter mode, it can result in a switching failure, with
consequent damage to the system components.
Electrolysers: Here the equipment useful life can be shortened and the efficiency of technical processes
can decrease. Elements of the high-current line become significantly degraded, and there exists a real risk
of increased maintenance and/or repair costs.
Electroheat equipment: In this case the efficiency is lessenedfor example, with the arc furnace due to a
longer melt timebut it is noticeable only when the magnitude of a voltage fluctuation is significant.
Light sources: A change in the supply voltage magnitude results in change of the luminous flux of a light
source, known as flicker. It is a subjective visual impression of unsteadiness of a light flux, whose
luminescence or spectral distribution fluctuates with time. Excessive flicker can cause migraines and is
responsible in some instances of the so-called sick building syndrome.
One has to mention though that the complaints due to flicker are usually a localized problem. As a
consequence, routine measurement campaigns are not carried out often. On the other hand, the available
data confirms that the long-term and short-term flicker levels are commonly below those levels that might
give rise to complaints. Values in excess of those prescribed in standard EN 50160 do occur, however. In
remote areas in particular (weak networks), flicker levels might increase up to critical values, as
demonstrated by many measurement results.

35

Due to the localized nature of complaints arising from flicker, excessive flicker values tend to be found in
the framework of measurements that are targeted specifically at areas of complaint. Given the immediate
visibility of the phenomenon and the severe human discomfort that can be caused, each case of complaint
must be taken very seriously. In order to prevent flicker becoming a widespread problem, appropriate
emission limitation is essential, with due allowance for the cumulative effect across the network levels
(different from the harmonic cumulative effect) .

2.4. Conclusions
Major studies around the world concluded that voltage dips and short interruptions cause significant
financial losses to customers of various sectors. Over the years, customer surveys have been the most
common method used to economically quantify the losses incurred by voltage dips and short
interruptions. New methodologies are being continually developed to consider more and more factors that
contribute to financial losses. Although theoretically, these methods promise better process/system
representation and improved accuracy, their effectiveness is yet to be proven due to the fact that none of
them are being tested in actual processes/network.
The harmonics can increase operating and investment costs of a power system. In dependence on data and
system information availability, deterministic or probabilistic methods allow the cost quantification. The
reported methods fall in the category of analytical methods that need deep knowledge of the system
structure, electrical components, electrical devices characteristics, and functions.

36

3. Overview of Existing Methodologies for Assessment of

Economic Impact Public Distribution Network Perspective
3.1. Introduction
The cost of power quality to consumers is well documented, and a range of techniques for calculating the
costs exist, as detailed in Chapter 2. Utilities, however, do not generally collect the costs associated with
different PQ phenomena. Instead, they are accounted for in routine operation and maintenance figures. In
this chapter, utility costs associated with PQ are identified and their relevance defined. A review of
existing methods for collecting economic data is also provided.
The term utility can mean many things; it is therefore necessary to define what the term utility means
in the context of this chapter. A definition of a utility is an organization responsible for maintaining the
infrastructure of a public service. A public services could include gas, electricity, water, sewage,
telephone, and Internet. In the electricity industry alone, utility could be interpreted in many different
ways, i.e. a vertically integrated energy company, an electricity supplier, a network operator, or a
generator. All are affected by PQ in different ways, as illustrated in Table 3.1.
Table 3.1 Effect of power quality
Utility Type
Economic impact of voltage dips
Generator (Wholesale)
Generators tend to sell less electricity in the hours following a voltage
dip while the industrial processes restart.
Transmission Network
TNOs incur costs associated with mitigating faults, which may lead to
Operator (TNO)
problems further down the system.
Supplier (Retail)
Suppliers are generally the first point of contact for consumers and
therefore suffer additional strain on call centers.
Distribution Network
In most countries, the DNO is responsible for PQ and incurs high costs
Operator (DNO)
associated with mitigation, resolution, and investigations.
Vertically Integrated
A vertically integrated company will be affected in all of the ways
described above.
This chapter is concerned only with the cost of PQ to the DNO, i.e. the owner and operator of the network
of towers, cables, substations, etc. that bring electricity from the National Transmission Network to
homes and businesses in a particular region, i.e. the medium-voltage (MV) and low-voltage (LV)
networks. They are neither the organizations that sell electricity to the end consumer nor the company
responsible for generating electricity. In the UK, where the industry is privatized, they are also
responsible for allocating meter point administration numbers (MPANs), providing new electricity
connections and resolving power outages in their area. The UK is split into 14 distribution network
regions, and they each distribute electricity at following voltage levels: 132 kV to 33 kV, 33 kV to 11 kV,
and 11 kV to 400 V.
In France, transmission operates at voltages greater than 63 kV, while the distribution system operates at
voltages of 20 kV or less.
According to ANSI C84.1 [167], Chapter 3 System voltage classes and Table 1, in the USA, transmission
is described as high voltage (HV) and is considered to be voltages above 100 kV, and distribution is
medium voltage (MV) with voltages between 1 kV and 100 kV or low voltage (LV) which is anything
less than 1 kV..
In Ireland, the transmission system operator (TSO) is responsible for the planning operation and control
of the transmission network, while the transmission asset owner (TAO) is responsible for the construction
and maintenance of the transmission assets in accordance with the development plans and maintenance
policies issued by the TSO. The transmission network consists of the 400 kV, 220 kV, and the vast
majority of the 110 kV network. There is only one distribution system operator (DSO), which is
responsible for the planning, development construction, operation, and maintenance of the distribution

37

network, which consists of the 38-kV, MV (20 kV and 10 kV) and LV networks and the noninterconnected 110-kV circuits.
In Italy the distribution system operates at low (equal to or less then 1 kV) and medium voltages (above 1
kV and equal to or less than 35 kV). Part of the distribution system operates also at high voltage (above
35 kV and equal to or less than 150 kV).
In Spain, transmission operates at voltages greater than 132 kV (namely at 230 kV and 400 kV), while the
distribution system operates at voltages of 132 kV or less. I.e., HV from 45 kV to 132 kV and MV less
than 36 kV.
According to European Standard EN 50160 [101], the limit between medium voltage and high voltage
public networks is established at 35 kV. Nevertheless in a recent new edition 2010 it has been changed
such limit up to 36 kV.

3.2. Review of Literature and Documented Methodologies

Although the cost of PQ to customers is well documented and understood, very little has been published
in relation to the cost of PQ to a DNO. The literature relates to determining pricing schemes for delivering
power of higher quality and reliability to specific customers or to calculating the insurance policies
relating to these supply contracts.
In [102], an economic analysis has been carried out using the cost-benefit ratio as a basis of comparison
to determine the mitigating equipment with best economic benefits. The process involves determining the
total annual cost for each alternative, including both the costs associated with the power quality variations
and the costs of implementing the solution. The cost per interruption is known, so the financial savings
can be calculated using the net present value (NPV). Comparing the annual costs of different power
quality solution alternatives identifies the solution with the lowest cost that warrants more detailed
investigation. The costs associated with purchasing and installing various solution technologies are onetime, up-front costs that can be annualized using an appropriate interest rate and assumed lifetime or
evaluation period. The paper concludes that the two parameters that have the greatest influence on the
cost-benefit ratio of the mitigating equipment are the equipment costs and the cost of an interruption due
to voltage dips.
Reference [103] looks at a power quality service pricing approach considering treatment expenses and
stop-loss insurance. The paper goes through the theory of stop-loss insurance before looking at the pricing
of PQ. The pricing of PQ service is based on the correct understanding of PQ level, which is evaluated by
a feasible method. A formula is defined to work out the fee of PQ service:
F = C(s) + P(s)
Where F is the fee of PQ service, s is the parameter of PQ level, C is the treatment expense charged by
PSCOM (power supply company) for fulfilling the customers demand PQ level of s, and P is the
premium charged for the stop-loss insurance related to s.

3.3. Costs Associated with PQ

In this section, the costs incurred by a DNO in relation to PQ are listed. For each cost, the relevance to PQ
is explained, indicative figures are provided, and an indication of how the costs could be established is
given. The costs are split into two categories, depending on whether they are incurred as a result of a PQ
incident or are associated with activities that mitigate the occurrence of PQ events. The costs associated
with responding to and investigating complaints are the most easily quantified and attributed to PQ.
Resolving PQ issues can vary hugely in nature and are therefore difficult to attribute an indicative cost to.
Costs associated with mitigating PQ incidents are rarely separated from those associated with improving
reliability and general network maintenance. There are, however, some activities that improve reliability
but not PQ, and these are specifically noted because they should not be included in any attempt to
quantify the cost of PQ to a DNO. Power quality is an inherent element of the basic electricity

38

connection. Increasing voltage quality or regulation above the basic design level cannot be done in
isolation for particular customers because the unreliability of other network sections would simply be
tagged on to more reliable circuits.

3.3.1. Costs Incurred by the Utility to Mitigate PQ Issues

For utilities, quality of supply generally covers continuity and low voltage, and it is for these cases that
investments are made, rather than for harmonics/dips/swells etc. It is also the case that network
investment for the purposes of providing increases in capacity will also (as a byproduct) improve
continuity and voltage regulation.
The types of network reinforcement possible can be assembled into different groupings with their main
drivers, which will also dictate where their costs are allocated; e.g. surge arresters are installed with all
pole-mounted transformers to protect the transformer and may also result in an improvement in voltage
swells/dips, but they are not installed for power quality improvement, and their costs will be allocated to
new supplies or network refurbishment rather than power quality.
Harmonics
Harmonic limits are set on the system by national standards, and in order that these are not breached,
lower limits are imposed on customer connections. If the customers connection is likely to result in a
harmonic limit breach, then the method of connection is either changed or the customer installs mitigation
measures at their own expense.
Harmonic filters would usually be installed by customers rather than the utility. If background harmonics
were excessive, the utility might be required to install harmonic filters. Zig-zag transformers can be used
to cancel out harmonics. However, on an HV system, a delta winding is installed on transformers giving
the same or similar effect. The extra cost of providing the delta winding is minimal when compared to the
total cost of the transformer.
The neutral in a balanced three-phase system should be lightly loaded, but with increased amounts of
loads such as office fluorescent lighting and switched-mode power supplies, the harmonic currents in the
neutral become much larger. Neutral currents can be up to 170% higher than the phase currents [102].
The utilities that had undersized their neutral might be forced to up-rate it to the same size as the phase
conductor, except where it can be shown that a smaller conductor will suffice. This extra cost would
amount to about 2 per meter on a main incoming LV cable.
Direct Cost Calculation
The presence of harmonics on a network can have a detrimental effect on assets in the medium and long
term; these include but are not limited to:

Equipment is subjected to voltages and currents at frequencies that it was not designed to withstand.
Derating of network equipment, such as cables and overhead lines, due to the additional harmonic
load.
Derating and overheating of transformers, particularly due to saturation effects in the iron core.
Premature aging of network equipment, e.g. insulation materials and electronic components.
Neutral conductor overload.
Additional losses in the conductors and transformers.

Joule losses in aerial and underground power networks can be calculated according to the following
simplified method:

PCU

3R I
n

n =2

2
n

LtE (euros)

(3-2)

where:

39

PCU = power losses (quantified in euros/year)

Rn = impedance at harmonic n (/km)
In = averaged current at harmonic n (A)
L = total lengths of line (km)
t = hours
E = price energy (euros/kWh)
The power losses can be determined for different areas of the network and added together to get an
indication of the system losses due to harmonics. For DNOs that are regulated, the value of these losses to
the company will be determined by the regulatory framework. In the UK, DNOs are not penalized for
losses, but they are rewarded for reducing them. The cost of reducing harmonics would therefore need to
be less than the reward available for a DNO. The costs associated with premature aging and derating of
assets are not easily quantified because DNOs do not generally maintain records of operating
temperatures and harmonic levels at their assets. The effect on the asset is therefore unknown.
More detailed calculation methods of are described in detail in Appendix 2-K.
Flicker
Voltage fluctuations in the power systems cause a number of harmful effects of technical and ergonomic
nature. Both kinds of effects may involve additional costs in the production process. Several selected
adverse effects of voltage fluctuation are shortly described. Also, frequently occurring, irregular operation
of contactors and relays should be mentioned, because their economic effects could be damaging.

Electric machines: Voltage fluctuations at the induction motor terminals cause changes in torque and
slip; as a consequence, they influence technical processes. In the worst of cases, they may lead to
excessive vibrations and therefore to a reduction of mechanical strength and shortening the motor
service life. Voltage fluctuations at the terminals of synchronous motors and generators give rise to
hunting and premature wear of rotors; they also cause additional torque, changes in power, and
increase in losses.

Static rectifiers: A change of supply voltage in phase-controlled rectifiers with DC side parameters
control usually results in a lower power factor and generation of non-characteristic harmonics and
interharmonics. In the case of a drive braking in an inverter mode, it can result in a switching failure,
with consequent damage to the system components.

Electrolysers: Here the equipment useful life can be shortened, and the efficiency of technical
processes can decrease. Elements of the high-current line become significantly degraded, and there
exists a real risk of increased maintenance and/or repair costs.

Electroheat equipment: In this case, the efficiency is lessenedfor example, with the arc furnace,
due to a longer melt timebut it is noticeable only
when the magnitude of a voltage fluctuation is
significant.

Light sources: A change in the supply voltage

magnitude results in change of the luminous flux of a
light source, known as flicker. It is a subjective visual
impression of unsteadiness of a light flux, whose
luminescence or spectral distribution fluctuates with
time. Excessive flicker can cause migraines and is
responsible in some instances for the so-called sick
building syndrome.

The voltage of an electrical network varies all the time

under the influence of various switching on-and-off
operations of electrical equipment connected to the supply
network. The voltage variation can be slow or fast,
depending on whether it is a progressive variation of the
total load supplied by the grid, or it is an abrupt variation of a large load. The level of voltage variations

40

emitted by an electrical equipment into the supply network to which it is connected depends on the
network impedance. With increasing impedance, the level of voltage variations will increase. The
variations of the voltage create flicker, a perturbation that affects the lighting equipment and creates a
impression of unsteadiness of the visual sensation.
Complaints due to flicker are usually a localized problem. As a consequence, routine measurement
campaigns are not carried out often. On the other hand, the available data confirm that the long-term and
short-term flicker levels are commonly below those levels that might give rise to complaints. Values in
excess of the EN 50160 value do occur, however.
Especially in remote areas, flicker levels might increase up to critical values, as demonstrated by other
measurement results. Given the localized nature of complaints arising from flicker, excessive flicker
values tend to be found in the framework of measurements that are targeted specifically at areas of
complaint.
Given the immediate visibility of the phenomenon and the severe human discomfort that can be caused,
each case of complaint must be taken very seriously. In order to prevent flicker from becoming a
widespread problem, appropriate emission limitation is essential, with due allowance for the cumulative
effect across the network levels (different from the harmonic cumulative effect) .

Lex = ni ( Li + Oi ) SDR
i

Underground Cables
Underground cables are less prone to transient faults than overhead, but it would not be effective unless
the remainder of the network was also underground. UG cables are installed in areas where it is not
feasible to install overhead lines, or where it is more economic to do so because it is a site that has not
previously been developed and the ground is already open. However, it is worth noting that in cases
where the underground cable is old and fault-prone, it can give rise to a significant impact on continuity
as it is usually located in urban areas feeding large numbers of customers. Usually the proportion of faulty
cable is low (depending on life cycle stage) and may be deemed poor enough to warrant replacement
because of its condition.
It is not possible to give an indicative cost for replacing overhead lines with underground cable, but it is
likely to be prohibitively expensive in the vast majority of cases given the need to bury the entire network
for transient faults to be reduced. According to some reports, 100% of underground cable would reduce
the occurrences of dips by 67%, but due to higher losses of supply the end costs would be reduced by
only 1%.
Increased Sectionalizing
Increased sectionalizing reduces the number of customers impacted by a fault and thereby increases
overall reliability. Where networks are in close proximity and can be interconnected and sectionalized,
this is done as a matter of design to improve continuity. There is also the spin-off benefit in reducing the
impact of dips. Dividing a network into two halves would result into a reduction of voltage dips by 50%
each. However, this would also result in reduced redundancy, increased restrictions on switching of
network parts, and therefore reduced security of supply [113]. Indicative costs for (statistically) avoiding
one voltage dip by splitting a network is given in the following example:
MV network
Length: 4539 km
Number of customers: 616,000
Measurements conducted in 30 substations on this network showed an average of 21.2 voltage dips per
substation per year and a statistical occurrence of 0.14 disturbances per km.
Two-busbar operation enables a reduction of occurring voltage dips to half, i.e. 10.1 per substation a year.
This modification would cost around 15.5million for 30 Peterson coils and 8 transformers. This would

41

result in (statistically 10.1 x 30) 318 voltage dips per year being avoided. Therefore, the cost per voltage
dip avoided would be approximately 50,000.
Insulate Overhead Lines
Insulation of an overhead line can provide protection against transient earth faults caused by
trees/branches rubbing against the line. In isolated neutral circuits, the line will not trip and the dip will be
minor, but in directly earthed circuits there will be a much more significant impact on continuity.
There are four ways in which this can be addressed:
1. Vegetation management
2. Installation of an arc-suppressed system
3. Installation of faulty phase earthing on current direct earthed 20-kV system
4. Insulation of covered conductors
Vegetation management has low yearly costs even when very extensive work is required and is effective
at reducing dips and outages caused by trees.
Installation of an arc-suppressed system would depend on the suitability of the network to accommodate
it.
Use of insulated conductors on new lines is expensive and unnecessary where the line is clear of
vegetation. However, most lines are not new, just extensions of existing circuits, so there is often little
point in insulating one area when another is left open. Restringing (reconductoring) lines in
covered/insulated conductors would be a major exercise, and to be effective in improving continuity
would have to be done for the full circuit, assuming that the dip on the busbar feeding station for a fault
on adjoining lines was not severe enough to offset the benefits.
Conductor Spacing Modification/Animal Guards
A network is normally designed in such a way that conductor clashing does not occur and thereby avoids
unnecessary outages. Typically, in order to have faults due to conductor spacing, the line spacing must be
such that it can be bridged by a birds wingspan, or in the case of bushings on pole mounted equipment,
that they are close enough for vermin to bridge the gap between bushings.
These possibilities are usually foreseen in the design, so that conductor spacing is adequate, and where
the line is in the path of migrating birds with large wing spans, bird guards can be fitted on the erection or
at a later date at low cost, because they simply clip onto the line and can be installed from the ground
using a hotstick.
For equipment such as transformers or reclosers mounted on poles, guards are placed over the bushings
where the clearances are close. The installation of bird guards is a relatively low-cost solution that is
adopted to reduce faults, which are normally sever in that they result in fuse blowing and power cuts.
Lightning Protection
Lightning causes problems either by hitting a line, in which case permanent damage is caused and cannot
be prevented, or striking near the line, causing induced currents, whose effects can be mitigated to some
extent. The probability of lightning strikes depends on location, but within location is strongly dependent
on the structures heightthe higher the structure the greater the likelihood of being affected by lightning
strikes.
High-voltage lines are much taller than LV or MV lines, so there is a higher probability of such lines
being affected. There are a number of mitigation measures that can be taken, the most common being the
installation of ground wires above the phase conductors, which results in the lightning strike being
earthed via numerous towers so that the rise in voltage at each tower is insufficient to backflash onto the
phase conductor and cause a dip in voltage.
For lines held by wood pole construction, accommodating a ground wire costs about 20% more, as well
as resulting in a structure that is visually intrusive and less acceptable to the local population. An

42

alternative solution that can be used is to place surge arresters on each phase so that a lightning strike
causes a short dip in voltage but is less likely to damage equipment, meaning that the circuit will still be
available after the strike. Pole and tower grounding are important in order to avoid tower voltage rise and
risk of flashover, which would cause a voltage dip in ground-wire-protected lines.
For an HV network, the precautions against
lightning strikes arise from the need to protect
equipment from damage and have the spin-off
effect of reducing the impact of voltage dips. HV
networks are optimized at design so that usually
there is little improvement that can be made if
the line has been properly designed from the
start.
MV lines tend not to have ground wires due to
excessive cost and the lesser impact and
probability of a lightning strike. Using surge
arrestors on MV lines is standard practice at each
transformer and at other pole-mounted
equipment such as reclosers, as well as at singlephase tee offs and cable line interconnections. If
a lightning strike occurs, the surge arrestor
would conduct, resulting in a voltage dip. In such
cases, there is no method to prevent against dips
from lightning strikes because the mechanism is
there to protect against equipment damage.
Fast Switching with Instantaneous Protection
Fast switching requires sophisticated relays and
circuit breakers that can also operate quickly. It
also requires a meshed system or else the fast switching would result in an outage. On transmission
networks, fast switching would be normal, but not at lower voltages, where the network is usually radial.
Typical costs for the equipment involved are:
Static switch with backup feeder
Static switches

$100/kVA for low-voltage applications.

$60/kVA for medium-voltage applications

$600k-$700k for very fast TS: within 0.25 cycles (11 kV, 10 MW)
$125k for fast TS: within 2 cycles
$75k for regular TS: within 6-7 s (10 MVA)

Solid-state transfer switch (SSTS) From $75k (several seconds) to $700k (1/4 cycle)
Fuse Replacements
Correctly sizing fuses so that faults are confined to the section with the fault is good design. However, the
closeness to which fuses can be coordinated with each other can be limited by the network. There are new
intelligent fuses that are actually single-phase reclosers that can be more correctly set so that they trip in
the event of a fault before the recloser on the main line trips. These cost around 2,000 per installation.
Fault-Current Limiting
These are reactors that are installed so as to limit the fault current and hence reduce voltage dips. In new
installations, there is little difficulty in accommodating them, but in existing installations, it would often
be difficult to find room for them and to make the necessary connections, particularly if compact metalclad switchgear is used.
Reactors can be installed in the coupler bay between two transformers; they have little current through
them and so low losses. They do not come into play unless there is a fault on either transformer,

43

whereupon the fault current from the second is limited. Reactors can also be placed on individual lines so
as to limit the fault current so that the voltage dip on other lines is limited. It does mean, however, that the
voltage dip on the line with the reactor will be greater, although the dip on adjoining lines will be less.
The cost of a 10% impedance reactor on the MV side of a 20-MVA transformer would be about 50,000
installed in a new build situation.
Capacitors for Voltage Regulation
Voltage regulating transformers rather than capacitors are used for voltage regulation because they are
active and can either reduce or boost the voltage around a given set point. They cost around 25,000 per
set and two sets are used in open delta for regulation on MV.
Improving the power factor of the line by supply Vars is one way in which shunt capacitors can be used,
but suitable tariffs that require the customer power factor to be between 0.95 and 1 are more effective, as
these are spread over the network and the Vars supplied locally. Placing capacitors in series with the line
to reduce inductance is not done at MV because overvoltages can arise, which damage the capacitor.
Protection Coordination Modifications
Regular reviews of protection settings take place to
ensure that proper protection coordination is achieved to
ensure that downstream devices (circuit breakers/fuses)
operate before upstream devices to ensure that the section
of network effected by the fault is minimized. At the
main feeding substations, the individual feeder breakers
should trip before the transformer breakers and similarly
the protection devices on the network should trip before
the upstream protection on the feeder trips. However, it is
also recognized that protection systems are complex and
attempts to optimize too closely could result in reducing
the impact of the protection.
Replacement of Old Feeders/Transformers
Transformers normally operate correctly (excluding tap
changer) until they fail; i.e., they do not malfunction
they catastrophically fail. So unless there is an on load tap
changer issue, the only reason to change a transformer is
to avoid the risk of it failing unexpectedly. It will operate
correctly up to the time it fails, without giving rise to dips/poor voltage.
Replacement of old overhead feeders can be effective as problems due to cracked insulators are
eliminated and usually the line capacity will be increased, improving voltage regulation. Replacing an old
overhead conductor is the same as building a new line along the same route, as the poles and line
headgear will also have deteriorated.
LV or MV lines cost between 14,000 and 20,000 per km but can increase due to terrain. Reliability will
be improved because a new line will be less likely to be damaged in storm conditions, but in terms of
dips, there should be little difference unless cracked insulators were the cause. In such cases, replacement
of the insulators concerned would be a more effective way of eliminating dips.
For poor voltage where the cause is an overloaded line, a rebuild in a larger construction is one option and
a booster/sectionalizing another.
FACTS devices
FACTS (Flexible AC Transmission System) devices such as dynamic and static Var compensators and DSMES (Distributed Superconducting Magnetic Energy Storage) are capable of reducing the number of
voltage dips or reducing the severity of dips experienced by end users. They are also used to mitigate

44

harmonics. FACTS devices are expensive mitigation devices with the main cost being capital and
maintenance costs incurred every year of their life time. Maintenance and operation costs can be assumed
to be anywhere between 5% and 15% of the capital cost. [104]
Load Rebalancing
Unbalance voltages are responsible for polyphase motor heating and torque pulsations. This implies
premature aging of the winding insulation material and the mechanical degradation of the ball bearing.
Extra-heating is also responsible for the derating of the motor nominal load capacity. This problem is
apparent mainly in multi-grounded distribution systems as in North America and is caused by unevenly
distributed single-phase load along feeders. The problem could come also from defective switch gear of
voltage regulators or from blown fuses of a capacitor bank.
The most common solution for voltage unbalance is to rebalance the load along the feeder. This implies a
relocation of some of the single-phase loads to a less loaded phase or a phase permutation along the
feeder.
The increase of short-circuit capacity of the feeder could reduce the voltage unbalance. This is possible in
changing substation transformer or in changing conductor size.
Maintenance Costs
Other regular maintenance costs such as insulator washing and equipment inspections can have a positive
impact on PQ but cannot be separated from routine network management.

3.3.2. Costs Associated with Improving Reliability but Not PQ

Reclosing Schemes
The use of reclosing schemes on three-phase overhead lines improves reliability by isolating the fault.
However, it also imposes voltage dips on other customers on the line, so there is a tradeoff between
increased numbers of voltage dips for all customers but decreased outages for all and particularly those
customers on fused spurs who would otherwise be shed during a transient fault. Reclosing schemes
improve reliability at the expense of PQ, and hence the cost associated with them should not be attributed
to improving power quality.
Redundant Feeders and Loop Schemes
Redundant feeders would have no effect on voltage dips but would allow a standby feed in the event of
loss of the primary feeder. Generally, redundant feeders would not be used for standby except where a
customer paid specifically for a dual radial feed whereby half the load was fed from one feeder and half
from the other, in which case only half would receive a dip in the event of a fault. Loop schemes will
provide greater reliability whether they are in a closed mesh or in a standby arrangement.
Where the network is dense, the most effective use of the capacity in the network requires looping of new
connections, which also reduces losses and maximizes loading between feeders. It also provides standby
supply in the event of a fault, but this is a byproduct, and a looped feeder in a less dense network would
normally be provided. Redundant feeders improve reliability but not PQ; therefore, their cost should not
be attributed to improving PQ.
Feeder Design Modification to Improve Reliability
This is done to a certain extent in that on a cable network, separation will be maintained between circuits
so that accidental damage to one will not affect the other cable, providing standby (i.e. avoiding commonmode failure mechanisms).

