Lehigh University

Traditionally, the grid relies on conventional bulk power plants to provide the flexibility to operate power systems reliably. These assets can guarantee available capacity except in rare events. The existing risk management strategy protects against those rare events and aligns well with conventional technologies. New risk management strategies are needed due to the shift in grid resources: variable renewable resources, distributed energy resources, and storage technologies. Management systems must be able to leverage all capabilities of these new technologies to maintain an economical and reliable grid. PERFORM projects aim to address that need by developing methods to quantify and manage risk at the asset and system levels for the grid.

The Lehigh University team will develop a framework for asset and system risk management that can be incorporated into current electricity system operations to improve economic efficiency through the establishment of an electric assets risk bureau. Discrepancies exist between the power scheduled by a system operator and actual power generated and/or consumed. These discrepancies—exacerbated by unplanned contingencies (e.g., variable renewable energy sources, natural disasters)—are caused by multiple factors, including the different financial, environmental, and risk preferences of power producers, consumers, and aggregators. The Lehigh team will use scoring and rating concepts from banking and financial institutions as well as optimization methods in dispatching power systems to help system operators and electricity markets schedule resources. The Lehigh team's research will counteract two failures in electricity system operations — imperfect information and missing markets for risk management products—by developing risk scores at the asset level based on historical data and incorporating the asset scores into decision making at the system level.