298
1, JANUARY 2010
Global Minimization of Financial Losses Due to
Voltage Sags With FACTS Based Devices
Jovica. V. Milanovic, Fellow, IEEE, and Yan Zhang, Student Member, IEEE
Abstract—FACTS based devices are proven to be an efficient
mitigation solution for voltage sag prevention. The high cost of
FACTS based devices often prohibits their wider deployment
within power networks. This paper presents an approach for
comprehensively assessing the financial benefits to the network
resulting from their use. The annual financial losses of the entire
network due to voltage sags are used as a savings target. The
three most widely used FACTS based devices for voltage sag
mitigation, namely, Static VA Compensator (SVC), Static Com-
pensator (STATCOM) and Dynamic Voltage Restorer (DVR) are
then optimally placed using a Niching Genetic Algorithm (NGA).
The aim is to reduce overall financial losses in the network due
to voltage sags. The cost of the individual devices along with
their installation costs and annual maintenance are taken into
account in the optimization procedure. Since this methodology is
largely based on an economic evaluation of the solution, several
conventional economic analysis methods are utilized. Simulations
are performed on a 295-bus generic distribution network (GDN).
Index Terms—Dynamic voltage restorer, FACTS, genetic algo-
rithm, power quality, static compensator, SVC, voltage sags.
I. INTRODUCTION
OLTAGE sags are widely accepted to be the most promi-
V nent power quality problem when considering the financial
consequences to end users [1], [2]. Prolonged interruptions in
supply (i.e., complete loss of voltage) may result in higher finan-
cial losses when compared to voltage sags. However, the much
higher frequency of occurrence of voltage sags and increased
sensitivity of customers’ equipment to voltage disturbances re-
sults in an unacceptably high number of very costly interruptions
of production processes in industrial facilities [3]–[5].
End user financial losses due to voltage sags are reflected in
many aspects of industrial and commercial operations. These in-
clude for example: loss of revenue, lost opportunities, product
damage, wasted energy, decreased equipment life, field service
warranty work, manufacturing interruptions and loss of produc-
tivity. Improving industrial facility resilience and performance
during power quality disturbances can result in significant sav-
ings and competitive advantage.
FACTS based mitigation devices deployed in distribution
systems and industry are proven to be effective in reducing the
Manuscript received May 18, 2009. First published December 11, 2009; cur-
rent version published December 23, 2009. (Paper no. TPWRD-00158-2009.)
J. V. Milanovic is with the School of Electrical and Electronic Engineering,
The University of Manchester, Manchester M60 1QD, U.K. (e-mail: mi-
lanovic@manchester.ac.uk).
Y. Zhang is with ABB Corporate Research, Baden CH-5405, Switzerland
(e-mail: yan.zhang@ch.abb.com).
Color versions of one or more of the figures in this paper are available online
at http://ieeexplore.ieee.org.
Digital Object Identifier 10.1109/TPWRD.2009.2035419
0885-8977/$26.00 © 2009 IEEE
IEEE TRANSACTIONS ON POWER DELIVERY, VOL. 25, NO.
Fig. 1. FACTS investment analysis process.
number of critical voltage sags (below the sensitivity threshold
of equipment) [6]–[9]. STATCOM, DVR and SVC are the
most widely used devices for these purposes [9]. Despite their
efficiency in voltage sag mitigation, their application is still
somewhat limited due to their high cost. Many past solutions
have considered the cost of installing a device compared with
the resulting financial benefits to the customer. It is recognized
that significant improvements in overall power quality can be
achieved if sufficient investments in mitigating devices are
made. Sometimes however, the high cost of devices can offset
the potential benefits resulting from their application. The
problem therefore, is one of optimization and of finding an
optimal solution that makes financial sense.
Research in [10] and [11] highlighted that the benefits re-
sulting from FACTS device installation include local mitigation
of voltage sags and, to some extent mitigation over wider part
or over the entire network. This is particularly the case when
shunt connected devices are used; e.g., SVC and STATCOM.
This extra benefit of FACTS device installation maybe lost if
only the bus where they are connected is considered. Substantial
financial and technical benefits could be realized if the impacts
of FACTS devices can be valued at a system level.
A thorough evaluation of network sag performance (and con-
sequential financial impact) with and without FACTS devices is
therefore necessary for the purpose of deciding on the level of
investment in mitigating devices. This evaluation is ultimately
an exercise in economics. Utility engineers must evaluate the
economic impacts of power quality variations in the network
against the costs of improving performance. The whole process
of making an investment decision in mitigating devices is dia-
grammatically shown in Fig. 1.