45

3.3.3. Costs for Responding to PQ Issues

The previous sections outlined the costs associated with mitigating or preventing PQ incidents. In this
section, the costs incurred after a PQ event are presented, as well as the ongoing costs associated with
facilities, which will be required should an event occur, for example call centers.
Call Centers
PQ enquires cover a wide range of power problems from large-scale outages due to storms down to
nuisance dips in voltage lasting a few cycles. Most of a call centres costs are related to the need to plan
for responses to large-scale outages, so the cost of responding to less serious and less frequent complaints
is a marginal cost of the operators time and equipment.
The cost of a call centre operator in dealing with a voltage complaint will be the cost of their time, which
depends on the duration of the call, which will be low (estimated at 10 for a typical complaint). The cost
of the operators equipment (telephone, headset, computer, database for logging calls) is a business need
and is not directly attributed to the cost of one PQ inquiry nor are operating service costs of the call centre
such as gas, water, electricity, and telephone.
Responding Crew
Not all complaints are valid and some may be resolved over the phone. However, those that cant be will
require a responding crew to investigate. A responding crew will normally install a voltage recorder for a
period of time at the problem site. The cost of the crews time will depend on how much time is spent
travelling to the site, installing recorders, and returning to their office. There are also the overhead costs
of the crews vehicle and fuel.
An estimate would be 1.5 hours for travel and installation, which would double if a return journey was
needed to collect the device(s). So an average response would cost 170, including overheads. A voltage
recorder does not always need to be installed by a responding crew; it could be posted with setup
instructions, thus saving cost.
Consultation
Once the voltage recorders have been retrieved, the data that they have collected needs analyzing. The
costs involved with this process can vary depending on the time needed to establish the reason for a PQ
problem. If the PQ problem is intermittent, then it is likely the analysis process would take longer. On
average, a PQ problem will be allocated 20 hours for collecting data, analyzing, and report follow-up.
Resolution
When the reason for the PQ problem has been established, recommendations of work to be carried out
would be made to resolve the problem. In many cases, work is required because of the condition of the
connection itself, which due to its age would have required changing anyway. Hence while the work may
be triggered by a voltage complaint, it would probably have been required in any case under planned
maintenance. The cost of resolutions can range from hundreds of Euros to millions. Whether or not all
these costs are attributed purely to PQ can only be decided by the DNO on a case-by-case basis.
Occasionally, PQ issues are introduced to the network by a consumer; for example, equipment with a
high startup current (outside normal limits) can cause voltage dips, large nonlinear loads can inject
unacceptable high levels of harmonics into the network, arc-furnaces, arc-welders, and similar facilities
can cause voltage flicker, etc. In these cases, the customers would be asked to disconnect the equipment
or to pay for network reinforcements. Typically, voltage complaints requiring upgrade have been resolved
by replacing the existing transformer with a larger, low-impedance module, which would cost around
2,000 to 3,000 per customer, although other customers sharing this connection would also benefit.
Compensation
Financial compensation for poor PQ is rare; it is therefore not possible to give a typical cost. However, a
DNO seeking to quantify the cost of PQ to their business should include the full costs associated with any
cases resulting in compensation, including legal fees.

46

3.4. Summary
Facility managers and utility engineers must evaluate the economic impacts of the power quality variation
against the cost of improving performance. It is desirable for utilities to optimize equipment maintenance
subject to limited budgets.
Investment and economic losses depend on numerous parameters, and this is itself an ambiguity and
complexity factor in comparison issues regarding power quality improvement projects. Calculation of
financial damages related to system quality problems widely various from customers and facility
managers prospective. Meanwhile, the rate of estimated damage depends on the quality problems at the
related region.
In general, the main power quality issue can be identified as:
- Voltage dips
- Harmonic distortion
- Voltage variation
- Voltage unbalance
- Voltage fluctuation
- Transients
This is why from an economic perspective, voltage variations, harmonics and, particularly, voltage dips
are counted as the most important power quality problems in a system.

ACCUMULATIVE EFFECT OF DISTURBANCES

3.5. Conclusions
Consumers of electrical energy are always interested in having access to a reliable source of energy. On
the other hand, facility managers manifest high attraction to this issue based upon many reasons.
However, this desire varies for different customers such that demand for electrical energy quality is not
comparable between residential customers and an industrial plant.
One of the main tasks of any electricity utility is to provide a reliable electricity supply to its customers at
reasonable prices. The more reliable the electricity supply, the higher the price. However, if system

47

reliability is low, power interruptions and voltage dips tend to occur more often and will result in cost
impacts to the utility and to the end customers.
The balance between economical and technical considerations is therefore necessary for the utilitys
operation. The optimal reliability level will be at the balanced point between the total cost of supply and
the benefits to the customers.
The DNO managers attempt to solve PQ problems for two main reasons. First, they are bound under
current laws and standards to maintain power supply quality for customers within an appropriate range
[101]. Second, DNO managers are interested in maintaining connected load, , and thus disturbances that
interrupt end use processes are a hindrance.
In the event that the network operator is not made aware of a customers load that is causing a breach of
the power quality limits until after the load has been installed, the network operator will require that the
customer take steps to bring the power quality parameter(s) back within acceptable limits. This can be
achieved either by paying for the network operator to upgrade his network or by the customer taking
mitigation measures within his installation. The latter option is most often the most cost effective since it
can be focused on the offending item(s) of equipment, rather than the network as a whole.
The principle that the action of one customer should not unduly interfere with the supply to another
customer(s) is actually enshrined in national legislation of some EU members. Therefore the network
operators have a statutory duty to ensure that the provision of a service to a particular customer will not
cause the quality of other services to fall outside of recognized limits.
In a small number of EU countries energy regulators set standards that are different from those indicated
in the EN 50160. Moreover, EU energy regulators also impose standards for potentially disturbing
customers, as well as for requests by customers of individual voltage quality verifications. For details,
refer to CEER Benchmarking Reports (2005, 2008) [4, 5].
Electricity utilities are investing regularly on refurbishment and improvement projects on the power
network to reduce voltage dips. For each of these investments, a detailed cost justification and business
case is needed. For this to be done, it is essential that the benefits of improved power quality to both
utilities and the end customer be quantified.

48

4. Methodology for Collecting Power Quality Economic Data

4.1. Introduction
This chapter deals with methods for collecting economical data, separating end user perspective from
distribution network operator (DNO). For both of them, the type of economical data and the methodology
to collect them vary in dependence of multiple factors, like activity sector, type of disturbance, PQ
phenomena under consideration, and required level of assessment accuracy.

4.2. Importance and Motivation

The knowledge of economic data is at the basis of the economical analyses on different aspects of power
quality (PQ). Any method used for estimating the economical costs, for deciding solutions for improving
PQ levels, for investing in reinforcement of the network starts from economical data that has to be
properly collected. Both end users and DNO are affected.
For both these categories the first question to answer should be: Why do we need information on PQ
economic data? Answering this question allows focusing on the type of data to collect, the most adequate
format, the time horizon of the collection, and the most efficient way for collecting them. This last aspect
is generally neglected assuming that, as in other economical investigations, the mode to obtain the
information has no effect on the results. Instead, in the specific case of PQ economical analysis, the way
can strongly affect the activity success. For example, sending by mail a questionnaire to an industrial
facility that has not yet experienced a major PQ event can fail. In fact, the PQ costs can remain hidden
until a disruptive incident, and the industry management does not perceive the importance of the analysis.
This frequently happens for quasi-stationary disturbances like harmonics or low-frequency voltage
variations. Moreover, also in the case of customers conscious of the importance of the investigation, the
questionnaire must reach the right persons of that facility to obtain the right information.
The most common economical analysis related to PQ is the quantification of the costs of disturbance
effects. Economical quantification of the effects of PQ events that have already happened or estimation of
future effects of PQ events that have not yet occurred are more and more frequent for both users and
DNO. Further economical analyses can be based on the following reasons:

Becoming conscious of the magnitude of PQ costs, which practically may or practically may not
affect productivity of a company.

Statistics and previous experiences may be helpful, but a very well known principle is that two
companies operating in the same sector will hardly be equally vulnerable to PQ disturbances, and thus a
cost survey is needed.

More and more often, PQ becomes a subject to contract between a user and a supplier. Costs of
PQ are needed to quantify so-called willingness to pay, which is a measure of a value of improved PQ for
which the user is going to pay a premium price.

In case of a failure caused by a PQ event that lays responsibility at the supplier according to
contract for electric power supply, the supplier should compensate for the losses incurred. These losses
will be calculated ex post, but an earlier cost survey may help in preparation to this calculation and its
precision.

Finally, the knowledge on the cost of PQ will help to minimize these costs and optimize PQ cost
with the cost of mitigation. Efforts to minimize PQ cost are always welcome, and sometimes they do not
require any substantial investment. However, to start these efforts, the knowledge is needed where to
focus exploration. While increasing the immunity of a single relay, which may be responsible for costly
process interruptions, is not really an investment, sometimes costly efforts are needed to secure
uninterrupted production processes. The methodology leading to unmitigated PQ cost and mitigation cost
optimization is usually called investment analysis into PQ solutions.

49

Collecting PQ cost data is not trivial process. The process can be either retrospective or planned for the
future. Planning this process depends on the activity sector that the company represents and other factors
described in this chapter.

4.3. End-User Perspective

As far as end users are concerned, the activity sector plays an important role in preparation for data
collection because it requires understanding of the production or activity process and particular focus on
certain cost categories and the data-collection method. The economic data that should be collected is not
limited to financial consequences of PQ problems but includes also savings, which are a side effect of
no use of electricity, other raw material, or staff resources during process interruptions. More economic
data refers to the cost of PQ mitigation/prevention, e.g. maintenance cost of existing UPS, disposal costs,
etc.
Moreover, an appropriate long-term analysis should include indirect consequences such as contractual
penalties, loss of reputation / brand, loss of traditional strategic customers, etc.
Historical information on a site turnover, profitability, assets value, capital cost, electricity bills, electrical
system maintenance cost, and past investments in PQ mitigation cost will be helpful to extend practical
use of data and data analysis. Also, other than monetary data like employment, working time system,
electrical system configurations, power and energy quantities, and loading, data is necessary to complete
some calculations but also to analyze and benchmark the PQ impact on site activity.
Data can be collected either on certain time interval basis, most practically annually (or pro rata annual
basis when the frequency of disturbances is less than once per year), or on cost-per-event basis, mainly
depending on the type of disturbance.
For all PQ consequences, the methods to be followed can be of two types: deterministic or probabilistic.
Deterministic methods are adequate when all the items of the analysis, from the operating conditions of
the system to the discount rate value, are known without uncertainty. This can be the case of ex post
analyses performed on existing systems whose operating conditions are repetitive and well-stated. Some
real cases can refer to industrial systems. Probabilistic methods are instead needed when some of the
problem variables are affected by uncertainties. This clearly happens for non-existing systems or also for
existing systems where some expansions have to be planned. However, technicians are often involved in
estimating the costs for the future operation of existing systems when both cash flows and operating
conditions of the system vary over a range and thus introduce a degree of uncertainty.
In the following the main technical and economic data to collect are summarized, the reader can be
helped also by the Appendix 4 that indicates a way for structuring the data collection process.

4.3.1. Technical Data

The collection of the technical data depends on the method used for estimating the costs due to PQ
disturbances. Following the approach shown in Chapter 2, it is suggested to separate the methods in
function of the type of disturbance. In the following, events from variations are distinguished, and in
particular well refer to the technical data needed for the following PQ disturbances:

Voltage dips and short interruptions

Harmonics
Current and voltage unbalances

With reference to voltage dips and short interruptions, all the methods shown in Chapter 2 involve the
estimation of the voltage-dip performance of the supply system and the evaluation of the effects of
voltage dips on components and equipment. The performance of the supply system in terms of voltage
dips can be assessed by measurements and by simulation.
Regarding the measurements, the actual standards IEC 61000-4-30 [117] and IEC 61000-4-7 [116] define
the class of instruments and the methods to detect, measure, and post-process the data. The most

50

important output of such an analysis is in the form of a voltage-dip performance chart (Fig. 4.1), tables
that furnish the number of voltage dips in function of duration and amplitude (Fig. 4.2), voltage-dip
pattern with time of the day (Fig. 4.3), and plots of daily variation in number of voltage dips (Fig. 4.4).

Fig.4.1: Voltage-dip performance chart [122]

Fig 4.2 reports the national average number of voltage dips measured per Voltage Quality Recorder
(VQR) in Italy in 2007, by the QUEEN monitoring system [118].
Residual
voltage u (%)
90 > u 80
80 > u 70
70 > u 40
40 > u 5
5 > u 1
Total

10 - 200

200 - 500

Duration (ms)
500 - 5000

37,7
19,9
38,8
12,5
0,3
109,2

5000 - 60000

5,5
2
4,1
0,7
6,6
0,8
2,6
0,4
0
0
18,8
3,9
Year 2007, around MV 400 measuring points
Fig.4.2: Voltage-dip performance chart [118]

0,1
0
0,1
0
0
0,2

Total
45,3
24,7
46,3
15,5
0,3
132,1

Fig. 4.3: Voltage-dip pattern with time of the day [119]

51

Fig. 4.4: Daily variation in number of voltage dips [119]

When measurements are not available, simulation methods can be used to obtain the needed technical
data. The two main methods are the Critical Distance method and the Fault Position method. Both
methods are based on the simulation of the system in short-circuit conditions for the assigned position of
fault. Consequently, to apply any of these methods, all the technical data for short circuit analysis is
needed.
Regarding the effects of voltage dips and short interruptions on the equipment and on the process, two
main types of information are needed: the voltage-tolerance curve of the equipment and the connection of
the equipment inside the process. This information allows someone to ascertain the most critical
equipment with respect to the stopping of the process that is the most important effect of voltage dips
inside an industrial premise.
Regarding the effects of harmonics, again, the technical data can be obtained by measurements or by
simulations. Measurements have to be done with respect of EN 61000-4-30 [117] and 61000-4-7 [116];
simulations can be performed in deterministic scenarios (usually selecting the worst condition) or in
probabilistic scenarios. In the latter case, the probabilistic description of voltage and current harmonics in
terms of probability density functions is needed. As evidenced in Chapter 2, usually several
simplifications can be introduced to avoid excessive complexity of the study.
The main information is: current and voltage harmonics (amplitude of each single harmonic component)
applied at all the equipment of the system, the type of equipment exposed to harmonics (cable line,
capacitor, transformer, electrical motor), and all the characteristics of the component needed to use
formulas reported in Chapter 2 (see details in the Appendix 2.J).
Regarding the effects of current and voltage unbalances, the following data are needed:

Power losses in the j element (equipment, load) in the considered facility due to voltage and current
unbalance.
Energy losses in the j element due to voltage and current unbalance.
Aging of element insulation due to voltage and current unbalance.
Reactive power reduction due to unbalance.

4.3.2. Economic Data

The economical data that has to be collected to estimate the costs of PQ disturbances can be divided into
two main categories with respect to the final effects of the PQ disturbance:
i) cases when the PQ disturbance does not cause the stop of a process;
ii) cases when the PQ disturbance causes the stop of a process..
If the PQ disturbance does not cause the stop of a process, then only the costs of additional losses and the
premature replacement of damaged components have to be computed. These computations are straight

52

forward and can be deduced from formulas in Chapter 2. Mainly the economic data needed in this last
case are:
-

for the additional losses: price of energy, variation rate of energy price, discount rate;
for the premature ageing: price of damaged component to substitute; variation rate of the
component price; discount rate.

If the PQ disturbance causes the stop of a process, then the corresponding cost has to be computed. This
quantity can be named in different ways ; for example in [123] it is called COD that is Cost of Down
time; in the IEEE Std 1346 [124] it is called Cost of disruption, in [57] it is called Economical Damage.
In the following two main models, called in the following as model A and model B, are presented that
evidence all the economic data to collect. The first model is more general and can be applied to
continuous and non continuous processes; the second method is more adequate for continuous process.
Model A
The process interruption cost, namely PIC, for each event is expressed as:

PIC = A1 + A2 + A3 + A4 + A5 + A6 A7

(4.1)

with the following meaning of the symbols :

A1 = cost of work in progress;
A2 = cost of the labor;
A3 = cost of process slow down;
A4 = cost of process restart;
A5 = cost of equipment;
A6 = other cost;
A7 = savings.
In the following each cost component in (4.1) is described to evidence which are the economic data to
collect.
A1
Work in progress
Work in progress (WIP) represents the lost or wasted work due to a process disruption; the corresponding
cost CW is given by:

CW = W 1 + W 2

(4.2)

where:
W1 is the cost of unrecoverable WIP;
W2 is the cost of reworking recoverable WIP to a usable standard.
When production and services in progress are partially wasted, W1 describes only that part which cannot
be recovered; irrecoverable means that the (semi-finished) product of an interrupted process will not be
repaired, used in a further process or sold as a lower quality product.
The model to use for computing W1 is:

W 1 = M + E + L WIP1

(4.3)

where:
M:
unrecoverable material lost, consisting of purchase price cost plus overhead cost of purchase plus
site transportation, less scrap or residual value;
E:
energy cost unrecoverably lost in WIP in /kWh;
LWIP1: labor cost defined as

53

LWIP1 = ni ( Li + Oi )

(4.4)

i =1

where:
P:
ni :
Li:
Oi:

number of the i different processes/operations affected by unrecoverable lost;

hours of wasted labor consumed in each ith process;
hourly depreciation rates of fixed assets;
hourly overheads which express rental cost of equipment owned or used by the company.

With reference to the item Oi, it is important to evidence that, in the simplest case or where differentiation
into processes makes only negligible calculation difference, this will be the number of wasted labor hours
multiplied by the cost of labor, including overhead costs.
Both M and Li are expressed in monetary value.
For that part of the WIP that can be recovered, W2 represents the cost of labor required to complete the
product to normal standard.

W 2 = ni 2 ( Li 2 + Oi 2)

(4.5)

i 2=1

where:
:
ni2 :
Li2:
Oi2:

number of the i2 different processes/operations affected by recoverable lost;

hours of labor needed in each i2th process to complete the product;
hourly depreciation rates of fixed assets;
hourly overheads which express rental cost of equipment owned or used by the company.

It is crucial to assess how much of WIP can be recovered; during surveys staff may underestimate both
W1 and W2.
In reality there is often enough spare capacity to allow production to return to normal levels within a
reasonably short time, but this may not be the case for time-sensitive or seasonal goods or where fresh or
perishable produce is being processed.
Establishing W1 and W2 requires an in depth analysis of cost elements. One practical approach would be
to monitor production costs for a period following an outage and compare them with costs for a similar
period with no outages. The balance between W1 and W2 is sometimes difficult to assess because the
decision to reuse or scrap WIP is subjective and may depend on conditions at the time; for example, if
raw material were in short supply or on long lead times, WIP would be more likely to be reused.
A2
Labor
The cost of lost or idle labor is the cost of staff who are unable to work due to a process interruption,
starting from the moment of interruption and ending when normal process activity resumes. It is
indicated with the symbol LOUT as:

LOUT = (ni 3 ( Li 3 + Oi 3) n'i 3 ( L' i 3 + O'i 3))

(4.6)

i3

The meaning of symbols in (4.6) is analogous to the one of the formula (4.5).
Symbols marked with a prime () indicate terms which account for the redeployment of labor to other
tasks (not related to the stoppage) or the employment of additional labor to aid recovery of the process.
If the staff responsible for the i3th operation or process is completely idle and no additional labor cost will
be required to compensate for lost time, the prime value will be zero.
If the staff is redeployed to other tasks which are necessary but are not stoppage related, the difference in
the working time, labor and overhead rates are accounted for in the prime terms which would be

54

subtracted from the non-prime elements. If additional labor was required to recover from the stoppage,
the prime terms would be added to the non-prime terms.
A3
Process slow down
This cost subcategory can be used either as a supplementary element to process interruption costs or as a
specific alternative approach for some sectors. It is a supplementary element, for example, when a
process is restrained by the failure of another. In the case of this cost component is used as an alternative
approach to the cost of interruption, care must be taken to avoid overlap with other process interruption
costs.
If equipment or a process is affected by a power quality disturbance, activity may be reduced, e.g.
because only a fraction of parallel processes are operating, operate at a slower rate or some fraction of the
product is out of specification. The value of the related economic cost, P, is estimated per single event as:

P = P1 + P 2 .

(4.7)

In the equation (4.7), P1 is the consequential loss caused by the reduction in efficiency below normal due
to reduced production due to limitations on capacity or speed, temporarily loss of synchronization,
additional restarts and resets, re-calibration, repair and maintenance and increased defect rate; P2 is the
cost of dealing with out-of-specification product by, e.g., repair, rework, recycling or scrapping.
The component P1 is given by:

P1 =

T
n Eff
WT

(4.8)

where:
T:

the annual cost of sales (i.e. turnover minus profit). In cases where no raw materials (including
energy) are lost, the annual added value should be used. If the effect is simply to reduce the
efficiency of labor, the annual cost of labor should be used;
normal annual working time of organization. This is average time in a year when company is
WT:
working, taking account of shift patterns, holidays, etc.
n:
number of hours for which efficiency is reduced
Eff : percentage reduction of level of activity. This is the best assessment of the reduction in
performance (as a sole result of PQ disturbance) compared to normal activity from the broadest
possible perspective.
A4
Process restart
When a process is interrupted, other ancillary processes, such as heating, cooling, ventilation and
filtration, may also trip. These processes must be re-established and verified before the main process can
restart, requiring additional time and labor. Some checking procedures, such as cleaning in paper or food
production, may also be required. The corresponding process restart cost, namely PR, typically takes into
account different cost items like materials, consumables (calculated directly in monetary units) and labor
calculated using equation (4.4).
In cases where the interrupted process is restarted from an independent power supply until normal power
supply conditions are restored, all the operating costs of the generating equipment form part of the PR.
A5
Equipment
When a process is interrupted the shutdown occurs in a disorderly manner and it is possible that
equipment will be damaged as a result. Damage may be instantaneous (e.g. damage by mechanical
collision) or incremental (e.g. by overheating due to loss of coolant) leading to shorter equipment life,
increased maintenance, etc.
The value of the equipment damage. Namely E, is estimated per single event as:

55

E = E1 + E 2

(4.9)

Where E1 is the main equipment damage cost, and E2 account for additional maintenance, repair,
material and consumables costs as
E1 consists of:

cost of equipment and tools damaged beyond repair and scrapped. Scrap or recovered value should
be deducted
cost of repair, adjustment and calibration of damaged equipment and tools
cost of installation of new equipment, parts and tools
cost of hiring replacement equipment
other indirect costs of equipment damage, e.g. additional costs for backup equipment, extra
(compared to normal scenario) cost of additional overhaul in future.

This category typically includes transformers, capacitors, motors, cables, contactors, relays, protection
and control, computers, lights, tools.
E2 account for all the additional costs as a consequence of the process interruption. Examples are
bearings, pads, fuses, compressed air, water, oil. Value of this cost should be expressed directly in
monetary units.
A6
Other cost
Other process interruption related, usually indirect, costs, include:

penalties due to contract non-delivery or late delivery

environmental fines / penalties
cost of evacuation of personnel and equipment (also external)
costs of personnel injury (additional inability to work)
increased insurance rates (equipment, personnel health, liability)
compensation paid out
hidden costs from loss of:
o competitiveness
o reputation
o customer satisfaction and, as a consequence, lost opportunity of subsequent revenues
o employee tolerance
Other non-specified indirect or direct costs.

A7
Savings
It is likely that interrupted operations can save money or defer expenditure. This usually is defined in
terms of unused raw materials, unpaid wages for contracted/temporary staff or savings due to reduced
energy usage.
Because of idle time resulting from PQ related disruption, some savings might be generated. The value
of these savings as a consequence of the particular PQ disturbance can be:

savings from unused materials or inventory

savings from wages that were not paid
savings on energy bill
other specific savings.

Model B
The cost of disturbance, namely COD, that causes the stop of a process can be computed using the
following generalized formula:
COD = DC + RC + HC

(4.10)

56

COD is the cost of downtime time as a result of a disturbance, DC is the direct cost, RC is the restart cost,
and HC is the hidden cost. The tool presented here builds on the work reported in [123] and experience
gained through discussions with pharmaceutical manufacturing plant personnel. The proposed COD
estimation tool is strictly applicable to aseptic manufacturing processes. However, general principles of
the developed methodology are applicable to any continuous manufacturing process.
DC component in a COD context refers to production cost accrual at a given instance of disturbance, and
thus is a function of time and process activity. Most manufacturing sectors involve the following direct
cost components: raw material, energy, labor overheads, outage savings, and profit lost. A brief
discussion on each of these cost components is presented below.
Raw Material. Manufacturing process disruption, either partial or complete, involves a significant
amount of raw material wastage (usually referred as scrap), some cost savings of the material that would
be otherwise added to achieve a finished product, and cost of recycling of the affected product. The
damage to the product is not always observable. In the case when this happens though, product damage
can be costly if the damage is subtle and the effects take time to surface [123]. Additionally, high
disturbance frequency increases the burden on manufacturers to store excess raw material, leading to an
increase in warehouse use, space, storage, and maintenance cost.
Energy. Although electrical energy is most commonly used among industrial sectors to power/run
processes, other forms of energy consumption such as steam, gas, and coal are also widely used. The
energy cost of product damage is a sum of a plants base energy use (e.g. lighting, PCs, etc.) and
progressive energy consumption cost until the instance of plant disruption leading to product damage
[123].
Labor. The labor cost in context of direct cost is the money paid for the labor to work on the product
until the instance of process disruption. Labor contracts, usually annual or seasonal contracts, are
generally inclusive of reserve hours that may be required to make up for downtime scenarios. In the event
when there is little or no use (due to fewer process disruptions or problem mitigation) of reserve hours,
the company can claim back monies paid for unused hours.
Overheads. Overhead includes marketing and sales cost, administrative cost, annual plant maintenance
cost (e.g. equipment repair due to wear and tear, consultants, electrical contractors, etc.), and site service
cost. Overhead cost is part of the direct cost and does not include the disturbance-related repair or
damage, or restart costs, which are treated as a separate cost in this study.
Lost Opportunity. Process disruption leads to interrupted sales or severely impacted revenue flow,
resulting in delayed production schedules [123, 125]. This is usually an identifiable or observable cost.
Penalties. Occasionally, damaged product due to PQ disturbances can cause companies to be penalized
for not delivering the order on time, because it might affect the customers production line. And in some
cases, this might even upset company shares and reputation. Memory chip-maker Samsung Electronic Co.
in August 2001 reported that it could have incurred a total loss of $54.19 million in damage as a result of
a power outage [126, 127]. As a consequence, the company shares dropped more than 2% in value from
previous closing price [127].
th

th
The computation of the DC component for n process activities, j failure and u product variant

th

processed at each i process activity is described in the following. For sake of generality, the costs are
here expressed in Unity Money (UM); the same quantities are expressed in pound () in the original
version [6].

phui : Amount of product handled in % at i th process.

th
rui :
Cumulative raw material cost in UM at i process.
osui : Outage savings accrued for product handled in UM at i th process, following a

eui :

complete/partial process disruption.

th

Cumulative energy cost in UM at i process.

57

lui :
oui :
prui :

th

Cumulative labor cost in UM at i process.

th

Cumulative overhead cost in UM at i process.

