Today, grid planning and operations do not adequately differentiate resource performance. Grid operators rely on offline guesses regarding overall resource performance and system risk exposure, which threatens the reliability and resilience of the power grid, especially given the nature and characteristics of emerging intermittent resources. The default strategy to combat the inability to quantify resource offer risk and system risk is to use antiquated grid management practices, which rely on conventional technologies (e.g., thermal plants). These obsolete management systems and decision support tools have no way to incorporate or capture uncertainty of a particular resource and there is no acknowledgement of the correlation of stochastic resources across the interconnected, synchronized power grid. These practices suppress the value proposition, utilization, and adoption of emerging technologies.

The PERFORM program aims to shift the operations and planning to a risk-driven paradigm. Future operations and investment strategies will more closely resemble portfolio management practices; resource offers will be differentiated by their overall historical performance and prediction of their real-time performance. This shift enables the ability to balance the tradeoff between minimizing costs versus delivery risk while providing the foundation for an incentive compatible environment that efficiently mitigates risk. This program will provide grid operators a transparent quantification of their system position and overall risk exposure, which does not exist today. The PERFORM program goals are to:

• Design planning and operational practices built upon risk management and performance evaluation of all players in the electric power sector, from behind the meter to bulk resources
• Develop transparent risk assessment methodologies that are well understood and widely adopted
• Leverage finance, actuarial science, and operations research approaches to quantify risk, mitigate risk, and achieve a risk-driven resource value proposition based on portfolio management
• Translate financial and actuarial concepts to grid resource performance metrics
• Identify new business opportunities for assessment of resource performance to enable efficient risk mitigation

This workshop aimed to identify innovative and ground-breaking grid risk management technologies by convening experts in finance, actuarial science, operations research, market design, and power systems. Decision making under uncertainty will transform grid planning and operations and pave the way for new business ventures for the evolving $300 billion per year electric power sector. The workshop goals were to:

• Explore future R&D pathways and identify key partnerships to ensure a transformative and disruptive impact for grid planning and operations based on a risk-driven paradigm
• Identify the required validation mechanisms to assess innovative grid risk management technologies that aim to significantly reduce operational costs, improve system reliability and energy efficiency, and incentivize efficient utilization of emerging resources
• Engage with a broader community to facilitate revolutionary ideas in grid risk management to support the transformation of the power sector

The meeting's output helped direct the actions of ARPA-E towards the most promising and appropriate high risk, high return R&D funding opportunities and management strategies.