Advances in electric power production technologies, grid measurements and monitoring, communications, computing, and innovative grid topologies have markedly changed the options available to provide electricity to end-users. The value propositions for electrical service have similarly become much more complex and diverse. The values of a grid design option can no longer be expressed just by using historical cost-emissions-reliability metrics. Nor can major decisions be made through closed analysis without consideration of the different stakeholders affected.
Unfortunately, across the electric power sector, there are few “best practices” for designing methodologies to assess and compare the value of diverse courses of action. Investment decisions and policy options are reviewed and interpreted by multiple stakeholders with different motivations and interests. The resulting value assessments often vary widely for the same or similar types of projects. These differences can be attributed to different assumptions about economic and engineering inputs; time, geographic, and power system scales; the use of closed-source modeling tools and analysis methodologies; stakeholder-specific choices of the key metrics or grid attributes that inform the valuation; and/or the choice of which grid investment, design, or operation alternatives to compare.
The valuation framework developed in this project provides a deliberate methodology to identify the criteria for deciding among alternative grid strategies or configurations; determining what information is required to inform that decision; selecting the methods and tools that can best provide that information within time and budget constraints; and interpreting the results to compare multi-criteria valuation assessments. The process is deliberate, inclusive of stakeholders, transparent, and well-documented to ensure clarity, accountability and repeatability. As there are many valid ways to perform a valuation study, the framework is not meant to be a prescriptive “how to” manual or an official rulebook for valuation. Rather, it describes a process consisting of activities that should be part of a valuation that is comprehensive, transparent, and soundly based on technical and economic principles.