Profits lost for product handled in UM at i
process disruption.

th

process, following a complete/partial

peui : Penalties accrued for product handled in UM at i th process.

prmui : Progressive raw material cost in UM at i th process ( phui rui ).
th
sui :
Progressive outage savings accrued for product handled in UM at i process, following

a complete/partial process disruption.

pec ui : Progressive energy cost in UM at i th process ( ph e ).

ui
ui
plc ui : Progressive labor cost in UM at i th process ( ph l ).
ui
ui
poc ui : Progressive overhead cost in UM at i th process ( phui oui ).
pplui : Progressive profits lost for product handled in UM at i th process, following a
complete/partial process disruption ( phui prui ).
ppaui : Progressive penalties accrued for product handled in UM at i th process ( ph pe ).

ui

Direct cost in UM at i

th

ui

process is given as,

dc ui = phui (rui + eui + lui + oui + prui + peui ) sui

(4.11)

Total direct cost is given as,

y

DC = dc ui

(4.12)

u =1 i =1

For the RC component, the costs include damage assessment cost accrued as a result of hiring either
internal or external consultants or contractors, equipment and production material and consumables lost,
damage, repair and replacement cost, wasted energy, and finally idle, restart, and overtime labor cost to
recover for lost production time. Each of these costs is discussed briefly in the following subsections.
Expert Damage Assessment. Occasionally, internal or external expert damage assessment is required
through consultants, contractors, etc.
Lost, Damage, Repair, and Replace. This category includes costs due to loss, damage, repair, and
replacement of manufacturing equipment, consumables (e.g. radiated sterile packs of pens, etc.), or
production material (e.g. plastic containers holding materials).
Restart Energy. This is the energy consumed by all or part of the plant from the moment of failure until
the system is brought back to normal operation.
Idle and Restart Labor. Labor hire can be hourly, seasonal, or annual, depending on the nature of
industrial sector, product, and the individual manufacturing plants labor hire practices. Seasonal and
annual hire contracts usually take into account certain number of lost hours in account, which is either
claimed back or left unclaimed. Either claimed or unclaimed, this is still an additional cost of downtime,
which is not clearly observable. However, when the hire is usually hourly or in scenarios where the plant
needs labor in addition at an hourly rate to restart or regain normal operation, the cost of this additional
labor is clearly observable.
The computation of RC component can be effected as follows.
th
edauij : Expert damage assessment cost in UM for j th failure at i process activity.

58

ldrruij : Lost ( lo ), damage ( da ), repair ( re ) and replace ( rp ) of parts, production material etc, for j th
th

failure at i process activity, in UM ( louij + dauij + reuij + rpuij ).

enqij : Energy cost in UM consumed from instance of failure to restart for j th failure at i th process
activity.
rlcqij : Idle labor cost ( il ), restart labor cost ( rl ), labor overtime to recover at later date ( rlo ) in UM
for j

th

th

failure at i process activity ( il uij + rluij + rlouij ).

Cost of restart for j th failure at

i th process activity is given as,

rcuij = edauij + ldrruij + enuij + rlcuij

(4.13)

Total restart cost at any given instance for j

given as,

th

failure selected/assessed at each i

th

process activity is

(4.14)

RC = rc uij
u =1 j =1 i =1

For the HC component, the costs usually result from damage, or losses, not immediately or readily
observed [6]. One method of quantifying this factor is through surveys conducted among plant personnel
and customers, and comparing availability score among competitors.
Decreased Competitiveness, Reputation, and Customer Dissatisfaction. High frequency of process
disruption leads to poor product quality and reduced availability (usually quantified using Overall
Equipment Effectiveness index, which is a product of equipment availability, performance, and yield),
which in some cases can lead to delayed production schedules. These shortcomings certainly decrease
competitiveness, reputation, customer satisfaction, and loss of customer loyalty that can prove very costly
[123] and difficult to quantify.
Employee Annoyance as a Result of Stoppages. PQ damages occasionally cause annoyance among
employees, especially disruptions leading to significant personnel involvement, cleaning, overtime work
schedules to recover lost time, etc. This factor is not readily quantifiable in terms of reduced efficiency.
The computation of HC component is as follows.

rct ui :

th

Retained competitiveness in p.u. from nominal as a result of lost product at i process

activity.

rrt ui :

th

Retained reputation in p.u. from nominal as a result of lost product at i process

activity.

rcsui :

Retained customer satisfaction in p.u. from nominal as a result of lost product at i

process activity.

ret ui :

Retained employee tolerance in p.u. from nominal as a result of lost product at i

process activity.

Hidden cost factor for j

th

th

th

th

failure at i process activity is given as,

hcf uij = rct uij rrt uij rcsuij ret uij

(4.15)

Total hidden cost at any give failure instance is given as,

59

HC = hcf uij
u =1 j =1 i =1

Other factors can influence the COD estimation, as listed in the following:
Hit Rate and Miss Rate. The typical definitions for hit rate and miss rate are not readily available in
manufacturing literature. The following definitions were adopted following correspondence with typical
continuous manufacturing plant personnel.
Hit rate is the ratio of intended use of resources used and sum of intended and un-intended (e.g. process
failures) use of resources. Miss rate is the ratio of unintended use of resources used and sum of intended
and unintended use of resources. Thus miss rate is given as,
Miss rate = 1 Hit rate
Pass Rate and Fail Rate. As before, typical definition of pass rate and fail rate is not readily available
in manufacturing literature. However, use in various research publications [128, 129] suggests the
following definitions of these terms.
Pass rate is the ratio of product number or batches that passed a set criterion and total number of product
number or batches initiated. Fail rate is the ratio of product number or batches that did not pass a set
criterion and total number of product number or batches initiated. Thus fail rate is given as,
Fail rate = 1 Pass rate

4.4. DNO Perspective: Data Collection

As far as DNOs are concerned, the first economic aspects linked to PQ are the consequences of noncompliance to certain PQ levels defined by a contract with an end user. The costs can be directly
identified in the contract as a penalty to be recognized to the customer but also include further elements.
For solving the customer complaints, the utilities must face several costly activities that include personnel
for communication, measurement campaign, data analysis, and so on.
Despite these, they also suffer from losses of unsupplied energy when end users are not using electricity
for their activities because of interrupted power supply as a consequence of inadequate PQ. The capital
and operating expenses of mitigation equipment and systems improving PQ are further elements of cost
that have to be properly collected.
The objectives for data-collection for DNO are:

Quantify the existing level of power quality.

Identify potential power quality issues.
Identify potential improvement opportunities.
Quantify costs of poor power quality.

The data to be collected are very copious and different. Appropriate forms help to collect these data. In
the following several tables are shown examples of possible forms.
Some preliminary information on the DNO are useful; some of the most important are:
Costs incurred while answering/responding to customer PQ enquiries/complaints, including costs
of:
- Call centers
- Responding crew
- Inspection
- Monitoring
- Consultation
- Mitigation

60

- Follow-ups
Costs incurred to maintain/improve quality of supply
- Fuse replacements (reliability)
- Reclosing schemes (reliability)
- Fast switching with instantaneous protection (voltage sags)
- Pole and tower grounding improvements (voltage sag)
- Increased sectionalizing (reliability and voltage sags)
- Surge arrestors and transient voltage surge suppressors (transients)
- Lightning protection shield wires (transients, voltage sags and reliability)
- Conductor spacing modification (reduce faults)
- Insulate/cover overhead conductors (reduce faults)
- Underground cables (reduce faults)
- Harmonic filters (harmonics)
- Increase size of neutral conductor (harmonics)
- Zigzag transformer (harmonics)
- Redundant feeders (voltage sags, reliability)
- Fault current limiting (voltage sags)
- Capacitors for voltage regulation (voltage regulation)
- FACTS devices (voltage regulation and other)
- Animal guards (reduce faults)
- Arc suppression coil earthing with time grading protection
- Feeder design modification to increase reliability
- Protection co-ordination modification to increase reliability
- Loop schemes
- New/replacement of old feeders/transformers to improve reliability and power quality: .
Maintenance costs
- Tree trimming
- Insulator washing
- Cable and transformer maintenance
- Switchgear maintenance:
Costs to provide standard quality of supply to customer. All costs involved in order to provide a
certain/standard quality of supply to a particular customer, which could be avoided if the customer was
not connected to the network.
- Switchgear (circuit breakers, ring main units, auto reclosers, switch disconnectors,
sectionalizers, expulsion fuses)
- Transformer
- Cable
- Overhead conductors (insulated, uninsulated, and covered)
- Steel tower and wood pole structures (struktura dalekvodnih stubova I bandera)
Other data to evaluate

number of individual consumers (revenue meters);

annual revenues;

size of population served (or similar information like concentration areas);

number and type of employees.

Regarding the last point (number and type of employees), it can be useful to adopt a table like the
following.
Function
Management
Corporate services
Finance
Management Information System (MIS)
Operations
Engineering

Employees

61

Procurement
Design
Maintenance
Human resources
Customer support
Research & development
Total
Assets

Total circuit length (if possible give details for each voltage level)
Number of distribution transformers (< 1600 kVA)
Number of medium-power transformers (1600 - 5000 kVA)
Number of large power transformers (> 5000 kVA)

4.5. Conclusions
The approach presented in this chapter facilitates the collection of technical and economical data for the
economical evaluation of costs both for end-users and for DNO. In both cases it is necessary to know the
characteristics not only of the disturbances but also the characteristics of the electrical system suffering
for PQ degradation. The chapter gives all the terms to be collected for the cost evaluation of a process
stop due to disturbances. Two approaches are described in this chapter; the first one is more general and
the second one is more tied for continuous process. Both the presented approaches are useful to clarify all
the economic items to collect for computing the overall costs.

62

5. Methodology for the Economic Assessment of Power

Quality Solutions
5.1. Introduction
The costs to industrial and commercial electric power end users from unmitigated power quality (PQ) and
reliability phenomena are significant and have been well documented by detailed studies [131]. These
studies have focused principally on quantifying the actual or reported cost to businesses of PQ and
reliability phenomena that result in unplanned businesses losses brought about by such factors as process
interruptions, equipment damage, extra labor costs, and increased scrap.
Although many of these studies also inquire about mitigation equipment employed by end users to try to
minimize the business impact of PQ and reliability phenomena, in general, the numbers given for the
cost of PQ and reliability focus only on the impact of unmitigated phenomena and exclude the cost of
preventing unplanned business losses.
As such, an unprotected facility might be said to suffer significant PQ and reliability costs, while a facility
protected with, say, a double-redundant uninterrupted power supply (UPS) and N+1 backup generation
might be said to suffer no PQ or reliability costs whatsoevera circumstance that does not reflect true
business decision-making wherein the costs of outages are balanced against the costs of mitigation.
Because of this, a comprehensive strategy to evaluate optimization of overall PQ-related cost is needed,
including:

Costs to industry and electric power providers of unmitigated PQ phenomena

Costs to industry and electric power providers of prevention and mitigation of the impacts of PQ
phenomena
The key challenge is to balance both of these broad cost categories. Although any number of economic
analysis approaches may be employed to arrive at an optimum, this chapter emphasizes a simple 10-year
Net Present Value (NPV) approach, whereby all costs and benefits may be combined to determine the
mitigation scenario that optimizes todays economic performance.

5.2. Economic Analysis of the Costs of PQ

Power quality and reliability continue to grow in importance with deregulation of the electric power
industry. The factory automation and wide-spread use of electronic goods has put the electric utilities
under severe stress to improve the quality of supply and service to customers. As plant operations and
processes are becoming more and more automated, the need to keep the equipment operating is of utmost
importance. Any downtime can be directly correlated to lost production, revenue, and profits.

5.2.1. Economic Impact of Power Quality Variations

Out of various power quality disturbances, voltage dips are the most frequent [131] and cause the greatest
loss of revenue because they result in frequent malfunction of equipment. Therefore, the ability of modern
industrial process equipment to ride through voltage dips is becoming more important than never before.
Especially, the equipment used in modern industrial processes, e.g. programmable logic controllers
(PLCs), adjustable-speed drives (ASDs), computers, and motor-contactors, are highly sensitive to voltage
dips [132].
Another useful data point is an analysis conducted by EPRI based on the companys more than 500
investigations of PQ and reliability-related problems at end-user facilities. These were prompted primarily
by utilities responding to customer complaints, and the investigations have spanned the spectrum of
standard industry classifications (SIC) codes ranging from commercial buildings to transportation to food

63

processing to plastics, printing, and chemical processing. Figure 5.1 shows a snapshot of the types of PQ
phenomena that have, upon investigation, turned out to be the culprit in these investigations.
In EPRIs experience, the single most potent cause of end-user PQ problems is voltage dips or swells.
Given the number of these sorts of events documented by the EPRI DPQ study, this should come as no
surprise. The second most frequent contributor is harmonics (unwanted frequencies in a facilitys voltage
or current waveforms). The next largest contributor is grounding and other wiring issues. Collectively,
these three PQ phenomena account for more than 85% of PQ investigations conducted by ERPI over the
years.

Root Causes From 500 EPRI PEAC

Investigations
Electromagnetic Interference

2%

Other

2%
5%

Load Interaction

6%

Cap. Switching Transients

15%

Grounding

22%

Harmonics

48%

Voltage Sags & Swells

0%

10%

20%

30%

40%

50%

60%

Percent of Total
Figure 5.1 Breakdown of the power quality phenomena found in more than 500 EPRI investigations
Figure 5.2 illustrates a compilation of the sources of PQ-related complaints from customers. It is
interesting to note that only 5% of complaints were the result of complete interruptions of power, with
95% precipitated by the combined effects of voltage dips and surges.

The Most Common End User PQ Problems

Voltage Swells

1%

Interruptions
Transient Over-voltages

5%
7%

Voltage Sags
0%

87%
20%

40%

60%

80%

100%

Percent of Reported Events

Figure 5.2 Common PQ problems as reported by a large North American utility4

Basics of Power Quality and Surge Protection, Florida Power Corp., 1998.

64

5.2.1.1. Assessment and Prediction of Voltage Dips

Clearly the monitoring of voltages at power system buses is the best way to assess voltage-dip
performance. If high accuracy of the monitoring data is required, however, it may take quite a long time,
typically several years [149]. In practice, fault location and the type of fault may vary with time
depending on weather conditions and geographical location. Furthermore, power system networks,
distribution networks in particular, are changing (e.g., changing network topology, different maintenance
practice, aging of equipment). Therefore, conclusions based on historical monitoring results could yield
unreliable assessment of voltage dip performance [150].
The other possibility to assess voltage-dip performance is by using a stochastic approach based on
computer simulations. This is generally the most suitable way to assess voltage dips during the power
system planning stage when the actual system (or part of it) may not exist yet or to assess system dip
performance for different operating scenarios and loading conditions. Moreover, it does not take many
years of monitoring to obtain the required accuracy of the dip-performance data. These are clearly
advantages over the monitoring approach.
Along with the stochastic approach, the method of fault positions and the concept of the area of
vulnerability are generally used to assess and understand the system voltage-dip performance. The
method of fault positions is a simple way to determine the expected number of dips and their
characteristics at power system buses. In this method, system fault analysis including symmetrical and
asymmetrical faults is initially performed at each fault position. Each fault position represents faults in a
specific part of the system. Remaining voltages and phase angles at each bus in the system during the
fault are determined; and the related phase angle jumps are computed. After taking into account
corresponding fault rate at each fault position and fault clearing time, the expected number of dips as a
function of magnitude, duration, and phase shift is calculated [151, 152]. Accuracy of this method
depends on modelled fault positions in the system. Different fault positions will result in different
magnitudes of dips according to system impedance, fault impedance, and type of fault. For the higher
accuracy of the results, more fault positions need to be used [153]. The network model and the reliability
of the historical fault statistics data used in the analysis are the other factors that will govern accuracy of
the results.
The methodology used is based on the guidelines recommended by the IEEE Std 493-1997 (Gold Book).
Two different approaches are used to calculate the total expected number of dips due to the faults inside
the area of vulnerability and due to the faults along the boundary crossing lines. Dip performance within
the area is assessed by using equations (5-3) to (5-5). A combination of the method of fault positions and
exponential fault distribution pattern along the boundary crossing lines is used in determining the number
of voltage dips following the faults. The fault rates at each location along the boundary crossing lines are
calculated using the exponential distribution pattern and then applied to the corresponding fault positions.
After taking into account calculated fault rates, the expected number of dips due to the faults along the
boundary crossing lines is calculated.
4

NSBF = i=1
4

j=1

B BFR

NSLF = i=1 j=1 L LL LFR

With probabilistic occurrence of a fault included, equations (5.1) and (5.2) become:
4

j=1

k=1

NSBF = i=1
4

B PO BFR

NSLF = i=1 j=1 k=1 L LL PO LFR

CNS = NSBF + NSLF
Where B
L

(5.1)

(5.2)

(5.3)

(5.4)
(5.5)

= Bus inside the area of vulnerability

= Line inside the area of vulnerability

65

LL
PO
BFR
LFR
CNS
NSBF
NSLF
i
n
j
k

= Length of the line inside the area of vulnerability

= Probabilistic occurrence of fault
(1 for symmetrical fault and 1/3 for asymmetrical faults)
= Bus fault rate
= Line fault rate
= Cumulative number of dips
= Number of dips due to the bus faults
= Number of dips due to the line faults
= Type of fault
= Total number of buses or lines inside the area of vulnerability
= Bus or line inside the area of vulnerability
= Number of phases

5.2.1.2 Overview of Equipment Sensitivity

In order to establish the consequences of voltage dips at a given point of common coupling (PCC),
voltage-dip characteristics are compared with the equipment voltage-tolerance (sensitivity) curves to
assess its performance (i.e., whether the equipment would trip/malfunction or ride-through the dip of
specified characteristics). This analysis consists of preparing a dip-performance chart (i.e., magnitudeduration chart) for a particular bus in the system and superimposing it on the equipment voltage-tolerance
curves and thereby obtaining a single graphic display [134-139] from which equipment ride-through
capabilities could be determined.
The information about the sensitivity of individual equipment can be obtained either from the equipment
manufacturer, available standards, or through laboratory tests. In case of non-availability of prior
information, testing is the most reliable and efficient way to identify equipment sensitivity to voltage dips.
However, determining equipment sensitivity is the most difficult task when assessing voltage-dip
consequences because different categories of industrial equipment have different sensitivities to voltage
dips [136]. Furthermore, different devices, even belonging to the same equipment category, do not exhibit
the same sensitivity to voltage dips [131, 136-147]. On the other hand, it is not reasonable to test all the
sensitive devices in customer facilities. Therefore, devices are classified into various categories based on
device type. Testing of an adequate number of devices representing one equipment category justifies
generalization of the acquired results. Because different brands of the same equipment type and even
different models of the same brand often have different sensitivity, typical sensitivity data with
appropriate statistical deviation and error parameters can be determined for a particular equipment type.
The sensitivity information so obtained needs to be updated continuously as and when more test results
are made available.
The evaluation of the impact of voltage dips at particular site in the network involves three basic steps fault analysis, voltage-dip analysis, and economic analysis.
In fault analysis, the method of fault-positions [148] is used in which various types of faults (symmetrical
and asymmetrical) are simulated at numerous locations throughout the system network and corresponding
expected voltage magnitudes and durations (assuming 100% reliable primary protection, i.e., the duration
of voltage dips is determined by the primary protection settings) are determined at various network buses.
In subsequent voltage-dip analysis performed at a point of common coupling (PCC), the frequency of
dips of specified dip magnitude and duration over a period of interest is determined by associating it with
the historical fault performance (fault per km per year) of all network buses, overhead lines, and
underground cables. This information is generally available from historic data obtained through long-term
monitoring at respective locations in the network. The corresponding duration of voltage dips depends on
fault-clearing times of protective devices used in the power system network. (In this analysis, it is
assumed that the primary protection is 100% reliable and that all the faults are cleared by the primary
protection.)
The final and the most crucial step for the economic assessment of power quality requires the information
about the consequences of expected voltage dips on the performance of industrial processes. In order to
determine whether the equipment will trip/malfunction or ride-through the dip of specified magnitude and
duration, expected voltage dips are compared with the sensitivity of process equipment connected at a
given bus. This procedure requires preparing a dip-performance chart for a particular bus in the system

66

and coordination of the customer equipment responses with these voltage dips on a single graphic display
[135]. For this purpose, the precise information about the equipment sensitivity is required for the
accurate quantification of their nuisance trips due to voltage dips. The information about the equipment
sensitivity may be gathered from the equipment manufacturer or by testing. The testing of each and every
piece of equipment is neither justifiable nor possible. Therefore, sensitive industrial equipments are
classified into various equipment categories based on equipment types, and then the testing is performed
on a suitable number of equipment picked up randomly from each category. However, even though the
equipment may belong to the same equipment category, it might not exhibit the same sensitivity to
voltage dips [132]. This makes it difficult to develop a single standard that defines the sensitivity of
process equipment. In addition to this, it is also possible that a process may get disrupted due to tripping
of individual equipment or it may require the tripping of a group of equipment depending upon their
interconnections. Therefore, for any assessment of financial losses incurred in a customer facility due to
voltage dips, the precise counting of process (not individual equipment) trips is essential. The
probabilistic assessment of the number of process trips incorporates the uncertainty coupled with the
equipment sensitivity as well as the uncertainty associated with possible connections of various
equipment involved in an industrial process.
The equipment sensitivity to voltage dips is usually expressed only in terms of the magnitude and
duration of the voltage dip. For this purpose, the rectangular voltage-tolerance curve (as shown in Fig.
5.3) can be used. It indicates that a voltage dip deeper than the specified voltage magnitude threshold
(Vmin) and longer than the specified duration threshold (Tcrit) will cause malfunction (or trip) of the
equipment. However, in practice, most of the equipment, e.g., motor-contactors and household electronics
items, would have non-rectangular voltage-tolerance characteristics [144-146]. Other two parameters,
which may be detrimental to sensitivity of some of the industrial equipment (though to a lesser extent
than voltage-dip magnitude and duration) such as motor contactors, are point-on-wave of dip initiation
and phase-shift during the dip [135, 144-146].
V
1.0
Normal operation
Vmin
Malfunction / Trip
0

Tcrit

t (ms)

Figure 5.3 Equipment voltage-tolerance curve

5.2.1.3 Uncertainty Involved with Equipment Sensitivity
After laboratory tests, when the voltage-tolerance characteristics of all the equipment from the same
equipment type are drawn on a two-dimensional (magnitude/duration) chart, it is found that all the
equipment belonging to a particular equipment category do not exhibit the same sensitivity against
voltage dips [144-147]. Even the same equipment acquires different sensitivities depending on power
system conditions and loading of the equipment. However, most of the equipment exhibit, more or less,
perfect rectangular characteristics as a first approximation. Voltage magnitude-threshold and durationthreshold may vary between Vmin and Vmax and between Tmin and Tmax, respectively. Therefore, the
voltage-tolerance curves of these equipment may occur anywhere inside the shaded region on a voltagedip magnitude v/s duration chart shown in Fig. 5.4, such that the knee point of curve always remains
inside sub-region C.

67

Voltage (%)

Vm ax
C

V m in
A
0

T m in

Tm ax

D u ra tio n (m s .)

Figure 5.4 The region of uncertainty for voltage tolerance curves of sensitive equipment
5.2.1.4 Counting of Equipment Trips
In counting the number of equipment trips/malfunctions, the number of dips occurring at the customer
site below the voltage-tolerance characteristic of the equipment should be taken into account. The random
behavior of the equipment (represented by the shaded area in Fig. 5.4) poses a problem; i.e., which
voltage-tolerance characteristic should one consider as the equipment may not have a single sensitivity
curve but a family of curves inside the associated (shaded) region of uncertainty? This uncertainty of
voltage-tolerance curve location inside the region can be taken care of by knowing the likelihood (i.e.,
assigning certain probability to each possible curve) of the individual sensitivity curve location inside the
possible range.
Method 1: Ordinary Probability Approach
The equipment sensitivity is a bivariate random variable (T,V) where T and V are two statistically
independent discrete random variables. (Note: In calculating voltage dips at different buses, the operation
of protection system was typically not modeled. It is assumed that all faults are cleared by primary
protection, and that fault clearing times are fixed for specific voltage levels, i.e., 80 ms at 132 kV, 150 ms
at 33 kV, and 300 ms at 11 kV. Based on this, one can assume that T and V are independent). T is the
voltage duration-threshold varying between Tmin and Tmax, and V is the voltage magnitude-threshold
varying between Vmin and Vmax. Therefore, if fX(T) and fY(V) are the probability density functions for
random variable T and V respectively, then the joint probability density function for the bivariate random
variable (T, V) is given by Bayes rule [154] as:
fXY (T, V) = fX(T) fY(V)

(5-6)

For the equipment having rectangular voltage-tolerance characteristic, the knee of all characteristics
resides inside the sub-region C (see Fig. 5.4). This means that the total sum of probabilities (fXY (T, V))
of occurrence of the knee of the equipment characteristics being inside the sub-region C is unity. The
general trend, i.e., the location of the voltage-tolerance curve inside the shaded region for particular
equipment or equipment-type (i.e., whether the equipment has high, low, moderate, or uniform
sensitivity), can be represented by various types of probability density functions [155] for the two random
variables V and T as follows:
a) Uniform sensitivity: If there is equal probability that the equipment voltage tolerance curve may
assume any location within the region of uncertainty, it can be represented by assuming fX(T) and fY(V)
to be uniform probability density functions for V and T within their respective ranges.
b) Moderate sensitivity: This type of sensitivity can be expressed by assuming fX(T) and fY(V) to be
normal probability density functions so that there is higher probability that knee of the equipments
sensitivity curve will occur in the centre of the region of uncertainty, i.e., sub-region C.
c) High sensitivity: If probabilities are assumed in exponentially decreasing order from high voltagethreshold to low voltage-threshold and from low duration-threshold to high duration-threshold, it will
represent highly sensitive equipment having very poor ride-through capabilities against voltage dips.

68

d) Low sensitivity: Exponential distributions assumed opposite to the previous case (reverse exponential
distributions) will represent equipment with low sensitivity, i.e., having very good ride-through
capabilities against voltage dips.
After calculating different joint probability density functions using (5-6), the expected number of trips
(ENT) of particular equipment (considering one type of sensitivity (a) (d) at a time) can be determined
as follows:

ENT (T , V ) = f XY (T , V ) N (T , V )

ENT = ENT (T , V )
T

Where,

Tmin T Tmax and V min V V max

(5-7)

(5-8)

Where fXY (T, V) is the joint probability density function for the knee of a specific voltage-tolerance
curve inside the region of uncertainty such that fXY=1and N (T, V) is the number of expected
equipment trips (with corresponding voltage tolerance curve) as a result of voltage dips at a given
location (PCC). Only one voltage-tolerance curve is considered at a time. (Example: Assume that the
probability of equipment having a voltage-tolerance curve defined by 60% magnitude and 100 ms
duration is f100,60 = 0.4. Assume further that based on calculated dip performance at a particular bus
(PCC), it is found that there will be N (100, 60) = 50 trips of particular equipment having that sensitivity
curve. The expected number of trips of this particular equipment therefore will be ENT(100,60) = 20.
Total expected number of trips of a particular equipment-type at a given bus (PCC) is obtain by
summation using (5-8) over the whole range of dip magnitudes and durations defined by the region of
uncertainty given in Fig. 5.4)
Method 2: Cumulative Probability Approach
Method 1, discussed in the previous section, sums up all the trip contributions made by various possible
sensitivity curves for a particular equipment-type, considering one sensitivity curve at a time and
multiplying it with its respective probability of occurrence. Method 2, on the other hand, works on the
premise that on the occurrence of a voltage dip, the sensitivity acquired by the equipment at that moment
will decide whether the equipment will trip or ride-through that voltage dip. This makes use of cumulative
probabilities instead of simple probabilities as in the case of the Method 1.
The reasons for considering cumulative probability are discussed below.

1.0
1

No trip: p = 0

A2

Voltage (%)

C3

A1

C2

C1

?: 0<p<1

Trip: p = 1

Duration (ms.)

Figure 5.5 Expected behavior of sensitive equipment against voltage dips of different characteristics
There is an uncertainty involved with equipment sensitivity (as discussed in section II-B) because
equipment may not have a single sensitivity curve but a family of curves inside the region of uncertainty
associated with the equipment-type. A piece of equipment may have any voltage-tolerance characteristic
inside permissible range. This paves the way for the stochastic assessment of likelihood of equipment
having a particular sensitivity inside the permissible range at the time of occurrence of a voltage dip and
consequential impact on the equipment operation.

69

Let us consider six different voltage-dip events namely, A1, A2, B, C1, C2, and C3 on the voltage-dip
chart as depicted in Fig. 5.5. It is obvious from the figure that voltage dips A1 and A2 will never cause
any malfunction or trip of the equipment, and therefore the probability of equipment trip is zero.
Similarly, voltage dip event B will certainly cause the tripping of the equipment and hence the probability
of the equipment trip is unity. However, the behavior of the equipment for voltage dips C1-C3 will
depend on the actual sensitivity characteristics of the equipment at the time of these voltage dips. It
implies that there is a certain probability of equipment either surviving these voltage dips or tripping
when exposed to them. In the case of voltage dip C1, any sensitivity characteristics occurring on the left
of voltage dip C1 will result in equipment trips. Therefore, one has to consider the probability of all these
sensitivity characteristics. This can be taken care of by considering the cumulative probability in such a
way that its value increases gradually from zero (for the left-most characteristic, i.e., left hand side thick
solid line) to one (corresponding to the right-most characteristic, i.e., right hand side thick solid line).
Similarly, all the sensitivity characteristics occurring above the voltage dip C2 will lead to tripping of the
equipment, and thus, one has to consider cumulative probability (instead of probability) of occurrence of
these characteristics such that its value increases from zero (corresponding to top-most characteristic) to
unity (corresponding to bottom-most characteristic). In the case of voltage dip C3, all the characteristics
falling on the left, and above C3 will cause the tripping of the equipment.
Having in mind this discussion, the variation in equipment sensitivity can be represented in terms of univariate random variable (T) in sub-region A, uni-variate random variable (V) in sub-region B, and
bivariate random variable (T, V) in sub-region C (see Fig. 5.4) where T and V are assumed to be two
statistically independent discrete random variables. T is the voltage duration-threshold varying between
Tmin and Tmax (determined by the protection settings) and V is the voltage magnitude-threshold varying
between Vmin and Vmax. Therefore, if pX(T) and pY(V) are the probability distribution functions for
random variable T and V, respectively, then the joint probability distribution function for the bivariate
random variable (T, V) in sub-region C is given by Bayes rule [156] as follows:
pXY (T, V) = pX(T) pY(V)

(5-9)

Tmin T Tmax , V min V V max

The general trend of sensitivity (e.g. high, moderate, uniform, or good ride-through) of a particular
equipment or equipment type can be represented by assuming various types of probability density
functions [155] in the sub-regions of uncertainty for one/two random variable(s), i.e., voltage threshold V
and/or duration threshold T as discussed in Method 1. For example, two types of sensitive behavior
highly sensitive and moderately sensitiveare considered in this study with the help of exponential and
normal probability density function, respectively, as depicted in Fig. 5.5.
After calculating probability distribution functions as discussed above, the expected number of equipment
trips, considering one type of equipment sensitivity at a time, can be determined as follows:
Total equipment trips =

p
T

XY

(T , V ) N (T , V )

(5-10)

Where p XY (T , V ) is the trip probability of the equipment as defined in (5-9) against the voltage dips
with dip magnitude V and dip duration T, and N (T, V) is the number of such voltage dips expected at the
specified site over specified period of time.
By comparing equations (5-7) and (5-8) with equation (5-10), it is to be noticed that both formulations
look almost identical, but equation (5-7) and (5-8) uses probability density function fXY (T, V), whereas
equation (5-10) uses probability distribution function pXY (T, V). Similarly, N(T,V) in equation (5-7)
stands for the number of expected equipment trips (with corresponding voltage tolerance curve) as a
result of voltage dips at a given location (PCC), whereas in equation 10, N(T,V) represents the number of
voltage dips expected (with dip magnitude V and dip duration T) at the specified site over a specified
period of time.
In the absence of any proper information about the type and the nature of operation of the sensitive
customers connected at the selected network buses, several assumptions can be made. The buses can be
ranked in the decreasing order of their total connected load and then classified into several different

70

groups, e.g., Group-I consisting of buses with high loads (>2MW); Group-II consisting of buses with
medium loads (between 1MW and 2MW); and Group-III consisting of buses with loads up to 1 MW.
Then, the distribution of total connected load at respective buses among different categories of customers
and the corresponding cost per dip can be assumed, e.g., for Group-I buses, 70% of the total load
connected can be assumed to be large customer loads that run continuous automated industrial processes
like chip-manufacturing plants etc. and remaining 30% comprised of general industrial loads. Group-II
buses mainly supply general industrial loads (70%), some large user load, representing steel plants,
packaging plants, bottling plants, dairies, etc. (20%), and a small amount (10%) of commercial load out of
which 5% represent large users (e.g., banks), who report huge financial losses due to voltage dips. For
Group-III buses, it can be assumed that 50% of the total load connected is residential load whose financial
losses due to voltage dips are generally small, and therefore they were not counted in the economic
assessment of the total incurred costs. Further, 20% of the connected load comprised of the industrial
load, whereas the remaining 30% is commercial load, out of which 5% represent large users (e.g., banks)
who report huge financial losses due to voltage dips, etc. To improve further the accuracy of the
economic assessment, the general trends of various customer types are also considered (see Table 5.1).
The total number of process trips after comparing their sensitivities against voltage dips experienced at a
specific location was therefore multiplied by a suitable correction factor to get the actual number of
process trips attributed to each customer category at a given bus over a year. For example, the commercial
establishments generally remain closed at least for one day in a weekeither on Sundays or on Fridays
and are open only for 10 hours a day, from 10 a.m. to 8 p.m. Therefore, a correction factor of [{(36552)/365}*10/24]= 0.3573 is used to get actual number of process trips affecting commercial activities
(i.e., a voltage dip occurrence when the commercial establishment is closed is not going to disrupt any
process). Similarly, to prevent frequent process disruption and consequential huge financial losses, large
industries (like chip-manufacturing companies or financial organizations) generally install mitigation
devices (e.g., UPS etc.), which provide ride-through for over 95% of the voltage dips. Therefore, only
about 5% of the total voltage dips per year at such customers location will still be able to disrupt their
processes.
Finally, the upper limit of maximum one trip per day is enforced on the actual number of process trips
attributed to a particular customer type (i.e. maximum number of process trips per year experienced by a
customer type is 365), whereas the initial assumption was that each trip causes 24 hours of disruption of a
production process.
Table 5.1: Consideration of customer activities
Customer type Working trend of customer
Correction
factor
Residential
Commercial
N = NT*
One day off per week
0.3573
10 hr/day
Industrial
N = NT*
Two days off
0.2384
8 hr/day
Large users
Continuous process
N = NT*
Installed mitigation devices
0.05
correct 95% of PQ
disturbances.
(NT Total number of process trips at the customer site before correction
N Actual number of process trips at the customer site before correction)
After the above-mentioned corrections for the process trips and cost criteria, total voltage dip costs for the
system considering processes with different sensitive equipment can be calculated.

5.3. End-Use PQ Solutions

A wide range of technologies are available for the mitigation of PQ phenomena. The most common
power quality mitigating technologies in use today are chemical-battery-based uninterruptible power

71

supplies (UPSs) and transient voltage surge suppression (TVSS), but a great many other types exist and
are widely used today.
Uninterruptible Power Supplies
Uninterruptible power supplies (UPS) contain stored energy (usually in the form of conventional
chemical batteries) that can provide replacement power in the event that utility power is interrupted.
Some newer UPS topologies use alternative energy storage such as flywheels, ultracapacitors, or
advanced chemical batteries. The annual U.S. market for small (<100 kVA) UPSs is generally estimated
at about $2 billion per year, and growing. There are basically three different types of devices that are
commonly referred to as UPSs: offline (standby), line-interactive, and online. Figure 5.6 provides a
schematic view of these three common UPS topologies.

Figure 5.6 The three principal UPS topologies5

1. Offline or Standby UPS
This UPS topology refers to a supply where, under normal circumstances, power is derived directly from
the utility without conditioning. When utility power fails, a battery-powered inverter turns on and
supplies power. The batteries are then charged when utility power is again available.
The pricing on this type of UPS is generally less than other topologies. Disadvantages include the
switchover timethe time required for the inverter to come online. This time can vary from one model of
standby UPS to another. Because loads are normally connected directly to utility power, this type of UPS
provides relatively poor protection from line noise, surges, frequency variations, and brownouts.
2. Line-Interactive UPS
This form of UPS conditions utility power by employing a ferroresonant transformer. It is this
transformer that acts as an automatic voltage regulator (AVR) standing between the AC input and AC
output. The AVR maintains a constant output voltage regardless of input voltage, drawing energy from its
internal battery when utility voltage is interrupted or drops too low.
5

PQTN Brief #26: UPS Mitigation of Capacitor-Switching Transients, EPRI, Palo Alto, CA: September 1995, PB-105575.

72

Besides also providing good protection against line noise, a major advantage of the line-interactive UPS
is that its ferroresonant transformer can compensate for brief voltage dips, which make up the majority of
voltage problems.
3. Online UPS
The traditional UPS topology, this form of UPS conditions all utility power through a doubleconversion (AC to DC, DC to AC) rectifier/inverter process. The upside to this UPS topology is that there
is no transition required when utility power is interrupted. Therefore, online UPSs can provide digitalquality power not possible with offline UPS systems, and generally provide the best isolation from other
utility power problems. Disadvantages are that these are more expensive, generate more heat, and are less
energy efficient than the other types of UPSs.
Ferroresonant or Constant-Voltage Transformers
Commercial power systems often contain electronic equipment sensitive to variations in the AC input
voltage. A typical way to desensitize such equipment is to install a constant-voltage transformeror
ferroresonant transformer. Unlike conventional transformers, the ferroresonant transformer is designed
such that its magnetic core becomes saturated with magnetic flux under normal operating conditions,
which maintains a relatively constant output voltage during input voltage variations such as
undervoltages, overvoltages, and harmonic distortion. The magnetic shunt shown in Figure 5.7 provides a
path from the primary winding to the secondary winding for flux that would be lost in the core of
conventional transformers. The resonating winding and capacitor shape the transformer output into a
sinusoidal waveform.

Figure 5.7 Typical components of a ferroresonant or constant-voltage transformer6

Transient Voltage Surge Suppression
TVSS devices are used to protect other equipment from the dangers of brief but potentially harmful
voltage surges, which can be caused by lightning and the switching of inductive or capacitive devices.
TVSS devices are best understood as high-voltage, high-power semiconductors. At normal voltages, they
conduct little or no electrical current. As voltage climbs, they begin conducting current. For example, a
surge arrester designed for a 3 kV system may conduct 1 milliamp at 5 kV and 10,000 amps at 10 kVa
7-fold increase in current magnitude after a mere doubling of applied voltage.
Non-Chemical Energy-Storage Technologies
In recent years, a number of energy-storage techniques have been developed that store energy in ways
other than through chemical reactions, as do lead-acid batteries. Table 5.2 lists many of these energy-

PQTN Brief #13: Ferro-Resonant Transformer Output Performance Under Varying Supply Conditions, EPRI, Palo Alto, CA:
May 1993.

73

storage technologies, their general sizing, and ride-through time (at rated load), as well as some of their
most attractive applications.
Table 5.2 Capabilities of emerging PQ technologies7
Mitigation Device
Power
Time
Large-scale motor generator 500 KVA
12 seconds
sets (500 KVA)
4160/480
Low-speed flywheel - DC
250 kW
12 seconds
output
500V DC
Low-speed flywheel - AC
output

250 kW
480 VAC

12 seconds

High-speed flywheel - DC
output

200 kW
600V DC

20 seconds

Rotating voltage restorer

3 seconds

Micro turbines AC output

2000 kW
12,470/12,470
100 kW
100 kW
600 V DC
200 kW
480 VAC
35 kVA

Dynamic dip corrector AC

output

30 kVA 1
300 kVA 3

PQ 2000 battery UPS - AC

output

1 MW
2 MW
4160 VAC
1 MVA
2 MVA
4160/12,470
Fraction kVA
1 to 1 MVA
3
230 / 480V

Ultracapacitor DC output
Fuel cells - AC output

Micro SMES - AC output

UPS (single conversion)
AC output

10 seconds
5 seconds
Continuous No
short-term rating
Continuous no
short-term rating
2 seconds in 1
minute
3 second first
event
10 seconds
10 seconds
1 second
1 second
15 minutes
battery
10 seconds
flywheel

Application
Service entry units can be
paralleled bearing maintenance.
Support for ASDs, UPSs, and
computer systems and 4-wire
system plant-wide support for
sections of large installation.
Support for ASDs, UPSs, and
computer systems and 4-wire
system plant-wide support for
sections of bearing maintenance.
Support for ASDs, UPSs, and
computer systems. No bearing
issues.
Service entry for whole plant
protection. Bearing maintenance.
Support for ASDs, UPS, and
computers systems.
Sections of load that requires
continuous power.
Sub-sections of an industrial
plant requiring ultimate security
of supply units can be paralleled.
Regular maintenance.
4-wire system critical subsections of industrial plant.
Service entry for whole plant
protection. Battery life in
question.
Service entry for whole plant
protection.
Single loads through to complete
system. Battery life in question.

Table 5.3 Field evaluation and price of emerging technologies

Mitigation Device
Field Evaluation
Price $/KVA
Where Applicable
Large scale motor
Product in manufacture
350
generators (500 KVA)
Low-speed flywheel Successful application at 160
DC output
BG&E with UPS
Low-speed flywheel Successful application
320
AC output
High-speed flywheel Successful application - 200
DC output
17year life predicted
Rotating voltage restorer Successful application
250
Ultracapacitor Successful application
200
7

Combined by EPRI PEAC from Myriad Internal and Industry Sources

74

DC Output
Fuel cells - AC output
Micro turbines - AC
output
Dynamic dip corrector AC output
PQ 2000 Battery UPS AC output
Micro SMES - AC
output
UPS single conversion AC output

Successful application
Successful application

400

Successful application
for both single and 3phase
Successful application

160

Successful application

600

Many successful
applications

300

400

Rotary UPS
A rotary UPS uses a rotating massmost often a heavy flywheel or other form of weighted shaftto
help stabilize and maintain rotation of an output generation, similar in concept to how a pottery wheel
works. These systems tend to be large and heavy. The rotating mass often shares a shaft with a hot
standby generator that is started the instant that utility power is lost. One example of a rotary UPS is the
Holec/HiTec system.8 Other versions of this concept include rotating AC restorers and some forms of
motor-generator sets.
Flywheel Energy Storage
Flywheels have been in common use for many years, but only recently were they coupled to electronics
for electrical energy storage and retrieval. Low-speed flywheels (such as Active Power9) usually contain
heavy steel flywheels rotating at 10,000 rpm or less when fully charged and can provide a few seconds of
ride-through power at rated load. High-speed flywheels (such as Beacon Power10 or AFS Trinity11) are the
emerging high-tech versions, with composite rotors operating at 50,000 to 100,000 rpm when fully
charged.
Superconducting Magnetic Energy Storage (SMES)
In a SMES system (such as American Superconductor12), energy is stored within a cryogenically cooled
superconducting magnet that is capable of releasing megawatts of power within a fraction of a cycle to
replace a sudden loss in line power. In standby mode, the current continually circulates. A power supply
provides a small trickle charge to replace the power lost in the non-superconducting part of the circuit.
When a voltage disturbance is sensed, the controller directs real and reactive power from the inverter to
the load, while automatically opening the solid-state isolation switch within two milliseconds. When the
voltage across the capacitor bank reaches a pre-set level, the switch closes. This sequence repeats until
normal voltage from the utility feeder is restored.
Dynamic Voltage Correction or Restoration (DVC, DVR)
Dynamic voltage restorers (such as S&C Purewave13 and SST DySC14) focus on augmenting voltage
during voltage dips by adding missing voltage at critical times. The theory is that because end users suffer
many more voltage dips than outages, having a device that mitigates only dips can do so more costeffectively than conventional technologies.
Ultracapacitors

http://www.hitecups.com/, June 7, 2002

http://www.activepower.com/
10
http://www.beaconpower.com
11
http://www.trinityflywheel.com/
12
http://www.amsuper.com
13
http://www.sandc.com/products/powerquality.asp
14
http://www.softswitch.com/dysc.htm
9

75

Capacitors store energy in the form of a voltage field created by electric charge on two large and closely
separated surfaces. Ultracapacitors (such as Maxwell Technologies15) employ materials that allow an
extraordinary amount of stored electrical charge (and therefore energy) in a very small space.
Other PQ-Enhancing Technologies
There are a handful of other PQ-enhancing technologies that bear mention.
Transfer Switches
Power transfer switches allow an end user to switch between alternate sources of power, whether they are
onsite generation or a second utility distribution feeder. These technologies are generally grouped into
slow switches (such as ASCO16), which arent capable of protecting the load from interruptions, and
fast switches (such as Mitsubishi17), which attempt to switch quickly enough so that loads are not
interrupted.
Extent of Use of PQ Mitigation Technologies
A number of studies have asked end users what sorts of PQ mitigation technologies they have purchased.
In all cases, the chemical-battery-based UPS has been the dominant player, usually followed by TVSS
technologies. A recent survey conducted by EPRI PEAC Corporation in the California market bears this
out (see Figure 5.8). A conventional UPS is almost universally applied in commercial and industrial
settings. Surge suppression (TVSS) is the second most common, used at roughly 1/3 of all sites.
Currently, the use of DG for PQ purposes is quite limited, but as costs for DG technologies drop, the
potential PQ benefits of DG will likely cause them to be more popular.
The rates of use in Figure 5.8 have been generally mirrored in other studies covering both broad and
narrow geographic areas in the United States.

Use of PQ Mitigation Technologies

8%

Harmonic filters

12%

Generators
Transfer switches

20%

Capacitors

20%
30%

Surge protection / TVSS

92%

Battery-based UPS

0%

20%

40%

60%

80%

100%

Percent of Respondents
Figure 5.8 Survey results: Use of PQ mitigation technologies18
The cost-analysis approach proposed in this chapter is intended to facilitate a balancing of the costs of
unmitigated PQ and reliability phenomena with the costs of preventive measures, with the goal of
achieving the highest net present value (NPV) of overall benefits and costs. Although complete
prevention of all business costs due to PQ and reliability phenomena would be a happy outcome for any
15

http://www.maxwell.com/ultracapacitors/index.html
http://www.asco.com/home.htm
17
http://www.meppi.com/eng_analysis.html
18
EPRI PEAC Corporation, Unpublished survey, May 2002
16

76

end user, it is seldom economically feasibleonly a few highly specialized industries commonly take this
approach, with data centers, financial facilities, and military facilities being perhaps the best known.
Facility planners would like to know how the improved reliability translates into more savings (or less
expenditure). Therefore, QRA methodology incorporates the NPV technique for engineering cost
analysis.
There are many benefits for using an NPV approach for evaluating PQ solutions and, from the perspective
of the authors, no significant detriments. Any element that results in a cost or profit, revenue in-flow or
out-flow, can be considered in the NPV analysis. The resulting combination of mitigation techniques
employed (including the do nothing option of no mitigation) can be weighed and the best alternative
selected or at least identified. The key to the success of the NPV approach is that all scenarios be treated
equally, with the same set of costs or benefits used for each scenario.
The number and type of cost and benefit categories that can be considered for inclusion in the NPV
analysis are virtually limitless. Some likely categories of costs that should be considered include:

Cost in lost productivity etc. of unmitigated PQ events

Capital cost of PQ solutions
Maintenance costs for PQ solutions

Some likely categories of benefits that should be considered include:

Reduced maintenance costs

Reduced scrap and material replacement costs
Reduced loss of good will, contract defaults, etc.

The number of configurations for possible PQ solutions is almost limitless. Table 5.4 illustrates some
examples compiled by EPRI.
Table 5.4 Examples of power quality problems, costs, and solutions in various industries
Customer
Type of
Type of
Solution
Cost of PQ Problem
Segment
Equipment
Power-Line
Problem
Disturbance
Commercial
Losses (Number/Cost)
Excessive
Transient
Installed
Amusement
lamps (81,255
overvoltages
TVSSs on
Equip 1987
1989
Park
lamps on site),
due to
electrical
Lamps 33,45 8,570
electric motors
lightning
panels in 1989
2$8,3 2143
(149 motors on
63
site), computer
Total installed Motor 83
2
network boards
cost of TVSSs: s
(1,540 boards
$0.14 per park Board 563
2
on site) failures
operating hour s
Electr 92.33 57.45
ical
per
per
Maint hour
hour
enanc
e
Healthcare
Failure of
Transient
Installed
Cost of Pressure
Research
pressure
overvoltage
TVSS on panel Transducer replacement:
Centre
transducer on
powering
$1,000 + Labor
autoclave
autoclave
Commercial
Office
Building
Healthcare
Hospital

Failure of fax
machines

Transient
overvoltage

Installed pointof-use TVSS

Over $100 repair for

each fax machine

X-ray tube
failures

Conducted
emissions
internal to X-

Installed
tunable filters
to dampen

$80,000 for replacement

cost of one X-ray tube

Source of
Information
Preventative
Maintenance
Survey:
Transient
Electrical
Voltage and
Lightning
Suppression for
HBJ Parks
Orlando, FL

Utility,
Healthcare
Customer, and
Autoclave
Service
Company
Utility
Utility and
Healthcare
Customer

77

Industrial
Chemical Plant
Industrial
Cement Plant
Commercial
Office
Building

Equipment
shutdowns
Computer and
programmable
logic controller
failures
Failure of fax
machine power
supplies

ray equipment
Power-line
disturbances
Voltage dips

Transient
overvoltages

emissions
Information
not available
UPSs, higherquality relays
with better
ride-through
Installed pointof-use TVSS

Healthcare
Hospital

Control system
failures, circuit
board failures

Voltage dips
and transient
overvoltages

Customized
UPS system
for imaging
system

Commercial
Office
Building

Fluorescent
lighting ballast
failures

Transient
overvoltages

Corrected
grounding
problem

Picture-Tube
Manufacturer Industrial

Downtime, loss
of production
due to process
interruption

Voltage dips
and
momentary
interruptions

Electronics
Parts for
Automotive Industrial
Aircraft
Engine
Manufacturer Industrial

Downtime, loss
of production
due to process
interruption
Downtime, loss
of production
due to process
interruption

Voltage dips

Protecting
sensitive
control circuits
throughout the
plant
MV static
switch/DVR

Paper & Pulp Industrial

Loss of
productivity +
equipment
damage +
startup time
Turnover losses

Voltage dips

Downtime due
to computer
losing track of

Wiring/Grounding inside
plant

Paper & Pulp Industrial

Fish Product
FactoryIndustrial

Voltage dips

Voltage dips
and
momentary
interruptions

Loss =
$1,000,000/minute
Loss = $1,000,000/plant
shutdown

Utility

Power Supply Repair:

$127
Cost of off-site faxing:
$25
Loss of time due to
repair: $250 Total:
$402 per fax machine
failure
Loss: $10,000/hour
Cost of UPS: $84,500
Cost of circuit board
replacement:
$20,000/board

Utility and
Commercial
Customer

Loss: $45.00/ballast +
cost of electrician to
remove and install new
ballast X 80 ballasts:
$8,000
$100,000/momentary
interruption,
$40,000/dip

Utility and
Industrial
Customer

Providing
Fluoroscopy In
The CCL During
Electrical Power
Interruptions,
Biomedical
Instrumentation
& Technology,
1995
Customer
EPRI/PEAC
Study
Customer
EPRI/PEAC
Study

$25,000 per process

interruption

Customer
EPRI/PEAC
Study

Dipproofing/CVT
and Coil Lock
circuit for
sensitive
controls
Dipproofing/CVT
for sensitive
controls

$100,000 per process

interruption

Customer
EPRI/PEAC
Study

$492,750 for 7 process

interruptions in 1996,
includes $100,000
equipment damage

Customer
EPRI/PEAC
Study

Large-scale
reactive power
compensation/U
PS,CVT/dipproofing/cogeneration/islan
ding
Isolation
transformer

Total $2,740,000
turnover losses at 8
paper and pulp mill in
South Africa in one year

Customer
South African
Power Quality
Conference

$4000-7500 lost of
production

Paper, PQ89,
page 90

78

South Africa
All Customer
Segment
Electronics
manufacturing
- Industrial
Semiconductor
Fab processing
- Industrial

batch status
Impact of PQ
on all South
African
customers
Component
damage + loss
of production
Wafer losses

Voltage dips
and
momentary
interruptions
Voltage dips
and
momentary
interruptions

Holec ridethrough Units

Total impact estimated

to be $300 million per
year; largest portion
related to voltage dips
$50,000/year for board
replacement and
$50,000/year in loss of
productivity
Annual wafer losses
$3.1 million

Detail Study
conducted by
ESKOM
EPRI PQ
Database
From Customer
Silicon
Systems Inc.

5.4. Choosing the Optimal PQ Solution

The basic approach for application of the NPV cost analysis method for evaluation of PQ mitigation
options is straightforward:
1.
2.
3.
4.
5.
6.

The annual cost of unmitigated PQ events for a facility is identified through application of the
methods detailed in Chapter 4.
The capital and, where appropriate, ongoing operations and maintenance costs for different PQ
mitigation approaches are identified.
A duration (t) for the NPV analysis is identified (the authors recommend 10 years, although
more or less may be appropriate for specific industries).
A discount rate (r) and inflation rate (i) to reflect the time value of money are identified,
These parameters are combined in the NPV equation provided below for each mitigation
scenario.
The scenario producing the highest (or least negative) NPV is identified for final analysis and,
one hopes, implementation at the facility.

The costs and benefits associated with the NPV approach are spread over the entire life span of the
equipment used. However, there is a time value associated with money. In order to make a decision, it is
important to alter the values of costs and benefits over the years to reflect at a common point in time. In
almost all engineering cost analyses, the common point in time is the present, i.e., the planning year [3].
Present worth analysis is used to determine the present value of future money receipts and disbursements.
The following equation (5-11) converts a stream of annual benefits and costs (annuities) to a present
monetary value reflective of assumptions for rates for inflation, discount, and escalation:
n

NPV = CI +
t =0

(Ctb + Ctc ) (1+ e)

(5-11)

[(1+ r)(1+i)]

Where:
NPV =
CI =
Ctb =
Ctc =
n=
e=
r=
i=

Net present value of a series of cost or benefit

components, Ct
Initial capital investment (usually expressed as a
negative amount)
Benefit component occurring at the beginning of
time period t
Cost component occurring at beginning of time
period t (usually expressed as a negative amount)
Number of time periods, usually in years
Escalation rate of C (normally same value as
inflation)
Discount rate adjusted for inflation
Inflation rate

79

NPV can be compared for different PQ mitigation options. In general, the mitigation option with the
highest (or least negative) NPV would be the most beneficial choice.

5.5. Conclusion
This chapter presents a Net Present Value (NPV) approach as recommended for evaluating different
approaches for mitigation of power quality. Although a 10-year interval for this evaluation is
recommended and used in the examples provided, it will be incumbent upon each enterprise or
organization applying this method to determine what time interval is most appropriate. Regardless,
however, the longer the interval, the more factors other than initial capital cost (such as maintenance, etc.)
will figure into the economic evaluationan approach generally encouraged by the authors.

80

APPENDIX 1
A

Common PQ Phenomena

PQ phenomena are well documented elsewhere; the following paragraphs give a brief description of the
most economically disruptive phenomena.

A.1

Categories of Power Quality Variations

The recent proliferation of electronic equipment and microprocessor-based controls has caused electric
utilities to redefine PQ in terms of the quality of voltage supply rather than availability of power. In this
regard, the Institute of IEEE Std. 1159-1995, Recommended Practice for Monitoring Electric Power
Quality, has defined a set of terminologies and their characteristics to describe the electrical environment
in terms of voltage quality. A description of the PQ categories as defined by IEEE Std.1159-1995 is
provided in the following subsections.
A.1.1

Voltage Dips and Swells

A voltage dip is a short-duration decrease of the RMS voltage lasting from 0.5 cycle to two minutes in
duration. These events are caused by faults on the power system or by the starting current of a relatively
large motor or other large load. A voltage swell may accompany a voltage dip. A voltage swell occurs
when a single line-to-ground fault on the system results in a temporary voltage rise on the unfaulted
phases. Removing a large load or adding a large capacitor bank can also cause voltage swells, but these
events tend to cause longer-duration changes in the voltage magnitude and will usually be classified as
long-duration variations.
A voltage dip is a short-term reduction in voltage. It is specified in terms of duration and magnitude of
retained voltage. Voltage dips are the result of increased voltage drop in the system caused by increased
current flow either as the result of the addition of a large load, for example the starting current of a large
motor, or due to a fault current. Those caused by large loads are generally localized, often within the same
installation, while those due to network fault currents can be widely distributed and affect a large number
of consumers. The characteristics of network dipsmagnitude and durationdepend many factors,
including the voltage level at which the fault is located, the response time of the protective devices, the
degree of network meshing, the number and configuration of transformers, etc. Most fault-induced dips
are caused by single-phase or two-phase (phase-to-phase) faults. Because three-phase faults are less
common than single- and two-phase faults, so too are three-phase dips less likely.

Figure A-1 Classification of Voltage Variations

A.1.2

Momentary Voltage Interruption

A voltage interruption is the complete loss of electric voltage. Interruptions can be short-duration (lasting
less than 2 minutes) or long-duration. A disconnection of electricity causes an interruptionusually by

81

the opening of a circuit breaker, line recloser, or fuse. For example, if a tree comes into contact with an
overhead electricity line, a circuit breaker will clear the fault (short circuit) and the customers who receive
their power from the faulted line will lose power and experience an interruption. The causes of
interruptions are generally the same as the causes of voltage dips and swells.

Figure A-2 Examples of Voltage Waveforms for Short-Duration Voltage Variations

System Faults
Customers located on a faulted feeder will experience one or more interruptions, depending on the type of
fault and the reclosing practices of the utility. For a temporary fault, one or two reclosing operations may
be required before normal power is restored. For a permanent fault, a number of reclosing operations
(usually no more than three) will occur before the breaker locks out because of the permanent fault
condition. In this case, the customers will experience a sustained interruption. Note that the interruptions
associated with successive operations of the breaker may be of varying duration, depending on relay
characteristics. This gives the fault multiple opportunities to clear. The multiple operations also give
sectionalizers the opportunity to operate. These devices typically open during the dead time after counting
a certain number of consecutive incidents of fault current within a short time period. The number of fault
currents is typically two, although it could be one if the sectionalizer is at the head of an underground
cable where all faults are assumed to be permanent.
Reclosing practices vary from utility to utility and, perhaps, from circuit to circuit. Feeders that are mostly
underground will typically not have any reclosing operations because most faults are permanent. Some
utilities are experimenting with faster reclosing times (0.3 to 0.5 seconds) for the first reclosing operation
to solve residential customer problems with momentary interruptions. (Residential electronic equipment
such as clock radios, VCRs, microwaves, and televisions can often ride through 0.5-second interruptions
but cannot ride through longer-duration interruptions.) At medium voltage levels, it usually takes a
minimum of 10 to 12 cycles of dead time to ensure that the ionized gases from faults are dispersed.
Customers located on parallel feeders (that is, feeders that are supplied from the same bus as the faulted
feeder) will experience a voltage dip for the duration that the fault remains on the line. On mediumvoltage systems, nearly all faults are cleared within one second and can be cleared in as short as three
cycles, depending on the relay settings and the magnitude of the fault current. This means that customers
on parallel feeders will experience at least one voltage dip lasting from three cycles to approximately one
second and possibly additional voltage dips if reclosing operations are required. Voltage dips are much
less severe than interruptions, and the duration of interest is only the period of time that the fault is on the
line.
If there are more than two feeders supplied from a common distribution bus, voltage dips will occur more
frequently than actual interruptions because a fault on any one feeder will cause voltage dips on all of the
other feeders.
Customers fed directly from the high-voltage system (that is, transmission-fed or large industrial
customers) usually have more than one line supplying the facility, and actual interruptions should be very
infrequent for these customers. However, these customers will experience voltage dips during fault
conditions over a wide range of the transmission system. Voltage dips caused by faults on a high-voltage
system generally have more consistent characteristics. The faults that originate in the medium- and lowvoltage systems tend to have more variation.

82

Because voltage dips can be much more frequent than actual interruptions, it is important to consider the
impacts and possible remedies for voltage dips separately from the required solutions for complete
interruptions.
A.1.3

Overvoltages and Undervoltages

Long-duration voltage variations that are outside the normal limits (that is, too high or too low) are most
often caused by unusual conditions on the power system. For example, out-of-service lines or
transformers sometimes cause undervoltage conditions. These types of RMS voltage variations are
normally short-term, lasting less than one or two days. Voltage variations lasting for a longer period of
time are normally corrected by adjusting the voltage with a different setting of a step voltage regulating
transformer tap. In addition, voltage can be reduced intentionally in response to a shortage of electric
supply.

Figure A-3 Example RMS Measurement of Undervoltage During One Day19

The root cause of most voltage regulation problems is that there is too much impedance in the power
system to properly supply the load. The load draws the current that gives a voltage drop across the system
impedance. The resistive drop is in phase with the current, and the reactive drop is 90 degrees out of
phase. Therefore, the load voltage drops low under heavy load. High voltages can come about when the
source voltage is boosted to overcome the impedance drop and the load suddenly diminishes.
A.1.4

Voltage Flicker

A waveform may exhibit voltage flicker if its waveform amplitude is modulated at frequencies less than
25 Hz, which the human eye can detect as a variation in the lamp intensity of a standard bulb. Voltage
flicker is caused by an arcing condition on the power system. The arcing condition may be a normal part
of a production process (for example, a resistance welder or an electric arc furnace. Voltage step changes
greater than 3%, usually caused by the starting of large motors, may also cause complaints of light flicker.
However, these events are not a frequency modulation of the voltage amplitude. Flicker problems can be
corrected with the installation of filters, static VAR systems, or distribution static compensators.

19

Assessing the Impact of Power Quality on California Industries, EPRI, Palo Alto, CA: 2002. Year.

83

Figure A-4 Example Voltage Waveform Showing Flicker Created by an Arc Furnace20
Voltage Fluctuations
The primary cause of voltage fluctuations is the time variability of the reactive power component of
fluctuating loads such as, for example, arc furnaces, rolling mill drives, main winders, etc. In general,
these loads have a high rate of change of power with respect to the short-circuit capacity at the point of
connection to the supply.
The magnitude of the fluctuations is usually such that the supply voltage remains within the permitted
voltage tolerance band, but the cyclic nature of the variation, combined with the characteristics of lamps
and the response of the human eye and brain, lead to a sensation of flicker. Flicker is an impression of
unsteadiness of illumination that can cause loss of concentration, headaches, and, in some cases, epileptic
fits.
A.1.5

Harmonic Distortion

Harmonic distortion is the presence of frequencies at integer multiples of the fundamental system
frequency, which is 50 Hz in Europe and 60 Hz for the North American power system. Electronic loads
and saturable devices generate harmonic distortion. In commercial facilities, computers, lighting, and
electronic office equipment generate harmonic distortion. In industrial facilities, adjustable-speed drives
and other power electronic loads can generate significant amounts of harmonics.
It is generally safe to assume that the sine wave voltage generated in central power stations is very good.
In most areas, the voltage found on transmission systems typically has much less than 1% percent
distortion. However, the distortion may reach 5 to 8% as we move closer to the load. At some loads, the
current waveforms will barely resemble a sine wave. Electronic power converters can chop the current
into a variety of waveforms. Most distortion is periodic, or harmonic. That is, it is nearly the same cycle
after cycle, changing very slowly, if at all. This has given rise to the widespread use of the term
harmonics to describe perturbations in the waveform. This term must be carefully qualified to make
sense.

Figure A-5 Example Voltage Waveform with 3rd Harmonics and 17.42% Total Harmonic Distortion21
20

Assessing the Impact of Power Quality on California Industries, EPRI, Palo Alto, CA: 2002. Year.
Assessing the Impact of Power Quality on California Industries, EPRI, Palo Alto, CA: 2002. Year.

21

84

Solutions to problems caused by harmonic distortion include installing active or passive filters at the load
or bus, or taking advantage of transformer connections that enable cancellation of zero-sequence
components.
Harmonic frequencies are integral multiples of the fundamental supply frequency. Current harmonics are
generated within the system and in consumer loads by the nonlinear behavior of magnetic materials,
rectifiers, and electronic converters. Although harmonic frequencies have always been present in the
electricity system, the increase in the number of equipment using electronic power control in recent years
has lead to increased levels. Voltage harmonics are created by harmonic currents as they flow through
system impedances. Nonlinear loads draw harmonic currents from the supply, thereby producing a
corresponding harmonic voltage drop in the impedance of the supply network. As a result, all consumers
see harmonic voltage distortion on the supply voltage. Standards have been introduced to limit the
emission of harmonic current by individual items of equipment and by installations in an attempt to limit
the overall level of harmonic distortion on supply networks. Fortunately, the design of networks tends to
mitigate some of the effects of harmonic load currentdelta transformer windings sink the third and
ninth harmonic currents emitted by single-phase loads, for example.
Electronic converters also introduce other frequencies into the supply, known as interharmonics. So far,
the magnitude of interharmonic voltages is small.
A.1.6

Unbalance

A three-phase supply system is said to be balanced if the three-phase voltages and currents have the same
amplitude and are separated by 120 degrees with respect to each other. If either of these conditions is not
met, the system is said to be unbalanced. Unbalanced supply voltage usually arises because of unequal
loading of the phases at the low voltage level, where most of the loads are single phase. Other causes are
the asymmetry of the distribution system and the connection of large non-three-phase loads, such as
railway connections and arc furnaces.
A.1.7

Voltage Notching

Voltage notching is caused by the commutation of power electronic rectifiers. It is an effect that can raise
PQ issues in any facility where solid-state rectifiers (for example, variable-speed drives) are used. The
effect is caused by the switching action of the drives input rectifier. When the drive DC link current is
commutated from one rectifier thyristor to the next, a line-to-line short circuit occurs at the input
terminals to the rectifier. With this disturbance, any given phase voltage waveform will typically contain
four notches per cycle caused by a six-pulse electronic rectifier.

Figure A-6 Example Waveform with Notching22

A.1.8

Transient Disturbances

Transient disturbances are caused by the injection of energy by switching or by lightning. The disturbance
may either be unidirectional or oscillatory. Lightning, electrostatic discharge, load switching, or capacitor
switching may cause a unidirectional transient. It is characterized by its peak value and rise time. An
22

Assessing the Impact of Power Quality on California Industries, EPRI, Palo Alto, CA: 2002. Year.

85

oscillatory transient is characterized by its frequency content and may be caused by a switching operation
such as the energizing of a capacitor bank, distribution line or cable, or interruption of current to an
inductive load. The switching of a load may cause high-frequency oscillations with principal frequencies
greater than 2 kHz. Common solutions to problems caused by transients include the application of surge
arresters, passive and active filters, and isolation transformers.

Figure A-7 Example Oscillatory Transient Waveform Caused by Energizing a Capacitor23

Figure A-8 Example Impulsive Transient Waveform24

23
24

Assessing the Impact of Power Quality on California Industries, EPRI, Palo Alto, CA: 2002. Year.
Assessing the Impact of Power Quality on California Industries, EPRI, Palo Alto, CA: 2002. Year.

86

Table A-1 Categories of Power Quality VariationInstitute of Electrical and Electronics Engineers
(IEEE) 1159-1995
1.0

2.0

3.0
4.0

5.0
6.0
7.0
8.0

Categories
Transients
1.1 Impulsive
1.1.1 Voltage
1.1.2 Current
1.2 Oscillatory
1.2.1 Low Frequency
1.2.2 Medium Frequency
1.2.3 High Frequency
Short-Duration Variations
2.1 Sags
2.1.1 Instantaneous
2.1.2 Momentary
2.1.3 Temporary
2.2 Swells
2.1.1 Instantaneous
2.1.2 Momentary
2.1.3 Temporary
Long-Duration Variations
3.1 Overvoltages
3.2 Undervoltages
Interruptions
4.1 Momentary
4.2 Temporary
4.3 Long-Term
Waveform Distortion
5.2 Voltage
5.3 Current
Waveform Notching
Flicker
Noise

Spectral
Content

Typical
Duration

> 5 kHz
> 5 kHz

< 200 s
< 200 s

< 500 kHz

3002 kHz
> 2 kHz

< 30 cycles
< 3 cycles
< 0.5 cycle

Typical
Magnitudes

0.530 cycles 0.11.0 pu

30120 cycles 0.11.0 pu
2 sec2 min
0.11.0 pu
0.530 cycles 0.11.8 pu
30120 cycles 0.11.8 pu
2 sec2 min
0.11.8 pu

0100th Harmonic
0100th Harmonic
0200 kHz
< 30 Hz
0200 kHz

> 2 min
> 2 min

0.11.2 pu
0.81.0 pu

< 2 sec
2 sec2 min
> 2 min

0
0
0

steady-state
steady-state
steady-state
intermittent
intermittent

020%
0100%
0.17%

Transient disturbances are high-frequency events with durations much less than one cycle of the supply.
Causes include switching or lightning strikes on the network and switching of reactive loads on the
consumers site or nearby sites. Transients can have magnitudes of several thousand volts and so can
cause serious damage to both the installation and the equipment connected to it. Non-damaging transients
can cause severe disruption due to data corruption.

Response of Sensitive Equipment to PQ Events

B.1

Data Processing and Communications Equipment

This type of equipment operates internally from a low voltage DC supply derived from the AC supply by
a rectifier and electronic converter. It is insensitive to moderate levels of harmonic distortion and can be
made immune to most transients, but it is sensitive to voltage dips.
When the supply voltage drops during a dip, the amount of energy delivered to the load is reduced. The
ability of the equipment to ride through the dip depends on the amount of stored energy available from
the internal power supply capacitor and the instantaneous energy requirement of the device. A personal
computer (PC) will have a better ride-through capability while processing than it would have while
writing to an optical drive, for example.
IT equipment dip performance is described by curves such as the Computer and Business Equipment
Manufacturers Association (CBEMA) curve and its more modern Information Technology Industry
Council (ITIC) replacement. These curves show the safe operational envelope of the equipment on a
nominal voltage/time plot. If the duration and retained voltage during a dip lie above the boundary, the
equipment is likely to continue to operate normally.

87

% nominal voltage

200
180
160
140
120
100
80

Im m unity area

60

Dip

40
20
0
0,0001

Interruption

0,001

0,01

0,1

10

100
seconds

Figure B.1 ITIC Curve

In reality, these curves simply specify typical equipment performance; they do not imply that the
equipment will survive the dips that typically occur on the network.

B.2

Variable-Speed Drives

Variable-speed drives (VSDs) use an electronic converter to produce a variable-frequency motor drive
voltage from the fixed supply frequency. Using VSDs is much more energy-efficient than using belts and
gearboxes to change speed or using throttle valves to control fluid flows. They are used extensively in
industrial processing, materials handling, and building management.
During a dip, the amount of energy supplied by the electrical system is reduced and may be below that
required by the process, resulting in loss of control. Because motor-controlled processes rarely operate in
isolation, this can result in loss of synchronization with other parts of the process and uncoordinated shut
down.
VSDs usually include a number of measures in order to protect the electronics and the motor from
abnormal conditions, such as undervoltage or loss of a phase voltage, that may trigger shutdown in the
event of a dip.
VSDs draw harmonic currents from the supply. Many drives are designed to minimize or eliminate these
currents. VSDs are not affected by normal levels of harmonic distortion.

B.3

Lighting

Any change in supply voltage magnitude may cause a change in the luminous flux or spectral distribution
of a light source. Incandescent light sources are particularly sensitive, as the luminous flux is
approximately proportional to the cube of the applied voltage. They are susceptible to flicker, which is
a subjective visual impression of unsteadiness of a lights flux, when its luminance or spectral distribution
fluctuates with time. The human eye-brain response to variation of luminous flux produces fatigue and
loss of concentration for relatively small variations in light intensity at frequencies of about 2 to 20 Hz.

88

Gas discharge lighting is less sensitive to traditional flicker, partly because it is often electronically
controlled, but is affected by a flicker effect due to jitter caused by voltage variation due to interharmonic
voltage distortion. Gas discharge lighting is sensitive to dips: if a dip is deep enough to extinguish the
discharge, a hot lamp may not re-strike when the voltage returns to normal.

B.4

Solenoid-Operated Contactors

Solenoid-operated contactors and relays are used in large numbers in process control systems, and they
are particularly sensitive to voltage dips. Hardened devices are available but are relatively rarely used.

Additional Losses Caused by Poor PQ

Additional losses may be the result of harmonic currents. Load-generated harmonic currents flow in
installations and in the distribution
system; they do not transfer energy but
do cause additional loss in cables,
transformers, and in motors.

C.1

Cables

In the presence of harmonic currents,

the RMS current is higher than that
required to energize the load because
harmonic currents do not transfer
energy. This has to be taken into
account in sizing conductors.
Zero-sequence harmonics, i.e., those with a harmonic number that is a multiple of three, do not cancel in
the neutral of a three-phase supply. This is important in three-phase cables, which provide supplies to
single-phase nonlinear equipment where the combined neutral current can exceed the phase currents.

89

C.2

Transformers

Transformers are affected by harmonic currents. Part of the load loss of a transformer is due to eddy
current losses in the windings; usually around 5 to 8% of the loss is due to eddy currents and the
remainder due to conductor resistance. Eddy current losses are proportional to the square of frequency, so
harmonic currents have a serious effect on the heat generated within the transformer, leading to higher
operating temperatures and significant reduction in transformer lifetime.

C.3

Motors

Directly connected motors (i.e., those without a VSD) are affected by harmonic voltage, due to the
presence of zero-, positive-, and negative-sequence harmonics. The result is excess heating, increased
mechanical stress, and reduced lifetime.

90

APPENDIX 2
A

Overview of Interruption Cost Calculation

The evaluation of customer outage costs (COC) for a particular service area utilizes three models [36] System model, which describes the performance of the power system serving the area, Load model, which
describes the load connected in the service area at various load points, and Cost model, which represents
the costs due to supply interruptions as a function of interruption duration for a particular customer mix.
The method of Failure Modes and Effect Analysis (FMEA) [70] is normally used for preparing the
system model. A system model is obtained in terms of a failure rate, average outage duration, and annual
outage time at each load point in the system. Table A-1 illustrates the system model parameters of for two
buses in a general test system.
TABLE A-1: SYSTEM MODEL
Index

Bus n

Bus k

0.48

0.46

r (hours)

0.95

0.99

U (hours/ yr)

0.46

0.46

(faults/yr)

The load model used can be in the form of either average load or actual time-dependant load curves at
each load point. This is used to obtain the annual energy consumed and peak demands for a customer or
sector at a given load point. A typical load model is as shown in Table A-2 [42, 71].

Sector y
Residential
Commercial
Industrial
Total

TABLE A-2: LOAD MODEL

E
Pmax
(MWh)
(MW)
8700
2.43
14600
3.97
9800
2.00
33100
8.40

Load
Factor
0.409
0.420
0.559
0.450

The preparation of the cost model requires the customer survey of the service area to collect perceived
costs of interruptions of various durations for the customer mix supplied. The cost model is then prepared
for each load point in the area as the normalized costs due to supply interruptions as a function of
interruption duration. A typical cost model is shown in Table A-3 [42, 71].
TABLE A-3: COST MODEL
C(ri) (/MWh)
Duration (ri)
Mom.
0.50
1 min.
0.52
20 min.
1.34
1h
2.84
4h
9.32
8h
17.2
24h
22.91
Using the above models, the COC at a load point j supplying ny sectors can be calculated as follows:

ny

COC j = E jy C j (rj ) j
y =1

(in )

(A-1)

91

Where Ejy is the annual energy consumed by sector y.

A summation of the COC at all the relevant load points b of a sector gives the annual COC due to supply
interruptions SCOC as follows:
b

SCOC = COC j

(in )

(A-2)

jb

Probabilistic Voltage Dip Costs Calculation

The evaluation of the impact of voltage dips at a particular site in the network involves three basic steps:
fault-analysis, voltage dip analysis, and economic analysis. In fault analysis, the method of fault-positions
[100] is often used in which various types of faults (symmetrical and asymmetrical) are simulated at
numerous locations throughout the system network, and corresponding expected voltage magnitudes and
durations are determined at various network buses.
In a subsequent voltage dip analysis performed at a point of common coupling (PCC), the frequency of
dips of specified dip magnitude and duration over a period of interest is determined by associating it with
the historical fault performance (fault per km per year) of all network buses, overhead lines, and
underground cables. This information is generally available from historic data obtained through long-term
monitoring at respective locations in the network. The corresponding duration of voltage dips depends on
fault-clearing times of protective devices used in the power system network.
The final and the most crucial step for the economic assessment of PQ requires the information about the
consequences of expected voltage dips on the performance of industrial processes. This procedure
requires preparing a dip-performance chart for a particular bus in the system and coordination of the
customer equipment responses with these voltage dips on a single graphic display [72]. The information
about the equipment sensitivity may be gathered from the equipment manufacturer or by testing. Sensitive
industrial equipment are classified into various equipment categories based on equipment-types, and then
the testing is performed on a suitable number of equipment picked randomly from each category.
However, even though the equipment may belong to the same equipment category, it might not exhibit
the same sensitivity to voltage dips [73]. This makes it difficult to develop a single standard that defines
the sensitivity of process equipment. In addition to this, it is also possible that a process may be disrupted
due to tripping of individual equipment or it may require the tripping of a group of equipment depending
upon their interconnections. The only way to deal with those uncertainties is to apply probabilistic
calculations relying on expert advice and limited number of field/laboratory tests related to
equipment/process sensitivity to voltage dips.
The main emphasis of this example, therefore, is to illustrate a probabilistic approach for quantification of
process trips incorporating the uncertainty involved with equipment sensitivity and consequently with the
process sensitivity.

Overview of Equipment Sensitivity

Equipment sensitivity to voltage dips is usually expressed only in terms of the magnitude and duration of
the voltage dip. For this purpose, the rectangular voltage-tolerance curve (as shown in Fig. C-1) is used. It
indicates that voltage dips deeper than the specified voltage magnitude threshold (Vmin) and longer than
the specified duration threshold (Tmax) will cause malfunction (or trip) of the equipment. However, in
practice, some equipment like motor contactors and household electronics items has non-rectangular
voltage-tolerance characteristics [74-77]. Other two parameters, which may be detrimental to sensitivity
of some of the industrial equipment such as motor contactors, are point-on-wave of dip initiation and
phase-shift during the dip [75-78].

92

Fig C-1. Equipment Voltage-Tolerance Curve

Equipment is therefore classified into various categories based on device type, and testing of an adequate
number of devices representing one equipment category justifies generalization of the acquired results.
Because different brands of the same equipment type and even different models of the same brand often
have different sensitivities, a typical sensitivity data with appropriate statistical deviation and error
parameters can be determined for the equipment type. The sensitivity information so obtained needs to be
updated continuously as and when more test results become available.

Uncertainty Involved with Equipment Sensitivity

It is found that all the equipment belonging to a particular equipment category do not exhibit same
sensitivity against voltage dips [74-79]. However, all equipment types except motor contactors exhibit,
more or less, perfect rectangular characteristics. Voltage magnitude-threshold and duration-threshold of
three equipment types, namely PLCs, ASDs, and PCs, may vary between Vmin and Vmax and between Tmin
and Tmax, respectively. The values of these parameters (obtained in tests) are different for different
categories of equipment. The Vmin and Vmax are 30% and 90%, respectively, for PLCs [78, 80], 46% and
63%, respectively, for PCs [79], and 59% and 71%, respectively, for ASDs [86], and corresponding Tmin
and Tmax are 20 ms and 400 ms for PLCs, 40 ms and 205 ms for PCs, and 15 ms and 175 ms for ASDs,
respectively.
Therefore, the voltage-tolerance curves of these equipment may occur anywhere inside the shaded region
on Voltage dip magnitude v/s duration chart shown in Fig. D-1, such that the knee point of curve always
remains inside sub-region C.

Fig. D-1. The region of uncertainty for sensitivity curves of PCs, PLCs, and ASDs

Similarly, the area of uncertainty related to the AC contactors sensitivity can be represented by the
shaded region shown in Fig. D-2. Their voltage-tolerance curves may appear anywhere in the shaded
region acquiring non-rectangular form for 00 point-on-wave of dip initiation and rectangular form for 900
point-on-wave of dip initiation [ 87-89].

93

Fig D-2. Probable regions for voltage-tolerance curve of contactors

Counting of Process Trips

The quantification of expected process trips due to voltage dips over a specified period of time requires
the knowledge about the mutual connection of sensitive equipment that control the process. Sometimes,
tripping of a single equipment may disrupt a complete industrial process, i.e., all the participating
equipment are assumed to be connected in series. On the other hand, the process might be disrupted only
when more than one equipment mal-function/trip, i.e., parallel connection of participating equipment. The
overall probability of process trip can be determined by knowing the probability of trip of individual
equipment and their mutual connections. For example, consider a simple process consisting of four
sensitive devices having mutual connections as shown in Fig. E-1.

Fig. E-1 Typical connections of sensitive equipment participating in a process

The overall probability of process trip is given by

Ptrip = 1 (1 p1 ) (1 p 2 p3 ) (1 p 4 )

(E-1)

Where pi, (i = 1, 2, 3, 4) is the cumulative probability of tripping of ith device. In general, the probability
of a process trip can be written as
n
m

Ptrip = 1 1 pi , j
j =1

i =1

(E-2)

Where m is the number of series-connected equipment/equipment groups and n is the number of parallelconnected equipment in ith equipment group. pi , j is the cumulative probability of tripping of jth
equipment of the ith serially connected equipment group.

94

Fig. E-2. Expected behavior of sensitive equipment against voltage dips of different
characteristics
A piece of equipment may have any voltage-tolerance characteristic inside permissible range. This paves
way for the stochastic assessment of likelihood of equipment having a particular sensitivity inside the
permissible range at the time of occurrence of a voltage dip and consequential impact on the equipment
operation. Consider six different voltage dips, namely A1, A2, B, C1, C2, and C3 on the voltage-dip chart
as depicted in Fig. E-2. It is obvious from the figure that voltage dips A1 and A2 will not cause any
malfunction or trip of the equipment, and therefore the probability of equipment trip is zero. Similarly,
voltage dip B will certainly cause the tripping of the equipment and hence the probability of the
equipment trip is unity. However, the behavior of the equipment for voltage dips C1-C3 will depend on
the actual sensitivity characteristics of the equipment at the time of these voltage dips. It implies that there
is a certain probability of equipment either surviving these voltage dips or tripping when exposed to them.
The variation in equipment sensitivity can be represented in terms of uni-variate random variable (T) in
sub-region A, uni-variate random variable (V) in sub-region B, and bivariate random variable (T, V) in
sub-region C (see Fig. D-1), where T and V are assumed to be two statistically independent discrete
random variables. T is the voltage duration-threshold varying between Tmin and Tmax (determined by the
protection settings) and V is the voltage magnitude-threshold varying between Vmin and Vmax. Therefore if
pX(T) and pY(V) are the probability distribution functions for random variable T and V respectively, and
then the joint probability distribution function for the bivariate random variable (T, V) in sub-region C is
given by Bayes rule [81] as follows:

pXY (T, V) = pX(T) pY(V);

(E-3)

Tmin T Tmax , V min V V max

The general trend of sensitivity (e.g. high, moderate, uniform, or good ride-through) of a particular
equipment or equipment type can be represented by assuming various types of probability density
functions [82] in the sub-regions of uncertainty for one/two random variable(s), i.e., voltage threshold V
and/or duration threshold T.

95

Fig. E-3. Representation of contactors sensitivity with the combinations of uniform and/or normal
probability distributions in various sub-regions of uncertainty

After calculating probability distribution functions as discussed above, the expected number of process
trips, considering one type of equipment sensitivity at a time, can be determined as follows:
Total process trips =

trip

(T , V ) N (T ,V )

(E-4)

Where Ptrip (T , V ) is the trip probability of the process as defined in (E-2) against the voltage dips with
dip magnitude V and dip duration T, and N (T, V) is the number of such voltage dips expected at the
specified site over specified period of time.

Cost Assessment

As evident from equation (E-4), total number of trips of a given industrial process is dependent on the
location of the process in the system network and the overall sensitivity of the process against voltage
dips. For economic assessment of financial losses due to voltages dips, it is pre-requisite to have the
information about the type of industrial/commercial process, customer type, mitigation devices installed
and the associated damage cost per dip. The total costs incurred due to voltage dips and interruptions
should be added together in order to come up with total network financial losses for a given network
topology. The implementation aspects of the Bayesian methodology for the assessment of financial losses
due to voltage dips described above are given in the sequel.

Numerical Example

The results presented here are based on calculations performed on a generic distribution system (GDS)
comprising four 275-kV transmission infeeds, 132-kV and 33-kV sub-transmission networks
(predominantly meshed), and 11 kV distribution network (predominantly radial) [83, 99]. The GDS
consists of 295 buses, 296 overhead lines, and underground cables and a large number of switches and
circuit breakers in order to alter the network topology for preventive control and better reliability of the
system. A large number of transformers having different (Yd, Yy, etc.) winding connections (generally
present in the UK distribution networks) are also modeled.
The base case topology consists of 18 switches in their open position. Additional 40 topologies were
derived more or less arbitrarily from the base case topology by opening/closing of some of the open
switches for the purpose of PQ-cost comparison. Some of the actions taken to generate different network
topologies are illustrated in Table G-1. For all these topologies, both interruption and voltage dip costs are

96

determined. Different network designs/topologies are considered in order to compare and minimize the
total financial losses in the system.
TABLE G-I: VARIOUS NETWORK TOPOLOGIES CONSIDERED
Topology
Switching action performed
1
Base case
2
All switches closed
3
Line 75-231 closed
.
.
40
Lines 3-74, 51-52, 85-87, 75-231, 79-223,
123-129 closed
41
Lines 60-64, 61-62, 61-55, 65-55, 66-67,
3-74, 179-26, 25-26, 27-28, 44-222, 36-37, 10-12,
51-52, 85-87, 123-129, 215-225 closed; Lines 249235, 250-236 open.
The input data about the customer interruption costs for different categories of customers is adopted from
[42] and shown in Table G-2. For the interruption cost calculation as previously described, the MonteCarlo simulation is used. The total system costs due to supply interruptions experienced by customers
over a period of one year for the various topologies considered are shown in Table A-VI in the decreasing
order.

Customer
Type
Res.
Com.
Ind.
L. user

Rank
1
2
3

Mom.
11.47
1.2k
216k

TABLE G-2: CUSTOMER INTERRUPTION COSTS () VALUES

CIC() for an interruption duration of :
1 min.
20 min.
1h
4h
8h
0.19
0.70
4.78
11.74
49.12
106
345
719
1.5k
2.9k
4.3k
7.6k
12.0k
216k
219k
233k
329k
413k

TABLE G-3: TOTAL INTERRUPTION COSTS FOR DIFFERENT TOPOLOGIES

Cost
Topology
Cost
Rank
(M)
No.
(M)
685.40
2
39
316.17
649.67
38
40
311.87
630.75
37
41
309.01

24h
1.0k
16.3k
581k
Topology
No.
6
3
1

On the basis of the interruption costs only, it is clear from Table G-3 that topology 2 results in huge
financial losses, whereas the topology 1 is the most economic one. All other topologies result in the
interruption costs in between these two extremes.
For the voltage-dip assessment, the method of fault positions is used considering fault positions on
network buses and transmission lines (one fault position per bus and six fault positions per line) [83].
Voltage-dip magnitudes at the network buses are calculated for symmetrical and asymmetrical faults at
these fault positions. A conservative approach is adopted for counting process trips due to voltage dips;
i.e., the lowest of all phase voltages is considered as the dip magnitude, and it was assumed that the
sensitive equipment is connected to the phase experiencing the lowest dip magnitude. The duration of
voltage dips is determined by the protection fault-clearing time assuming that all faults are cleared by the
primary protection (i.e., 100% reliable primary protection system). The adopted fault rates and durations
are given in [84, 85]. Ten network buses are selected arbitrarily as the buses of interest at which sensitive
industrial processes are running. Out of these ten buses, the first eight are 11-kV buses, whereas the last
two are 33-kV buses.
For the stochastic assessment of process trips taking into account the voltage-dip performance at the site
and the sensitivity of individual equipment participating in the industrial process, six different generic
process configurations, as shown in Fig. G-1, comprising of series/parallel connections of four pieces of
commonly used industrial equipmentPLCs, ASDs, PCs, and AC contactorsare considered. From

97

these six basic process configurations, 37 distinct processes are derived with two additional assumptions:
1) four sensitive devices participating in a process belong to the same equipment-type; 2) all four
sensitive devices participating in a process belong to different equipment types. The tripping probabilities
for these individual devices are as shown [15].

Fig. G-1: Six typical configurations considered for industrial processes

Because these four sensitive devices are connected in series/parallel combinations, the overall sensitivity
of a particular process depends on the equipment type(s), expected range of variation of the sensitivity of
individual equipment type, and their mutual connections.
In order to get a realistic cost assessment (in the absence of exact information about process distribution
among network buses), it is decided to allocate any ten randomly selected processes (out of 37 available)
among ten network buses of interest such that one process is connected to each bus. (Note: This
assumption allows for the same process to be connected to more than one bus at the same time.) To
achieve this, Monte Carlo simulation is used.
About 10,000 trials were made for the random allocation of processes among ten network buses to get the
maximum and minimum range for the system-wide nuisance process trips, once assuming high sensitivity
of participating equipment and then assuming moderate sensitivity. After the random allocation of
processes, their nuisance trips are determined and used for the evaluation of financial losses, assuming
different categories of customers connected at respective network buses. For the economic assessment of
customer losses due to voltage dips, it is assumed (conservatively again) that every nuisance trip of an
industrial process requires 24 hours of restoration time. The damage costs reported by various categories
of customers for 24 hours long interruption [42] are taken as the damage costs for process trips due to
voltage dips. These costs for different categories of customers are shown in Table G-7.
In the absence of the proper information about the type and the nature of operation of the sensitive
customers connected at the selected network buses, several assumptions are made in order to account for
those in the most realistic way. The selected ten buses of the network are ranked in the decreasing order
of their total connected load and then classified into three different groups: Group-I consisting of buses
with high loads (>2MW); Group-II consisting of buses with medium loads (between approximately 1MW
and 2MW); and Group-III consisting of buses with loads up to approximately 1 MW as shown in Table
G-8. Then, the distribution of the total connected load at respective buses among different categories of
customers and the corresponding costs per dip are assumed as shown in Table G-9. For Group-I buses,
70% of the total load connected is assumed to be large customer loads, which runs continuous automated
industrial processes like chip manufacturing plants, glass manufacturing, etc., and remaining 30%
comprised of general industrial load. Group-II buses mainly supply general industrial load (70%), some
large user load, e.g., packaging plants, bottling plants, dairies (20%), and a small amount (10%) of
commercial load out of which 5% represents users (e.g., banks, data centers) who report huge financial
losses due to voltage dips (see Table G-9). For Group-III buses it was assumed that 50% of the total load
connected is residential load whose financial losses due to voltage dips are generally small and therefore
they were not counted in the economic assessment of the total incurred costs. Further, 20% of the
connected load comprised of the industrial load whereas the remaining 30% is commercial load out of
which 5% represents users who report huge financial losses (as above) due to voltage dips (see Table G9).
To improve further the accuracy of the economic assessment, the general working trends of various
customer types also are considered (see Table G-10). The total number of process trips after comparing

98

their sensitivities against voltage dips experienced at a specific location was therefore multiplied by a
suitable correction factor to get the actual number of process trips attributed to each customer category at
a given bus over a year. For example, the commercial establishments generally remain closed at least for
one day in a weekeither on Sunday or on Fridayand are open only for 10 hours a dayfrom 10 a.m.
to 8 p.m. Therefore, a correction factor of {(365-52)/365}*10/24 = 0.3573 is used to get the actual
number of process trips affecting a commercial facility (i.e., a voltage dip occurrence when the
commercial facility is closed is not going to disrupt any process). Similarly, to prevent frequent process
disruption and consequential huge financial losses, large industries (like chip-manufacturing companies
or financial organizations) generally install mitigation devices (e.g., UPS, etc.), which provide ridethrough for over 95% of the voltage dips.

TABLE G-7. ASSUMED COSTS PER VOLTAGE DIP [42]

Type of
Dip Cost/event () assuming one
Customer Load
day-long interruption of production
Residential
Commercial
1,000
Industrial
16,300
Large User
581,000
TABLE G-8. CATEGORIZATION OF NETWORK BUSES
Peak
Rank
Bus
Group
Load
no.
No.
1
247
51.19
I
2
243
34.79
3
89
1.44
4
66
1.15
5
137
1.15
II
6
40
1.05
7
34
0.87
8
76
0.87
9
111
0.15
III
10
16
0.04
TABLE G-9. DISTRIBUTION OF COSTS AND LOAD TYPES AMONG CUSTOMER CATEGORIES
Group
Type of load
Load (%)
Cost/dip ()
Large User
70
581 k
I
Industrial
30
16.3 k
Large User
20
581 k
Industrial
70
16.3 k
II
9.5 (95%)
1k
Commercial
0.5 (5%)
581 k
Residential
50
0
Industrial
20
16.3 k
III
28.5 (95%)
1k
Commercial
1.5 (5%)
581 k
TABLE G-10. CONSIDERATION OF CUSTOMER ACTIVITIES
Customer type
Residential
Commercial
Industrial
Large Users

Working trend of customer

One day off per week
10 hr/day
Two days off
8 hr/day
Continuous process
Installed mitigation devices
correct 95% of PQ disturbances

Correction factor
N = NT* 0.3573
N = NT* 0.2384
N = NT* 0.05

(NT TOTAL NUMBER OF PROCESS TRIPS AT THE CUSTOMER SITE BEFORE CORRECTION
N ACTUAL NUMBER OF PROCESS TRIPS AT THE CUSTOMER SITE BEFORE CORRECTION)

99

Therefore, only about 5% of the total voltage dips per year at such a customers location will still be able
to disrupt their processes. Finally, the upper limit of the maximum one trip per day is enforced on the
actual number of process trips attributed to a particular customer type (i.e., the maximum number of
process trips per year experienced by a customer type is 365), because the initial assumption was that
each trip causes a 24-hour disruption of a production process.
After the above-mentioned corrections for the process trips and cost criteria, total voltage dip costs for the
system considering a processes with highly sensitive equipment and then with moderately sensitive
equipment are calculated. The variation in voltage-dip costs for the system obtained in first 12 trials with
highly sensitive and moderately sensitive equipment is shown in Fig. G-3.
The variation in the voltage dip costs for one selected topology (topology 20) is shown in Fig. G-4. It can
be seen that the variation in costs due to voltage dips can be very high (between 0.14M and approx.
61M in case of moderately sensitive equipment) depending on the allocation of processes to different
system buses. The figure also shows that the sensitivity of the equipment involved in process can increase
the costs up to 50% (e.g. total costs with moderately sensitive equipment for trial 1 are about 61M and
with highly sensitive equipment about 88M).
Finally, the interruption costs and voltage dip costs for 10 different network topologies are added
together, and the results are shown in Fig. G-3. It can be seen that the voltage dip costs, when added to the
interruption costs, may alter the total financial losses in the system and in some cases alter the ranking of
the topologies based initially on interruption costs only. (e.g., topology 20 with dip costs included
becomes more expensive than topology 39 for about 3.3M per year). The numerical results are
illustrated in Fig. G-5. By comparing the total network losses due to voltage dips with those of
interruptions it was found that voltage dip costs account for up to about 23% of the total network losses
due to interruptions.
60

HS
MS

50

Cost (M/yr.)

40

30

20

10

0
0

10

11

Trial

Fig G-3. Variation in dip costs due to process trips for the whole system (HS highly sensitive
equipment; MS medium-sensitive equipment)

100

Cost (M)
100
90

HS
MS

80
70
60
50
40
30
20
10
0
1

13

17 21

25

29 33

37 41

45

49 53

57 61

65

69 73

77

81 85

89

93

97

Trial

Fig. G-4. Variation in total voltage dip cost for network topology
The example illustrated the methodology for comprehensive assessment of financial losses incurred to
individual customers and the whole network over a specified period of time due to two main PQ
disturbances: interruptions and voltage dips. The study performed considers modeling of uncertainties
involved with the equipment and process sensitivity and their influence on the quantification of process
trips due to voltage dips. In the absence of the accurate data related to equipment and process sensitivity
and corresponding trip/failure costs, which is a common and wide-spread occurrence in this type of study,
a probabilistic approach is applied that leads to an estimate of the expected number (range) of process
trips and consequential financial losses. The estimated range of financial losses due to voltage dips
compared to the losses due to outages is in agreement with the reported results based on field surveys.
The example further compares total financial losses in the network incurred by interruptions and voltage
dips for various network topologies. It is observed that the costs to individual customers and the whole
network due to voltage dips alone could be quite substantial (depending on the equipment and process
sensitivity) and therefore could have great influence on the total PQ costs.

900

800

Int. cost
Int. + Min. sag cost
Int. + Max sag cost

778.04
736.77

700

666.55

Cost (M/Yr.)

600

500

475.9

472.56

430.6

413.75

398.84

400

365.1
329.69

300

200

100

Topology

Fig. G-5. Comparison of interruption and voltage dip costs for the system: Influence of dip costs
on total financial losses for the system with various topologies considered

101

10

27

14

18

13

23

19

24

30

26

36

28

31

32

35

37

Typical Loss Values

Table I-1 Average cost of power interruption. Adopted from [18].
Average cost
Cost index
K
IEEE 1159 class
(US$/kW)
Ck
1
Instantaneous
0.078
1
2
Momentary
0.176
2
3
Temporary
1.22
15
4
Sustained
3.63
47

Table I-2 CIC () values. Adopted from [42].

CIC () for an interruption of duration

Sector
Residential
Commercial
Industrial
Large user

Momentary
11.47
1.2k
216k

1 min
11.47
1.5k
216k

20 min
0.19
49.12
2.9k
219k

1 hour
0.7
106
4.3k
233k

4 hour
4.78
345
7.6k
329k

8 hour
719
12.0k
413k

24 hour
1.0k
16.3k
581k

Table I-3 Estimated costs for industrial sectors. Adopted from [14].
Voltage Dip Cost (% of total yearly power cost)
Industrial Process
Category A
Category B
Category C
Semiconductor
0 to 2
2 to 10
5 to 6
Pharmaceutical
0 to 0.8
1 to 5
2 to 4
Chemical
0 to 1
1 to 3
2 to 4
Petrochemical
0 to 1
2 to 5
1.5 to 3.5
Manufacturing
0 to 0.2
0 to 1
0.8 to 1
Metallurgy
0 to 0.2
0 to 1.5
1 to 1.5
Food
0 to 0.5
0 to 1.5
0 to 2
Table I-4 Direct cost per event per kW. Politecnico di Milano. Adopted from [29].
[/kW-event]
All sectors
Per NACE codes
DA Food products
DB Textiles
DE Paper
DF Refined petroleum products
DG Chemicals and man-made fibers
DH Plastic products
DI Glass and ceramic products
DJ Metals products
DL Electrical equipment
DM Auto and auto components

Entire sample (sub-sample)

Median
0.8 (1.1)

Mean
2.8 (3.3)

Interval
0 (0.1) - 30

0.6
3.2
0.8 (0.9)
13.3
0.6 (0.7)
1.8
0.8
1.1 (4.9)
9.3
2.9

5.9
3.2
0.9 (1.0)
13.3
0.5 (0.7)
2.2
0.9
3.3 (4.9)
10.6
2.9

0.2 30
3.2
0.1 2.2
13.3
0 (0.6) 0.8
0.1 4.2
0.1 2.3
0 (1.1) 8.7
0.1 22.4
0.7 5.0

Table I-5 Financial losses due to voltage dips. Adopted from [44].
Industry
Typical financial loss per event ()
Semiconductor production
3,800,000
Financial trading
6,000,000 per hour
Computer centre
750,000
Telecommunications
30,000 per minute

102

Steel works
Glass industry

350,000
250,000

Table I-6 Financial losses of large commercial and industrial customer for various disturbances. Adopted
from [45].
Scenario

Financial Losses ($)

4 hour outage without notice

1 hour outage without notice
1 hour outage with notice
Voltage dip
Momentary outage

74,835
39,459
22,973
7,694
11,027

Table I-7 Impact of voltage dip on industry. Adopted from [49].

Industry

Loss per voltage dip ($)

Paper manufacturing
Chemical industry (plastic, glass, etc.)
Automobile industry
Equipment manufacturing
Credit card processing
Semiconductor industry

30,000
50,000
75,000
100,000
250,000
2.5 million

Table I-8 Summary of all outage cost studies. Adopted from [50].
Cost per interrupted kW
Cost per event
Study
Average cost per hour
or kWh
Population Research $61,949 for large industrial
Systems
and commercial
All regions - $59,983
Northwest - $28,609
Southwest - $51,908
Southeast - $86,477
West - $52,734
Midwest - $28,735
ASCO
Cellular $41k
Telephone $72k
Airline reservation $90k
EDF
$0.67/kW
$8/kWh up to 30MWh
$17.4/kWh from 30 to 50
MWh
ESOURCE
$583k over 800
commercial and
industrial customer
over 1 year
IEEE 493-1997
Industrial - $6.43/kW +
$9.11/kWh
Commercial $21.77/kWh
CEIDS EPRI
$7795 for digital
establishments
$14,746 for continuous
process manufacturing
Primen Mass Survey $21,688 for 19 businesses
surveyed
ICF Consulting
80 to 100 times the
cost of retail
electricity
Table I-9 Comparison of interruption costs of industrial customers (in year 2000 US$/kW). Adopted from
[51].

103

Study/Duration 2 second
Canada
1.07
(small
industrial)
England
14.49
(industrial)
USA
(industrial)
Nepal
(industrial
Greece
2.10
(industrial)
Taiwan
37.03
(high-tech)

1 min

20 min

1 hour

2 hour

4 hour

8 hour

24 hour

2.55

3.65

7.71

13.68

28.13

52.06

82.87

15.24

33.62

59.5

170.1

283

354.3

9.64

0.11

0.23

0.42

0.58

1.50

3.00

10.99

2.55

7.35

12

16.75

21.80

46.86

55.15

60.90

87.6

118.1

167.1

242.4

425.2

Table I-10 Voltage-dip sensitivity factors for different industries. Adopted from [32].
Category
Dip sensitive factor
Semiconductor (SC)
1
Computer and peripherals (CP)
0.4
Telecommunications (TC), and
0.4
Optoelectronics (OE)
0.6
Precision machinery (PM)
0
Biotechnology (BT)
0
Table I-11 Industries surveyed. Adopted from [52].
Industry
Number of samples
Ratio (%)
Food and beverages
49
7.4
Textile and apparel
55
8.3
Pulp and paper products
36
5.8
Chemical and products
127
19.2
Basic/fabricated metal
52
7.9
Other machinery and
49
7.4
equipment
Electric and electronic
82
12.4
equipment
Electric machinery
53
8.0
Audio visual equipment
48
7.3
Motor vehicles
51
7.7
Other transport equipment
56
8.5
Table I-12 Interruption cost by duration (unit: Won). Adopted from [52].
Interruption cost per average kW ($/kW)
Industry type
Below 3 seconds
Below 1 minutes
Below 5 minutes
Below 30 minutes
Food and beverages
22.783
44.747
78.020
128.504
Textile and apparel
8.421
8.724
9.500
13.935
Pulp and paper
1.660
1.678
1.781
2.100
products
Chemical and
39.805
50.284
52.042
61.505
products
Basic/Fabricated
12.886
18.706
33.359
63.288
metal
Other machinery
11.594
15.950
26.605
59.443
and equipment
Electric and
electronic
80.335
120.718
174.493
230.076
equipment
Electric machinery
7.700
13.634
21.470
45.794
Audio visual
9.547
12.709
23.045
53.517
equipment

104

Motor vehicles
Other transport
equipment

23.699

36.683

49.706

83.612

9.316

12.862

15.782

39.420

Table I-13 Expected losses due to voltage disturbance. Adopted from [53].
Losses due to voltage disturbance
Industry
($/kVA per event)
Semiconductors
80 - 120
Glass
10 - 15
Automotive
6 - 10
Plastics
4-7
Textile
3-8
Table I-14 Cost per event of interruption
Industry

Cost per Event of Interruption

Paper industry
$10,000 - $30,000
Textile industry
$10,000 - $40,000
Data processing
$10,000 - $40,000
Plastic industry
$10,000 - $50,000
Semiconductor industry
$10,000 - $50,000
Automotive manufacturing
$15000
Source: EPRI PQ Applications Guide for Architects and Engineers
Table I-15 Average cost of outages. Adopted from [37].
Average
Industry
cost of downtime ($/hour)
Mobile communications
41,000
Telephone ticket sales
72,000
Airline reservation
90,000
Credit card operations
2,580,000
Brokerage operations
6,480,000
Source: U.S. Department of Energys Strategic Plan for Distributed Energy Resources (2000)
Table I-16 Estimated voltage dip costs. Adopted from [37].
Industry
UK steel work
US glass plant
US computer centre
US car plant
South Africa

Duration

Cost/dip

30% for 3.5 cycles

Less than 1 second
2 second
Annual exposure
Annual exposure

250k
$200k
$600k
$10M
$3B

105

Fig. I-1 Annual costs due to power quality disturbances for the industrial sector in EU-25 [40]

Fig. I-2 Annual costs due to power quality disturbances for the services sector in EU-25 [40]

106

Fig. I-3 Annual costs due to voltage dips for five Finnish distribution companies [8]

Fig. I-4 Voltage dip-related cost in different industries. Adopted from [43].

Fig. I-5 Normalized cost per dip as a function of plant power. Adopted from [10]

107

Fig. I-6 Industry-specific costs of PQ. Adopted from [48].

Fig. I-7 Customer damage functions for different high-tech industry categories. Adopted from [32].

Typical Financial Loss Values - Summary

Section
Manufacturing

TABLE J-1 DIRECT COST PER KW PER EVENT

Financial
Division
Activities
Currency
Loss
General

Disturbance
Type

Small Industrial
(Canada)

2.55

US$

1-minute power
interruption

Industrial (England)

15.24

US$

1-minute power
interruption

Industrial (Nepal)

0.11

US$

1-minute power
interruption

Industrial (Greece)

2.55

US$

1-minute power
interruption

108

Food products and

beverages (17, 18)

Textiles (20)

Paper and paper

products (24)

High-tech industry
(Taiwan)

55.15

US$

Food products
(Italy)

5.9

Euro

Food

US$

Food and Beverages

(South Korea)

44.75

US$

Textiles (Italy)

3.2

Euro

Textiles

11.7

US$

Textiles (South
Korea)

8.72

US$

Paper (Italy)

0.9

Euro

Paper

1.7

US$

Paper (South
Korea)

1.67

US$

13.3

Euro

0.5

Euro

Chemical

20.6

US$

General cost of
power quality

Chemical and
petrochemical
(South Korea)

50.28

US$

1-minute power
interruption

Plastic products
(Italy)

2.2

Euro

Very short
interruptions
and voltage dips

Plastic products

US$

General cost of
power quality

Glass and ceramic

products (Italy)

0.9

Euro

Very short
interruptions
and voltage dips

Coke and refined

Refined petroleum
petroleum products
products (Italy)
(26)
Chemicals and
man-made fibers
(Italy)
Chemical and
chemical products
(27)

Rubber and plastic

products (29)

Non-metallic
mineral products
(30)

1-minute power
interruption
Very short
interruptions
and voltage dips
General cost of
power quality
1-minute power
interruption
Very short
interruptions
and voltage dips
General cost of
power quality
1-minute power
interruption
Very short
interruption and
voltage dips
General cost of
power quality
1-minute power
interruption
Very short
interruptions
and voltage dips
Very short
interruptions
and voltage dips

109

Basic/fabricated
metals (31, 32)

Computer,
electronic and
optical products
(33)

Electrical
equipment (34)

Machinery and
equipment (35)
Motor vehicles,
trailers and semitrailers (36)
Other transport
equipment (37)
Transport and
storage

Glass products

US$

General cost of
power quality

Primary metal

15.5

US$

General cost of
power quality

Basic/ fabricated
Metal (South
Korea)

18.71

US$

1 minute power
interruption

Metal products
(Italy)

3.3

Euro

Very short
interruptions
and voltage dips

Electronic

58.3

US$

General cost of
power quality

12.71

US$

1-minute power
interruption

120.72

US$

1-minute power
interruption

13.63

US$

Electrical
equipment (Italy)

10.6

Euro

Other Machinery
and Equipment
(South Korea)

15.95

US$

Auto and auto

components (Italy)

2.9

Euro

36.68

US$

12.86

US$

1-minute power
interruption

10

US$

General cost of
power quality

Audio and Visual

Equipment (South
Korea)
Electrical and
Electronic
Equipment (South
Korea)
Electric Machinery
(South Korea)

Motor Vehicles
(South Korea)
Other Transport
Equipment (South
Korea)

Transportation (55All transportation

57)

1-minute power
interruption
Very short
interruptions
and voltage dips
1-minute power
interruption
Very short
interruptions
and voltage dips
1-minute power
interruption

Information and
communication

Communications
(62-66, 86)

Communications

28.6

US$

General cost of
power quality

Financial and
insurance
activities

Financial service
activities (87)

Business services

3.7

US$

General cost of
power quality

TABLE J-2 DIRECT COST PER KVA PER EVENT

Section

Division (NACE code)

Activities

Financial
Loss

Currency

110

Textiles (20)

Textile

3-8

US$

Rubber and plastic products (29)

Plastics

4-7

US$

Non-metallic mineral products (30)

Glass

10 - 15

US$

80 - 120

US$

6 - 10

US$

Manufacturing
Computer, electronic and optical products
Semiconductors
(336)
Motor vehicles, trailers and semi-trailers
(36)

Automotive

TABLE J-3 DIRECT COST PER EVENT

Section

Division

General
Textiles (20)
Paper and paper
products (24)
Chemical and
chemical products
(27)

Activities

Financial Loss Currency

Large User (UK)

216,000

Large industrial and

commercial (US)

7694

US$

Industrial (UK)

1200

Voltage dip
1-minute
power
interruption

US$
US$

Process
interruption
Voltage dip

Textile Industry
10,000-40,000
Paper manufacturing (US)
30,000
Paper industry

10000 - 30000

US$

Process
interruption

Chemical industry (US)

50,000

US$

Voltage dip

US$
Euro
US$
Euro
US$
Euro

Process
interruption
Voltage dip
Voltage dip
Voltage dip
Voltage dip
Voltage dip

Rubber and plastic

products (29)

Plastic Industry
10,000-50,000
250,000
Non-metallic mineral Glass industry (Europe)
products (30)
Glass plant (US)
200,000
Steel works (Europe)
350,000
Basic metals (31)
Steel works (UK)
250,000
Semiconductor (Europe)
3,800,000

Computer, electronic
and optical products
(33)
Machinery and
equipment (35)

Manufacturing

Motor vehicles,
trailers and semitrailers (36)

Wholesale and
retail trade

(51-53)

Disturbance
type
1-minute
power
interruption

Semiconductor (US,
Europe and Far East)

2,500,000

US$

Voltage dip

Semiconductor

10,000-50,000

US$

Process
interruption

Equipment manufacturing
(US)
Automobile industry (US)

100,000
75,000

US$
US$

Voltage dip
Voltage dip

Automotive

15,000

US$

Process
interruption

Commercial (UK)

11.7

1-minute
power

111

interruption
Telecommunications
(64)

Telecommunications
(Europe)
Computer centre (Europe)
US computer centre (US)

30,000
750,000
600,000

Euro
Euro
US$

Voltage dip
Voltage dip
Voltage dip

Data processing

10,000-40,000

US$

Process
interruption

Credit card processing

(US)

250,000

US$

Voltage dip

Information and Information service

communication
activities (66)
Activities auxiliary to
Financial and financial services and
insurance
insurance activities
activities
(88)

TABLE J-4 ANNUAL COST

Section

Division (NACE code)

Activities

Financial Loss

General

Manufacturing

0-1

Food products and beverages (17, 18)

Food

0-2

Currency
% of total yearly
power cost
% of total yearly
power cost

Coke and refined petroleum products

Petrochemical
(26)

0-5

% of total yearly
power cost

Chemical and chemical products (27)

Chemical

0-4

% of total yearly
power cost

Basic pharmaceutical products and

pharmaceutical preparations (28)

Pharmaceutical

0-5

% of total yearly
power cost

Basic metals (31)

Metallurgy

0 - 1.5

% of total yearly
power cost

Computer, electronic and optical

products (33)

Semiconductor

0 - 10

% of total yearly
power cost

Motor vehicles, trailers and semitrailers (36)

U.S. car plant

10,000,000

US$

Manufacturing

Other

General

South Africa
3,000,000,000
total

US$

TABLE J-5 COST PER HOUR OF INTERRUPTION

Section

Financial and
insurance activities

Information and
communication
Wholesale and
retail trade

Division (NACE code)

Activities auxiliary to
financial services and
insurance activities (88)

Telecommunications (64)

Activities
Brokerage
operations
Credit card
operations
Financial trading
(Europe)
Mobile
communications

Retail trade, except of motor Airline reservation

vehicles and motorcycles Telephone ticket
(53)
sales

Financial Loss

Currency

6,480,000

US$

2,580,000

US$

6,000,000

Euro

41,000

US$

90,000

US$

72,000

US$

112

K
Formulae for Computing Harmonic Losses for the Main Electrical
Components
The harmonic losses PT for the transformers (joule and core losses) can be computed as [57-59] :

PT = 3

(I )

h max

h 2

h = h1

V h
R + P 1
h = h1 V
h
T

1
co

h max

mT

1
,
h 2.6

(K-1)

Where:
Ih
RTh
Vh

=
=
=
=
=

Pco

mT

current harmonic of order h

equivalent resistance of the transformer at the harmonic of order h
voltage harmonic of order h
core losses at the fundamental frequency
numerical coefficient

The harmonic losses PM for the induction motors (joule and core losses) can be computed as [5759]:

PM

h max

h max V h
Vh
1
= 3 h R hM + Pco
1

h = h1 Z M
h = h1 V

mM

1
h 0.6

(K-2)

Where:
h
ZM

= equivalent impedance of the motor at the harmonic of order h

= equivalent resistance of the motor at the harmonic of order h
= numerical coefficient

h
RM

mM

Harmonic losses PC for the condensers can be computed as [57-59]:

PC = 3 C

h max

( )

h V h tgh

h = h1

(K-3)

Where:

= angular frequency of system at the fundamental

C
= capacitance of the condenser
tg h = loss factor at the harmonic of order h

The harmonic losses PCa of three-conductors cables (joule and dielectric losses) can be computed as [5759]:

PCa = 3

h max

( )

hmax

( )

h
+ 3 CCa h tgh V h
Ih R Ca

h = h1

h = h1

(K-4)

Where:
h
RCa
=

alternating current resistance of one conductor of the cable

113

CCa = capacitance per core;

= angular frequency of system at the fundamental.

Other formulas are proposed for a precise evaluation of the equipment loss of life. It is necessary to
consider the operating condition instead of the nominal one.
The operating temperature rise of the hottest point ( TO ) at operating condition is evaluated by the
following formula.

PO

TO =

PN

TN

(K-5)

Where :

TO
TN
PO
PN

= Expecting temperature rise of the hottest point under operating condition

= Temperature rise of the hottest point under nominal operating condition
= Operating power
= Nominal power

This formula considers that the equipment is at operating condition since enough time to reach the
equilibrium temperature.
The temperature of the hottest point is given by adding the ambient temperature ( TA ) to the temperature
rise.

TO = TO + TA

(K-6)

And

TN = TN + TA

(K-7)

The evaluation of the ambient temperature could be problematic. We should consider the cooling system
used. The equipment is inside or outside? Is it in a temperature control environment?
The expecting life under operating power condition ( tO ) could be evaluated with Arrhenius function [58,
59, 166] knowing the nominal temperature the hottest point and the lifespan of the equipment from the
manufacturer.

tO =t N e

T
E

K TN (TN + T )

(K-8)

Where :

t N = Expecting life span under nominal condition

tO = Expecting life span under operating condition
TN = Expecting temperature of the hottest point under nominal condition (K)
T =TO TN (most of time negative)
The formula presented in chapter 2.2.2.2 will be modified in the following form:

114

Ph

Th

PO

th =tO e

TO

Th

TO (TO + Th )

(K-9)

(K-10)

Where:

Th =
Ph =
th =

temperature rise of the hottest point cause by harmonics content

harmonics content
Expecting life span under polluted harmonics condition

There could be more loss of life at operating condition than at rated condition because the life
expectancy tO will be greater than t N . Utilities could loss more money in reduction of equipment useful
life in harmonics condition when their equipments are operating below their nominal rating.
To do the economic we should find the actual cost for the replacement, in the future, of the equipment.
The time used will be modulated by the lifespan of the equipment. This implies the use of the present
value formula as presented in chapter 2:
(C tb C tc ) (1 + e) t
t =0
[(1 + r )(1 + i )]t
n

PV =

(K-11)

This is modified in the following form:

PVE =

C E (1 + e) tO
[(1 + r )(1 + i )]tO

(K-12)

Where:
PVE
CE
tO

=
=
=

Present value of future equipment replaced in sinusoidal condition

Actual cost for replacing the equipment
Expecting life span of the actual equipment

This formula gives the actual cost for a future

The same formula is used to calculate the present cost for buying new equipment in t h years representing
the expected lifespan under harmonics condition.
PVEh =

C E (1 + e) th
[(1 + r )(1 + i )]th

(K-13)

Where:
PVEh = present cost for buying new equipment in t h years representing the expected lifespan under
harmonic condition
t h = Expecting life span of the actual equipment under harmonics condition

The extra cost for the lifespan reduction due to harmonics will be given by the following formula:
C ELR = PVE PVEh

(K-14)

This procedure is generic and could be apply for the cost of lifespan reduction for any kind of
perturbation.

115

A global cost evaluation for loss life for distribution system equipment could be perform by ordering
equipment in categories representing the kind of equipment and the nominal power in order to reduce the
amount of calculation. Time of the day and date of the year could be used to evaluate different load level
(operating condition) and fluctuating ambient temperature.

Methods for Probabilistic Evaluations

The first step in a probabilistic approach is to recognize that output economical figures to be computed
are statistical quantities. In the most general cases, their probability density functions (PDFs) completely
describe their statistical features. However, for the sake of estimating the economical value of losses and
premature aging due to harmonics, it is adequate referring to the total expected value as:

E ( D) = E ( Dw) + E ( Da)

(L-1)

where symbol E(.) indicates the expected value of the quantities already introduced. When estimating
expected values for a period of time, it is needed to consider their present worth values as:

E ( D) pw = E ( Dw) pw + E ( Da) pw

(L-2)

The present worth expected economical value of losses due to harmonics losses, E (Dw )
the whole electrical system life of NT years, is:
NT

NT

n =1

n 1
n = 1 (1 + )

E ( Dw) pw = E (Dw)npw =

pw

, referred to

E ( Dw) n

(L-3)

pw
Where E (Dw)n is the present worth expected value of the harmonic losses in the nth year, and

E ( Dw) n is computed by summing the economical value of harmonic losses of each component in each
jth combination characterized by mj components operating in the same time period Tj:
mj

E (Dw) j = E (Dw)k , j .

(L-4)

k =1

For the gncombinations taking place in year n, it is:

gn

gn m j

j =1

j =1 k =1

E (Dw)n = E( Dw ) j = E( Dw )k , j

(L-5)

It is clear from relation (L-5) that it is necessary to compute the expected value of harmonic losses for
each component of the system, that is E( Dw )k , j . Considering each single electrical component

,G h 2 ,..,G h max
h max , E( Dw )k , j is computed as :

continuously subject to an hmax harmonics of voltage or current harmonic G

characterized in the time interval

by the joint pdf f h1

G ,..,G

h1

E (Dw)k , j = 0 0 ..0 Dwk , j ( G h1 ,.., G h max ) f h1

dG h1 ..dG h max
G ,..,G h max

(L-6)

with

116

Dwk , j = Dwk , j G h1 ,..,G h max = Kw Pk , j ( G h1 ,..,G h max )T

(L-7)

For the most common components of industrial energy systems, the harmonic losses
Pk , j ( G h1 ,..,G h max ) in (L-7) can be obtained by summing up the losses due to each harmonic so that
the integral in (L-6) can be strongly simplified as:
h max

E (Dw)k , j = 0 Dw(G h ) f h dG h
G

(L-8)

h = h1

In spite of the apparent complexity of models from (L-3) to (L-8), it is necessary to evidence that the
methods practically require the estimation of losses due to harmonics for each component of the system,
paying attention to preliminarily ascertain definite states of operating conditions.
h
The computation of losses, Dw(G ) in (L-8), does not present particular difficulties; several studies in
literature addressed this subject for the most common components and equipment like transformers, cable
line, capacitors, and so on [89-92]; also the formulas shown in Appendix 2-L are valid.
Main difficulties can arise for deriving in each state the PDFs of voltage and current harmonics. For
existing systems, this can be obtained both from measurements and from simulations adopting well-stated
probabilistic methods of harmonic analysis [92-98].
pw
, is evaluated by summing the
The present worth economic value of premature aging in (L-2), E ( Da )
present worth expected value of the aging costs of each of the N components of the system:
N

E( Da ) pw = E( Da )kpw

(L-9)

k =1

pw
Where the value of E( Da )k is calculated starting from the knowledge of the useful lives of the

various components by the relation:

E(Da)kpw = E(Cns )kpw - E(Cs )pw

k

(L-10)

pw
pw
where E (C s ) k and E (Cns ) k are the present worth expected value of the costs for buying the

component during the system life in sinusoidal and non-sinusoidal operating conditions, respectively.
The actualization of the costs can be effected in a similar way considering both the discount rate and the
cost variation for buying the component; the expected value of cost to be met for buying each component
at year n in a sinusoidal and non-sinusoidal regime is linked to the expected value of the component life
in these conditions, respectively. To estimate these figures, again the cumulative damage theory can be
applied, as in the case of deterministic methods. In such a case, we have to refer to the expected value of
relative loss of life in the study period; E[RL] computes as:

E [ RL ] = Tc ...
0

f x1 x 2 ..x n

dxi

0 L( x1 , x2 ,.., xn ) 1

(L-11)

117

where f x x ..x is the joint PDF of the n random variables on which the component life L depends. The
1 2 n
successive estimation of the useful life can be carried out, as previously mentioned, by summing the
expected values of the relative losses of life until reaching the unity.
The main critical point of this method is linked to the complexity of computing the N dimensional
integral of (L-11) and, overall, to assign the joint PDF f x x ..x . Indeed, some simplifications
1 2

introduced by life models of actual insulated components can greatly help. First of all, in most cases it is
adequate to consider electrothermal stress models. Moreover, it is demonstrated that they can be reduced
to an even simpler model like:
n p

L = L0 ' K p

exp (-B c )

(L-12)

Where L0' is life at nominal sinusoidal voltage and reference temperature; c =1/0 - 1/ is the so-called
conventional thermal stress, is absolute temperature, 0 is a reference temperature (generally the room
temperature); np and C are model parameters. In particular, np is the coefficient related to the effect of the
peak of the distorted voltage waveform on life (thus, the larger this coefficient, the stronger the influence
of peak voltage).
Using model (L-12), the general equation (L-11) becomes:

E [ RL ] = T c

DT D K p

f K p
L( K p , )

dK p d

(L-13)

Where f K p is the joint PDF of the peak factor Kp and of the equipment temperature , defined in the
time interval Tc, DK and D are the variation domains of Kp and , respectively, and L(Kp, ) represents
p

the equipment life model expressed by (L-12).

Equation (L-13) still can present some difficulties in deriving the joint PDF of the random variables Kp
and . This joint PDF is generally not directly available. Even in the case in which the statistical
characterization of the variables is known, the computation of (L-13) is not immediate, mainly due to the
fact that Kp cannot be expressed in closed form as a function of voltage harmonics and fundamental
component (infinite different combinations of harmonic vectors can provide a given value of Kp). Then,
the application of (L-13) in real cases requires the use of Monte Carlo simulation procedures.
Some simplifications can be pursued only in particular cases:
1. As an example, having the aim to highlight only the influence of voltage and current harmonics on
component life, the voltage and current at fundamental frequency, the ambient temperature and the
elements of the system admittance matrices at the fundamental, and at harmonic frequencies can be
assumed deterministic quantities. Under this assumption, the voltage harmonics are directly linked to the
current harmonics injected by nonlinear loads via the elements of the system harmonic admittance matrix.
In such a case, the expected value E[RL] of all the MV/LV power system components are a function of
only the PDF of the magnitude and phase of the current harmonics injected by nonlinear loads, thus
reducing the number of random variables to be accounted for.
2. Further simplifications can be achieved computing the life reduction in the worst condition, i.e., that
occurring when the peak voltage is the arithmetic sum of the voltage harmonic peaks. Applying this
simplification, there is no need to know the PDF of the phase of harmonic currents injected by the
nonlinear loads; moreover, in the presence of only one group of nonlinear loads as the main cause of
harmonic pollution, the useful life can be evaluated also with closed form relations, with the simplified
procedure proposed in [54].

118

In conclusion, to estimate the economical damage due to harmonic losses for each component of the
system in the study, the following procedure can be observed.
A) Evaluate the expected value of the operating costs due to harmonic losses E[Dw] as follows:
i. Let n1,...,NT be the years of the system study. Let year n1 be assigned to the annual count NN.
ii. Let h1,..., H be the harmonics present in the NNth year. Let harmonic h1 be assigned to the harmonic
count NH.
iii. Evaluate the expected value of the operating cost due to the actual NHth harmonic, [Dw(GNH)]NN,
computing each integral in (L-8) for known fGNH .
iv. Update the harmonic count NH. If NN > NT, go to step v; otherwise go to step iii.
v. Sum the integrals obtained in step iii to estimate the operating costs due to harmonic losses E[Dw]NN
in NNth year.
vi. Update the annual count NN. If NN > NT, go to step vii; otherwise go to step ii.
vii. Calculate the expected value of the total operating costs, E[Dw], summing the actualized values of
each considered year E[Dw]NN.
A flow-chart of this procedure is shown in Fig. L-1.

119

Start
n1,...,NT
h1,..., H
[Dw(GNH)]N

NH= NH+1

NH > H

no

yes
E[Dw]NN

NN= NN+1

NN > NT

no

yes
E[Dw]

Stop
Fig. L-1. Flow-chart of the procedure to evaluate the expected value of the operating costs due to harmonic losses
B) Evaluate the expected value of the aging costs due to harmonic losses E[Da], as follows:
i.

Evaluate the expected value of the thermal loss of life E[RL] in sinusoidal operating conditions by
the integral in (L-13).
ii. Sum the E[RL] coming in succession until their sum reaches the unity, so establishing the i-th year
in which the component must be substituted.
iii. Evaluate the purchase cost of the component at the i-th year, taking into account the cost variation to
buy it.

120

iv. Evaluate the expected value of the aging costs in sinusoidal operating condition, E[Cs], summing the
purchase costs obtained in step iii, taking into account the present worth discount rate.
v. Repeat steps i. to iv. in non sinusoidal operating conditions to evaluate E[Cns].
vi. Calculate the difference between E[Cns] and E[Cs].

A flow-chart of this procedure is shown in Fig.L-2.

121

Start
E[ RL]

E[R L]

E[R L]=1

no

yes
purchase cost of the
component

E[C s]

E[R L]ns
E[R L]ns

E[ RL]ns=1

no

yes
purchase cost of
the component

E[Cns]
E[Cns]-E[C s]

Stop
Fig. L-2. Flow-chart of the procedure to evaluate the expected value of the aging costs due to harmonic losses

122

APPENDIX 3
A

Cost Aspects

The economic effect of voltage dips and short supply interruptions may differ depending on the time of
occurrence related to a specific process [120]. It may be without any difference to a control system
whether a loss of supply is lasting for 100 ms or for one or more hours; depending on the kind of
manufacturing process and its vulnerability, regarding the before-mentioned consequences and/or service
costs for re-establishing a related manufacturing process, one case of data loss may result in efforts of up
to several thousands of Euros. Depending on the branch, voltage dips or supply interruptions result into
costs in a range from 10.000,-- (paper, plastic, glass manufacturing) to 700.000,-- (semiconductor
manufacturing) per event [121].
Mathematical Model [106]
Mathematic modeling of costs of loss caused by supply interruptions and voltage dips can be done by
considering these costs consisting of two components: a fix component, that one independent from the
duration of voltage loss/reduction; another component proportionate to the duration of voltage
loss/reduction [109], what leads to the related specific costs kA affecting the customers:

k A = kW t + k P

(A-1)

Where

kA

kW

specific costs of voltage loss/reduction

[/kW]

energy-specific, constant-cost component,

independent from the duration

[/kWh]

duration of supply interruption/voltage dip [h]

kP

power-specific costs for voltage dips

[/kW]

Some figures on mean cost components

Based on study results in different European countries, mean values for related costs/kW have been
calculated [106], resulting into the following mean cost components dependent on the duration of supply
interruption/voltage dip:
Table A-1 Mean cost components
Duration
0
min
Household
Costs
Agriculture
0,006
(mean
values)
Commerce
1,59
[/kW]
Industry
2,6

1
min
0,03
1,92
3,5

15
min
0,11
0,16
3,99
8,7

1
h
2,28
16,8
13
17

4
h
8,2
62
46,5
49,7

8
h
25,4
96,2
80,1
80,3

Applying these values to a diagram and, based on linear interpolation, adding trend lines results into the
following functions for the mean values for costs of supply interruptions:

123

/kW

Agriculture

y = 12 ,51 x + 1,53

Industry

y = 9,72 x + 5,49

Commercial

y = 9,97 x + 2,47

Household

y = 2,94 x

10 0

80

60

40

20

0
0

Duration [h]

Fig. A-1 - Diagram of mean cost components

While the gradient of the trend lines is characteristic for the specific costs of interruptions, the starting
values at 0 h give the specific costs for voltage dips (and short interruptions).
From the results, the following Table A-2 shows the specific voltage dip costs:
Table A-2 Voltage dip costs

Household
Agriculture
Commerce
Industry

Specific voltage dips costs kp

/kW
0,29
0,35 (1,53)
2,47
5,49

Some other results from research in other countries are as follows.

A Norwegian research project [108, 112] was undertaken during 2002, aiming besides others to evaluate
customers costs associated with voltage dips and short supply interruptions. The results showed the
following:
Approximate numbers of occurrence per delivery point:
Short supply interruptions, distribution network

13

Voltage dips, distribution network

13

Voltage dips, regional network

63

Overall customers costs:

Associated with voltage dips of 23 44 M/year, considering only business customers and voltage dips
with voltage levels reduced by 50% for a maximum of 1 s.
Associated with short supply interruptions of 80 M/year, considering only business customers.

124

The average sum of both being in the order of magnitude of the overall customers costs associated with
long supply interruptions: (> 3 min) of ~ 113 M/year
Average specific interruption costs:

For voltage dips:

0,67/kW
For short supply interruptions: 0,93/kW

Investigations by EdF [113] resulted in specific costs of short supply interruptions < 1 min of 0,76 /kW,
while for such shorter supply interruption the Norwegian study resulted in specific costs of 0,85 1,25
/kW [121].
The following example describes the economic effect of losses of supply in the case of a manufacturer in
textile (threads):
Consequences:

Increased piling up of unsalable bobbins, due to malfunction of the manufacturing process.

Need for 8 hours time until the entire manufacturing system is regularly working again.
Costs for production loss: 6.300,--, to be completed by staff costs resulting from staff not being
able to do any work (manufacturing process, telephone, PCs), in the considered case to be calculated
with 2.000,--/h.
Other considerations on remedial measures and cost aspects [114].
On principle, remedial measures can be taken on different supply network voltage levels, within the
customers installation as well as on equipment design stage (considering modifications of the supply
network (HV, MV) design).
On an LV level, within the customers installation to reduce the effects of voltage dips or short
supply interruptions, targeted at particularly important devices or processes.
At design and construction of the (more or less) susceptible device

Voltage dips generally imply a solution that provides some means of supporting voltage, while
interruptions usually require a source of energy to replace the lacking one from the electricity supply
network.
Economic considerations play an important part in balancing the cost of the remedial measures with the
gravity of the possible disturbance arising from voltage dips or short supply interruptions.
In HV-/MV-network oriented, voltage dips and short supply interruptions are mainly caused by events in
the MV networks, the related percentage being reported by more than 80%. On the network side, the most
effective method for reduction of ARCs appears to be increased realization of MV lines as buried cables.
According to some scientific investigations, 100% cabling would reduce the number of dips by 67%, but
due to longer durations of loss of supply, the end costs would be reduced only by 1%. Huge financial
efforts for reaching comprehensively cabled MV networks would be facing a quite modest success related
to the supply interruption costs.
Another option is given by dividing given networks. Dividing a network into two halves results in a
reduction of voltage dips by 50% each. This measure is followed by a decrease of redundancy, a freedom
of switching of network parts, as well as a freedom of power plant use and therefore of security of supply
[113]. Based on the measure of dividing a given network, a calculation example may highlight the cost
relation for statistically avoiding one voltage dip. The example is based on an MV network with a length
of 4.539 km, this one supplying 616.000 customers. Measurements conducted in the 30 substations of this
network show a mean value of 21,2 voltage dips per substation and year to be expected and a statistical
occurrence of 0,14 disturbances per km.
Two-busbar operation enables a reduction of occurring voltage dips to half, i.e., 10,1/substation, year. For
enabling this kind of operation, costs of around 15,5 M are to be afforded, for 30 Peterson coils and 8
transformers. By this measure, over the entire MV network, statistically 10,1 x 30 = 318 voltage dips per
year are avoided.

125

Starting from this point and considering the overall effort of 15,5 M, the costs for avoiding one voltage
dip/year for every customer in the considered MV network would statistically amount to around
15.500.000 : 318 = ~ 49.000,-- . Without considering the costs for the transformers, this cost would
amount to around 25.000,--.
Taking into account the overall costs of 15,5 M for the statistical avoidance of the reduction of the
expectable number of voltage dips to half, these costs were equal to e.g. providing flywheel energy
storage (1 MW, 50.000,--/piece) for 320 enterprises or of flywheel energy storage for 160 enterprises (8
M) + 1.500 smaller UPS ( 300,--) during 50 years.
Further options are given by the application of voltage stabilizers (dynamic voltage restorers, DVRs),
with or without using energy storage units. These devices, normally expected to support the load for a
short period, using heavy-duty batteries, super capacitors, or other forms of energy storage such as highspeed flywheels, generate the missing part of the supply [105].
For shallow dips, where there is considerable retained voltage, so that energy is still available, but at too
low of a voltage to be useful to the load, there are several established automatic voltage regulator
technologies (automatic voltage stabilizers) [105]. They rely on generating full voltage from the energy
still available at reduced voltage during a dip. Because there is no need for any stored energy mechanism,
these devices can be used for long-duration events.
Attention is to be drawn to the selection of an automatic voltage stabilizer in a way to solve the particular
problem without creating additional ones. For example, an inappropriate connection of a ferroresonant
stabilizer to the output of an inferior generator aiming at a reduction of voltage variations would result in
the affection by frequency fluctuations of the inferior generator, which would produce an AC voltage
change of 1.5% for each 1% change of frequency.
Opposite to the options for voltage stabilizing at MV network level, a well-proven measure to reduce the
effect of voltage dips or short supply interruptions is the application of a UPS to retain the supply of the
considered system at least for a time to arrange an orderly shutdown, thereby protecting the data, and
therefore enabling the immediate restart of the process after return of the supply. Such UPSs cover a
range from very small home user systems to huge systems for the protection of industrial processes.
UPSs for the home or small commercial applications (for example, for the protection of PCs or smaller
servers) cost about 300,--/piece. When considering cost aspects related to the protection of PCs, smaller
EDP systems, for 2003, a number of PC shipments for Western Europe of 31,076,639 units is reported,
and for 2004, a number of such shipments of 33,720,772 units was forecasted [105].
For a much larger 230/400 VAC UPS used in a customers installation, the following data may serve as
an example for the features/costs:

Max. storable energy: 2,7 MJ

Bridgeable time at 100% loss of supply: 1.4 s at 1.400 kVA, 2,8 s at 800 kVA
Purchase costs 1999: ~ 840.000 USD, operating costs per year: ~ 50.000,--
Effect: 126 successful carryovers within 55 months

The effect of application of this UPS is to be evaluated by comparing the overall costs for purchasing and
operation with the costs to be expected due losses resulting from 126 events over the time, i. e.:
Expected costs = # Events x $/Event
Alternatively, a buffering unit with electrolytic capacitor can be applied. Compared with a UPS, buffering
units are smaller, dont need any maintenance, and are cheaper. Operating without any battery, buffering
units cause fewer problems at operation and disposal in general.
DC-UPS or buffering unit should ensure

Bridging of a voltage dip/supply interruption by delivery of Ersatz-current.

Notifying of the occurrence of a voltage dip/supply interruption to the supplied control unit for
starting data storage for the case that the reserve energy would be used up.

126

Device oriented.

It is possible to cope with voltage dips/short supply interruptions by enhancing the immunity of electrical
equipment and systems from these phenomena, an option that most economically were to be used at
designing equipment/systems. Sometimes the replacement of older existing equipment, systems or control
units, may be the most economic solution.
See Brauner study, typical supply dip characteristic and ITIC curve [115].

Fig. A-2 Typical supply dip characteristic and ITIC curve

As conclusions on PQ solutions cost, it appears as very costly to try to cope with the phenomena of
voltage dips and short supply interruptions by improving the network performance. Through this type of
solution, elimination of dips may be recognized as probably impossible. In some special cases, where the
need justifies the expense, it may be possible to arrange for dual supplies that are derived from
sufficiently separated parts of the grid as to be considered independent.
Considering the different options for coping with voltage dips and short supply interruptions, Fig. A-3
[105] shows the given cost situations, being characterized by a steady increase of costs when moving
from equipment through the plant to the infrastructure.
The cheapest solution appears to be consideration of dips and short supply interruptions at equipment
design, with small effort per piece to make it resilient to the effects of dips and short interruptions. In
most cases, some form of mitigation equipment is applied within the customers installation, due to the
kind of equipment/system to be protected.

Figure A-3 Cost mitigation increases as the power level of the load that must be protected increases

127

B - Hydro-Quebec-Ireq Report for Economical Aspect of Harmonics on

Distribution and Transmission System
In 1998, Hydro-Quebec finalized a technical and economical study on the impact of voltage and current
harmonics on distribution network. Previous studies have been done earlier at a smaller scale covering
only a few lines. The 1998 study was one of the first to cover an entire distribution network and the
results were published in 1999 [165]. An interesting estimation of worldwide harmonic cost was then
presented, based on a gross national product extrapolation of countries.
Systematic methodologies were developed for the study considering the literature and know-how of that
time. Formulas representing every aspect of harmonic losses were analyzed. Those formulas cover
power losses (heating) and equipment loss of life. The study includes analysis of distribution and end
user equipments.
Three level of voltage harmonic were considered corresponding to 50%, 100% and 150% of the planning
level fixed by IEC 61000-3-6 [130]. This approach gives a good figure of the projected economic losses
in term of harmonic level and the results can be used to evaluate the impact of harmonic emission limit
changes, which is mainly ruled by the network regulator.

B.1 Harmonics Power Losses Evaluation

The evaluation of harmonic losses requires the knowledge of voltage and current harmonic level at PCC.
For this reason, a typical Hydro-Qubec distribution line was used to evaluate the harmonic current from
the voltage harmonic planning level of the IEC 61000-3-6 [130]. The harmonics losses of this typical line
were then used to extrapolate the results to Hydro-Qubec overall distribution network.

B.2 Harmonics Losses Evaluation

The following table gives the overall evaluation of power losses for the distribution network. The
equipments and lines were considered as loaded at nominal capacity.
Table B.1 - Distribution system power losses produced by harmonics at rated load (kW)
Harmonics level of 50% Harmonics level of 100% Harmonics level of 150%
IEC
IEC
IEC
LV Line
9109
36424
81957
MV Line
6894
27575
62043
Transformer
2679
10713
24105
Capacitor
141
565
1271
Total
18823
75277
169376
A similar evaluation was done for the industrial load, which is presented in the following table.
Table B.2 - Industrial power losses produced by harmonics at rated power (kW)
Harmonics level of 50% Harmonics level of 100%
IEC
IEC
Motors
18286
73145
Capacitors
111
443

Harmonics level of 150%

IEC
164575
997

In the following tables, factors were applied to present a more realistic figure for the lines and the
equipments loading (Lines = 33.8% ; Transformers = 36.4% ; Capacitors = 97% ; Motors = 36.7%).
Those factors were determined by Direction Distribution, Hydro-Qubec based upon the 1998 operating
costs and use factor as a function of the annual fluctuation of network load.
Table B.3 - Estimated distribution system power losses produced by harmonics (kW)
Harmonics level of 50% Harmonics level of 100% Harmonics level of 150%
IEC
IEC
IEC

128

LV Line
MV Line
Transformer
Capacitor
Total

3078
2330
975
137
6491

12311
9320
3899
548
26078

Table B.4- Estimated industrial power losses produced by harmonics (kW)

Harmonics level of 50% Harmonics level of 100%
IEC
IEC
Motors
6711
26844
Capacitors
108
430

27701
20970
8774
1233
58678
Harmonics level of 150%
IEC
60399
967

B.3 Harmonic Losses Cost Evaluation

A cost of 0.085$US for each kWh of energy sold was used to produce the annual cost shown in the next
table. This rate is based upon the projected production cost of a kWh in a thermal plan for year 2000.
Table B.5- Estimated annual cost for distribution system power losses produced by harmonics (k$US)
Harmonics level of 50% Harmonics level of 100% Harmonics level of 150%
IEC
IEC
IEC
LV Line
2290
9167
20626
MV Line
1733
6940
15614
Transformer
726
2903
6533
Capacitor
102
408
918
Total
4833
19418
43692
Table B.6- Estimated annual cost for industrial power losses produced by harmonics (k$US)
Harmonics level of 50% Harmonics level of 100% Harmonics level of 150%
IEC
IEC
IEC
Motors
4997
19988
44973
Capacitors
80
320
720

B.4 Conclusion
Considering that in 2000 the total annual Hydro-Qubec distribution electrical consumption was
150TWh, the following table presents the percentage of energy losses caused by harmonics.
Table B.7- Estimated distribution system power losses produced by harmonics in percent of total energy
used
Harmonics level of 50% Harmonics level of 100% Harmonics level of 150%
IEC
IEC
IEC
LV Line
0.018
0.072
0.162
MV Line
0.014
0.054
0.122
Transformer
0.006
0.023
0.051
Capacitor
0.001
0.003
0.007
Total
0.038
0.152
0.343
At the time of the study, the harmonics level of Hydro-Quebecs distribution network was evaluated at
near the 50% IEC planning level. This represents a 0.038 percent of losses caused by harmonics. For
comparison, a similar study [166], done over the Greek MV and LV distribution network, gives values in
the range of 0.15% to 0.20%, which is more like a harmonics level of 100% IEC level of the HydroQubec study. In Greek publication, simplifications and assumptions were made in order to obtain an
over estimation of the economical impact of harmonics in the distribution network. The aim was to
conclude that it is useless to put effort in network harmonics improvement. Both results could not be
directly compared in term of network configuration, equipment characteristics, harmonics level,
technique used and assumptions made, but they are quite similar.

129

(Losses) = (Harmonics)2

P = R x I2
losses
% harm

50%

100%
IEC threshold

150%

130

APPENDIX 4
A

Structuring the Data Collection Process

For the purpose of structuring the data collection process, a proper taxonomy can be useful; in the
following the most important items are recalled and described.
Critical sectors
They are in general PQ critical and demonstrate similar PQ sector sensitivity, for which the methodology
can be potentially targeted.
CS1.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
CS2.
1.
2.

3.
CS3

Industrial sectors type uni-product / uni-process (continuous manufacturing)

Food / Beverage (production processing and preserving, NACE25 15)
Glass, ceramics, cement, lime and stone (NACE 26)
Metallurgy (NACE 27)
Pharmaceutical ( NACE 24.4)
Plastic and rubber (NACE 25)
Publishing, printing and reproduction of recorded media (NACE 22)
Pulp and Paper industry ( NACE 21)
Refineries, chemical industry (NACE 23.2, 24 except 24.4)
Semiconductor industry (NACE 32.1)
Textile (particularly preparation, spinning and manufacture NACE 17.1 and 17.5)
Wood and wood products (particularly production of sheets, boards and panels NACE 20.2)
Industrial sectors type multi-product / multi-process
Automotive industry (NACE 34)
Continuous or highly automated or precision manufacturing not defined in other sectors metal products (NACE: 28 fabricate metal products - except structure work 28.1 , 30 - office
equipment, 31- electrical equipment, 32 except 32.1 RTV and telephony electronics, 33
medical equipment)
Manufacture of machinery (NACE 29 and 31)
Services sectors

1.
2.
3.
4.
5.
6.
7.

Air transport (NACE2 62)

Database activities e.g. hosting services (NACE 72.4)
Financial intermediation (particularly central banking, but also other general transactions, section
J; NACE 65-67)
Hospitals (NACE 85.1)
Hotels (NACE 55.1)
Railways (NACE 60.1)
Telecommunications (NACE 64.2)

Cost categories
1.
2.
3.
4.
5.

Process interruptions
Process slowdown
Equipment damage
Reduced lifetime and mis-operation (postponed costs)
Reduced energy efficiency - increased energy loss

25

The NACE Code is a pan-European classification system which groups organisations according to their business activities;
http://ec.europa.eu/comm/competition/mergers/cases/index/nace_all.html

131

6.
7.
8.

Product quality
Worker productivity
Other indirect costs

Cost types - Operating consequences

1.
2.
3.
4.

5.
6.
7.

WIP loss, often referred to as production loss or production damage. This category includes this
part of labor and material costs which has been inevitably lost. This category has two major
components - labor and material cost.
Working capacity loss basically quantifies efforts to make up this part of production which can
still be repaired or reused WIP recovery
Labor cost resulting from production outage lost or extra paid
Other related costs when quantification using above mentioned categories is not easily possible.
These could be a process slow down when it cannot reach its nominal efficiency including
process restart cost and additional maintenance costs. These include process and process restart
cost.
Equipment related costs, including equipment damage and replacement costs, hire of temporary
equipment, and running costs of back up equipment
Indirect costs, e.g. consequences of late delivery such as penalties to clients, extra compensation
to personnel, cost of personnel or equipment evacuation, extra insurance cost
Savings from unused resources (labor, energy, material).

PQ phenomena
1.
2.
3.
4.
5.
6.

Voltage dips and short interruptions

Harmonics (current and voltage)
Surges and transients
Flicker
Unbalance
Earthing and EMC

Equipment:
as a PQ source and affected by PQ
1.
2.
3.
4.
5.
6.
7.
8.
9.

Capacitors
Contacts and relays
Electric motors
Electronic equipment
Lighting equipment
Processing equipment
UPS uninterruptible power supplies
VSD and other static converters
Welding and smelting equipment

PQ consequences
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

Circuit breakers (including protective devices) nuisance tripping

Capacitor damage
Capacitors dielectric loss
Computer lock up
Computers / other electronics damaged
Data loss
Electric shock
Lights flicker or dim
Loss of synchronization of processing equipment
Motors / process equipment - malfunction or damage
Motors overheating energy losses
Noise interference to telecom lines
Relays /contactors nuisance tripping

132

14. Transformers / cables overheating with related energy losses

15. Premature ageing and loss of reliability of electrical equipment
16. Overheating of neutral conductor in lines and transformers and related problems (e.g. transient
overvoltage, tripping of RCDs, losses)
Solutions
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.

Equipment immunity
Backup generator
Dynamic voltage restorers
Harmonic filter
Isolation transformers
Line conditioners or active filters
Multiple independent feeder
Oversizing equipment
Shielding and grounding
Site generation capable of substituting supply
Static transfer switches
Static VAR compensator
Surge protectors on key pieces of equipment
Uninterruptible power supply (UPS) devices
Voltage stabilizers

Executing Data Collection Process End User Perspective

With reference to the Model A presented in Chapter 4, the following step-by-step procedure can be
recommended to estimate the process interruption cost, PIC:

Step 1:
Based on the assumptions mentioned above, evaluate the total number of product
variants, the total number of process activities at any given instant and the maximum number of
potential failures among all process activities.

Step 2:
For each product variant, determine the associated progressive cost components from
A1 to A726 for each process activity. Note: If for a particular process activity the maximum number
of failure scenarios is less than the maximum number of failure scenarios in all process activities,
then the cost components A2, A3, A4 and A5 associated with failure scenarios assumes zero value.
Establish the cost related to component A6, particularly employees tolerance for each failure instance
of process activity. Establish customer satisfaction and reputation retained level for instance of nondelivery of a product variant in time. Finally calculate savings A7 due to failure scenarios.

Step 3:
Prepare a work schedule highlighting the active process activities for a typical day for
which process interruption cost profile has to be established. This work schedule should include
process activities for various product variants and their simultaneous.

The proposed specification and division of sectors by Taxonomy A may help an end user to focus
economic data collection on certain aspects.
The proposed methodology suits the collection of cost data in industrial - uni-process sectors. Most of
processes are organized in a series topology as indicated in the Figure B.1. With reference to Fig.B.1, the
stream I is the simple extreme. In such a case, close attention should be paid to the calculation of process
interruption costs as all the processes are closely interdependent. In a Just in time scenario, where there
are no buffers in the process, one process failure may stop the whole production line.
These sectors are particularly vulnerable to voltage dips and related process interruptions
For sectors classified as Industrial - multi-process, the production process is less often performed in
continuous stream Figure B.1 stream VI, as an extreme. In such case one process interruption may not
26

Chapter 4 clause 4.3.2

133

necessarily stop other processes. The consequences are limited to the critical processes which are needed
to make up for lost lead time of the final product. The focus is therefore on extra cost (e.g. bonus extra
time labor cost) to recover lost or partly lost WIP (A127).
These sectors are vulnerable to voltage dips but also other phenomena like harmonics and unbalance,
transient and surges.

I
II
III
IV

VI

Figure B.1: Six typical configurations considered for industrial processes

In the Services sectors it can be difficult to distinguish the root cause of process interruption,
particularly in a commercial environment where software, hardware or a PQ issue maybe responsible.
Once the root cause has been attributed to PQ, the consequences could be:

Loss of transactions in progress requiring data recovery, reprocessing and repeated transmission. The
standard data collection process described here should be modified either using a mix of A1, A2 and
A5 cost components.
Process restart cost using A4 cost calculation
Other costs, particularly lost revenues (missed opportunities) as result of customer dissatisfaction and
loss of reputation, but also such consequences as penalties and other elements of A5 cost component.
Potential savings from A7 are usually negligible.

The alternative to the procedure described above is to use A3, the process slow down method, to simply
calculate business slow down rate.
In addition, due to lack of clear differentiation whether a process was interrupted or not, all phenomena
related cost components should be used to check that nothing has been omitted. It also should be checked
whether any items have been double counted, particularly A5 (equipment damage due to process
interruption) and equipment damage due to occurrence of PQ disturbance.
Service sectors are relatively more vulnerable to the consequences of long interruptions but PQ may still
be the root cause of substantial economic losses.

Conclusions

Deregulation and industry restructuring are placing utilities under increasing pressure to both improve
customer reliability and decrease cost. To remain competitive, it is critical to prioritize maintenance tasks
so that the best possible reliability is achieved with increasingly constrained maintenance budgets.

27

Chapter 4, clause 4.3.2

134

The purpose of maintenance is to extend equipment lifetime and/or reduce the probability of failure.
Corrective maintenance replaces or repairs failed components, while preventive maintenance is a
proactive effort to improve the condition of an unfailed component that may be deteriorated to some
degree.
Power quality can be surveyed for three major purposes:
1.
2.
3.

Technical reasons (which are more important in industrial centers and to facility managers)
Economic reasons (including all sectors linked with the electrical system)
Social reasons (in which the governmental system is bound to offer desirable services)

Appropriate quality of electrical energy can greatly reduce expenses arising from losses or system
disturbances. Improvement of power quality can overcome these problems as well as increase equipment
longevity and system reliability.
In poor power quality, financial damages imposing upon residential, industrial, and trade consumption
would be very different. Therefore, it must not be neglected that some huge portion of electrical energy is
consumed in residential utilization. Losses of power, decline in useful life of power system equipment, as
well as non-purchased energies due to power quality deficit are counted as parts of financial damages
imposed upon facility managers. Furthermore, governments fulfill community satisfaction and demands
with legislation for facility managers. All the above-mentioned instances appear as positive pressure in
promotion of power quality in a power system.
The scientific response is that they are only due to economic limitations, which of course the alternative
implication may be suffering from poor initiatives in establishment of state laws in this respect and also
lacking practical scientific capability necessitated in supplying those wants.
In this report, attempts have been made toward implicating economic damages resulting from quality
problems encountered with shape of consumption. Requirement investment for power quality promotion
counts as main criteria for comparison.

135

APPENDIX 5
A

Illustrative Case Study

This section illustrates the application of the NPV approach to a hypothetical high-tech facility based on
an actual facility. The example considers a semiconductor wafer-fabrication factory located in the United
States. Wafer fabrication requires a high level of power quality and reliability due to the sensitivity of the
equipment and process controls and therefore is a strong candidate for applying the NPV analysis.

A.1

Base Case: Facility Data and Base Case Calculations

For purposes of this case study, each process interruption resulting from an unmitigated voltage dip is
assumed to cause an overall business loss of $500,000 from various factors, including lost production,
extra labor, and scrap. Losses due to unmitigated protracted power interruptions are expressed as a
constant $/hr rate of $750,000/hour. The actual measured rates for PQ and reliability phenomena for this
case study, shown in Table A.1, were obtained from power quality monitoring and/or statistical analysis
of historical data. Although this facility was subjected to 73 voltage dips during the course of the year,
only 12 dips were sufficiently low to cause a process interruption (see Figure A.1). Only those voltage
dips resulting in process interruptions (i.e. costs to the facility) are useful for the NPV analysis. This data,
including assumptions for other sources of PQ-related costs, is shown in Table A.1. A combined discount
and inflation rate of 5% was assumed for this analysis.
Table A.1 Assumed Rates and Costs of PQ and Reliability Phenomena
Failure Type
Failure
Repair Time
Costs
Rate
Long-term utility interruption
2/year
4
$750K per hour
(feeder)
hours/interruption
Voltage dips (producing
12/year
1 hour/dip
$500K per event
interruptions)
Transformer and local equipment 0.1/year
3 hours/interruption $750K per hour
failure
RMS Variation Magnitude-Duration Scatter Plot
Sensitivity of Facility Equipment to Voltage Sags

2.00

Total Events: 73
Events Violating ITIC Lower Curve: 12
Events Violating ITIC Upper Curve: 0

Voltage Magnitude (pu)

1.75
1.50
1.25
1.00
0.75
0.50
0.25
0.00
10-3

10-2

10-1

100
Seconds

101

102

Electrotek/EPRI

103
PQView

Figure A.1. Process Susceptibility to Voltage Dips at the Fabrication Facility

Having identified the cost of unmitigated PQ events and a discount/inflation rate, we now turn our
attention to the impact that different mitigation approaches will have. The analysis below employs
different scenarios, or cases, to allow a comparison of facility benefits/costs with different combinations
of mitigation.

136

The base case NPV analysis is summarized in Table A.2. Note that the facility loses US$12.2 M/year due
to the cost of unmitigated power quality events when no mitigation is employed.
Table A.2: Base Case: NPV for Existing Facility and Conditions

A.2

Case 1: Redundancy in the Utility Supply

One method to mitigate a power supply interruption is to have an alternate feeder with a fast switch. The
alternate feeder is assumed to have the same reliability and PQ characteristics as the primary feeder (see
Table A.1). The costs associated with the alternate feeder are shown in Table A.3. Failure Mode and
Effect Analysis (FMEA) for this case is given in Table A.4.
Table A.3 Feeder Cost Information
Initial cost of building the
$ 525,000
feeder + mechanical switch
Installation cost
10% of initial
cost
O&M cost of the feeder +
5% of initial
mechanical switch
cost
Useful life
10 years
Table A.4 FEMA Analysis: Case 2
Failure Mode for
Effect
Interruption
Supply would switch on to
Feeder 1 failure
feeder 2. The critical load
wont be affected.
Supply would switch on to
Feeder 2 failure
feeder 1. The critical load
wont be affected.
Feeder 1 and 2 both fail
Critical load is interrupted.
Transformer or cable
Critical load is interrupted.
failure
Voltage dips from the
Critical load is interrupted.
utility side

137

The two-feeder system introduces redundancy in the power supply. A reliability block diagram (RBD) for
interruption failure is shown in Figure A.2. For the reliability calculations, a common-mode factor of 0.05
is assumed. The QRA analysis results are shown in Table A.5. For the cost analysis, an equipment life of
ten years is assumed.

Feeder 1
Local
switchgear
Feeder 2

Figure A.2. Adding a Redundant Utility Feeder

Table A.5 Ten-year NPV results for a Redundant Feeder

Adding a redundant feeder to this facility does nothing to mitigate voltage dips, but significantly reduces
the impact of protracted interruptions, thereby improving the NPV of unmitigated PQ by approximately
$40M.

A.3

Case 2: Applying a Battery UPS

Case 1 examined the benefit of reducing the impact of long outages. However, the cost impact of voltage
dips is considerably greater, making it likely that the most beneficial mitigation option will likely include
a dip-mitigation solution. This case considers a battery UPS for dip ride-through. Details of the UPS
configuration and cost are given in Table A.6.
Table A.6 UPS Information
Failure rate of each unit
Repair time per unit
Redundancy
Common-mode factor for 2-out-of-3 and 3-out-of-3
failure mode
Initial cost of three units
Installation cost
O&M cost/yr
UPS life span

1 failure/yr
6 hours/yr
2 out of 3
0.01
$1,000,000
$100,000
$100,000
10 years

138

FEMA analysis for this case is shown in Table A.7. N-1 redundancy is assumed. Therefore, the UPS
system would protect the load even if one unit (out of three) fails. A common-mode failure factor of 0.01
is assumed for the redundancy calculations. The RBD for the UPS configuration is shown in Figure A.3.
Table A.7 FEMA Analysis: Case 3
Failure Mode for Voltage
Effect
Dips
1 out of 3 UPS units fails.
Critical load will still be
protected.
2 out of 3 units fail.
Critical load would be
exposed to dips.
3 out of 3 units fail.
Critical load would be
exposed to dips.
By-pass switch

UPS 1

UPS 2

Critical Load

UPS 3
2 out of 3 UPS system

Fig. A.3 NPV Calculation for Adding Redundant UPS

As shown in Table A.8, adding redundant UPSs to protect critical loads reduces the average number of
unmitigated voltage dips from 12 to 0.0135 per year, resulting in substantial savings and a positive net
present value.
Table A.8 10-year NPV Results: Redundant UPS

Because of its impact on voltage dips, a redundant UPS has a profound impact on reduction of
unmitigated PQall but eliminating these costs while adding capital and ongoing maintenance costs. The
overall improvement in NPV with this option is over $90M (i.e., -$2M (-$95M) = $93M).

139

A.4

Case 4: Using Distributed Energy Resources (DER)

From cases 2 and 3, it is evident that the optimal QRA solution should include mitigation of most voltage
dips as well as interruptions. This case is built upon case 3, except that distributed energy resources
(DER) (in this case, on-site generation) is considered for protecting against long interruptions. The QRA
analysis for dips is the same as in Case 3. DER information is given in Table A.9.
Table A.9 DER Information
2/year
DER failure rate ()
DER repair time
6 hours
Redundancy
1-out-of-2
Initial cost of DER
$1,000,000
Installation cost
$100,000
Fuel cost/yr
$95,278
O&M cost/yr
$50,000
DER life span
10 years
The facility is assumed to have two DER units with N-1 redundancy. FMEA analysis for this case is
shown in Table A.10. NPV for long interruptions is shown in Figure A.4. The block of Local DGs
represents the equivalent parallel combination of two DER units in parallel at the facility.
Table A.10 FEMA Analysis: Case 4
Failure Mode for Interruption
Effect
The utility feeders fail.
Backup generator should come online. Critical load
wont be affected.
Utility feeders fail and the DERs
Critical load will be interrupted.
fail to start.

Utility feeder
Local
switchgear
Local DGs

Fig.A.4 Configuration of local distributed generation with utility feed

The results of the QRA analysis are shown in Table A.11. For the cost analysis, it is assumed that DER
provides ancillary benefits such as CHP and peak shaving. The savings due to these are assumed to be 5%
of the total initial cost. Positive NPV indicates that DER can be an economical option for the
semiconductor-fabrication process. Note that DER will not provide any protection against voltage dips.
The NPV in Table A.11 does not include the losses due to twelve voltage dips per year. If losses due to
voltage dips are considered, NPV will come out to be 0.88M$. Therefore, installing DER without any dip
ride-through technology is not an effective QRA solution.
Table A.11 QRA Results: Case 4

140

Distributed generation is able to mitigate the duration of power outages; however, its lack of impact on
voltage dips is a strong disadvantage in this particular analysis. At $44M, the overall improvement in
NPV of this option is roughly comparable to that of a redundant power feed (-$51M (-$95M) = $44M).

Case Comparison and Sensitivity

The results of the Base Case and three alternative cases are illustrated in Figure B.1. Although a myriad
of other options can be considered, among the three cases, Case 2: Battery UPS offers the best 10-year
NPV and should be seriously considered, along with other solutions that mitigate the impact of voltage
dips.
It is also important to note, however, that the other options may offer benefits not taken into account in
this analysis, such as improved safety, environmental issues, or options for combined heat and power
(CHP) or cogeneration. These and many other issues can be considered in the NPV analysis depending on
the sophistication of the application and those designing it. The key is that all cases considered be treated
equivalently.
Comparison of NPV Cases
$0
Base Case

Case 1: Redundant
Feeder

Case 2: Battery
UPS

Case 3: On-Site
Generation

NPV (10-yr)

-$20,000,000

-$40,000,000

-$60,000,000

-$80,000,000

-$100,000,000
Cases

Figure B.1 NPV Values for Mitigation Cases

It is also important to consider the sensitivity of such an analysis to variations in the input parameters
usedin particular, the number of voltage dips assumed per year can have a profound impact on the
results of the NPV calculations. For example, if the true cost of voltage dips to this facility were actually

141

$250,000 per event rather than $500,000, the economic analysis would be impacted as illustrated in
Figure B.2 below. Although the relative rankings of the various solutions considered here are not
changed, the disparity in their impact on 10-year NPV is considerably reduced. For PQ solutions that
address only voltage dips (such as dynamic voltage restorers, etc.), reassessment of the cost of individual
dips would likely have a profound impact on economic performance.
Comparison of NPV Cases
$0
Base Case

Case 1: Redundant
Feeder

Case 2: Battery
UPS

Case 3: On-Site
Generation

NPV (10-yr)

-$20,000,000

-$40,000,000

-$60,000,000

-$80,000,000
Cases

Figure B.2 NPV Values for Mitigation Cases with reduced impact of voltage dips

142

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ACKNOWLEDGMENTS
Members C4.107 - Economic Framework for Voltage Quality
Jose GUTIERREZ IGLESIAS
Detmar ARLT
Gerhard BARTAK
Math BOLLEN
Dave BYRNE
David CHAPMAN
Alice DELAHUNTY
Philippe EYROLLES
Elena FUMAGALLI
Mats HAGER
Zbigniew HANZELKA
Bill HOWE
Rafal JAHN
Alex McEACHERN
Ian McMICHAEL
Jovica V. MILANOVIC
Patxi PAZOS
Roman TARGOSZ
Mario TREMBLAY
Jasper Van CASTEREN
Mathieu VAN DEN BERGH
Raghavan VENKATESH
Paola VERDE

Spain
Germany
Austria
Sweden
Ireland
UK
UK
France
Italy
Sweden
Poland
USA
Belgium
USA
Australia
UK
Spain
Poland
Canada
Netherlands
USA
India
Italy

Utility
Academia
Utility
Research
Utility
Institution
Utility
Utility
Academia
Industry
Academia
Research
Research
Manufacturer
Research
Academia
Utility
Institution
Research
Institution
Manufacturer
Manufacturer
Academia

Chairman C4.107 & Coord. Ch. 3

Coordinator Chapter 1
Coordinator Chapter 3

Coordinator Chapter 5

Coordinator Chapter 2
Coordinator Chapter 4

Coordinator Chapter 2 and 4

Other former C4.107 members or that collaborate by correspondence:

Herivelto de Souza BRONZEADO Brasil
Jhan Y. CHAN
UK
Philippe GOOSSENS
Belgium
Kurt REYNDERS
Belgium
Angela RUSSO
Italy
Helge SELJESETH
Norway
Gregorio VARGAS
Spain

Utility
Academia
Utility
Utility
Academia
Research
Utility

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