The financial losses due to voltage sags in the entire net-
work can be estimated by considering the uncertainties asso-
ciated with network fault statistics and the customer’s equip-
ment and process sensitivity to voltage sags [3], [4]. Consid-
erable research has been done to perform financial analysis to
MILANOVIC AND ZHANG: VOLTAGE SAGS WITH FACTS BASED DEVICES 299

evaluate the investment in FACTS devices [12], [13]. Compara- TABLE I

tively little work however, has been devoted to building a system ASSUMED COSTS PER VOLTAGE SAG [4]
losses assessment. The great advantage of taking a holistic view
is that the extra potential benefits can be revealed accurately and
inform the investment decision making process.
This paper proposes a new methodology to financially analyze
the investment in FACTS devices to mitigate against voltage sags
and extends the research reported in [14], [15] by incorporating
financial aspects of the problem. The methodology is based on
the assessment of the total annual cost due to voltage sags on
the entire network. Scenarios are evaluated with and without op-
TABLE II
timally placed FACTS devices. The capital investment cost and REPORTED COSTS OF DIFFERENT FACTS DEVICES
annual maintenance of devices over their life time is also consid-
ered. A discounted cash flow analysis is used to understand the
time dependent value of each mitigating solution.
A bespoke Niching Genetic Algorithm (NGA) optimization
is used to determine the location, size and type of different
FACTS devices resulting in minimal network financial losses
due to voltage sags. The full network annual financial losses
due to voltage sags are used to guide the optimization process.
NGA optimization is used as it identifies multiple feasible so-
lutions that give more flexibility to the expert making the final
investment decision.
The methodology is illustrated on a realistically sized Generic
Distribution Network (GDN) with 295 buses and 278 branches.
SVC, STATCOM and DVR are all considered as options for
voltage sag mitigation.
the associated damage cost per sag event. The customer inter-
II. ECONOMIC ANALYSIS ruption costs given in [9] are reproduced in Table I. These were
adopted for the analysis in this study.
A. Cost of Voltage Sags
B. Cost of Mitigation Devices
It is very difficult to accurately assess financial losses in a dis- The cost of a FACTS device has two components: initial in-
tribution network due to voltage sags. They depend on network stallation costs and operating costs. The initial installation cost
structure, operating practices, fault performance in the network, comprises a one off payment that includes the purchase price
location, type and structure of industrial/commercial processes of the complete system plus delivery and installation charges,
in the network. They also depend on sensitivity to voltage sags professional fees and sales tax [17]. Operating costs are often
of the individual equipment involved in the industrial processes neglected in the assessment of the costs of FACTS devices. Op-
and on the method used to estimate the financial losses following erating costs are incurred over the lifetime of a device. They
a process interruption or malfunction. include maintenance and service, insurance and any applicable
The comprehensive probabilistic method developed in [3], taxes. A rule of thumb estimate for annual operating expenses
[4], [10] is applied in this study. This method assesses the an- is 5% to 10% of the initial system cost [18].
nual financial losses due to interruptions and voltage sags. It in- The total installation cost can be expressed as a function of
volves three basic steps: fault-analysis, voltage sag analysis and rated electrical capacity of FACTS device. The large variety of
economic analysis. In fault-analysis with FACTS devices, the options available for optimum design means it is impossible to
method developed in [10] is used to determine voltage magni- give a definitive cost figure for a FACTS device installation.
tude at various network buses due to various faults at other loca- However, in some reports the approximate prices of these de-
tions throughout the network. The duration of the voltage sag is vices were given [13], [17], [19]–[21] (see Table II). It can be
determined by the protection fault clearing time, assuming that seen from those reports that the price of FACTS devices varies
all faults are cleared by the primary protection. The modeling over a large range.
and application of FACTS devices for this type of study is dis- Technology of FACTS devices began with silicon-based
cussed in [7]. In sag-analysis, the number of sags at different thyristors and then moved on to voltage source converter based
network buses is calculated using the method of fault positions controllers [19]. Components based around SVC are essentially
[16] and fault statistics data (fault frequency and distribution) mature products. There is little room for major cost reduction
for different voltage levels. In the subsequent economic anal- in this technology [19]. There is potential however, for the
ysis, the probability of process interruption is determined [10] cost of STATCOM to come down [22]. Over the next 5 to 10
and the consequential sag costs calculated. Sag costs are based years, a total reduction in manufacturing price of 10–20% is ex-
on the type of industrial/commercial process, customer type and pected [23]. Additionally, some newer technologies such ETO
300
(Emitter Turn-off Thyristor) could lead to further reductions in
the overall product cost [23].
It is important to point out, that the cost of the overall solution
to voltage sag mitigation is not solely determined by the costs
of the device. It will be significantly influenced by the mainte-
nance costs as those devices will typically remain in service for
a number of years.
C. The Benefit From Improved Resilience to Voltage Sags
The financial benefit resulting from improving network sag
performance is defined as the difference between the initial fi-
nancial losses in the network without any mitigation devices and
the financial losses in the network with mitigation devices minus
the cumulative cost of the solution.
From the utility’s point of view, these devices reduce the
number of critical sags in its network. A utility therefore gains
overall power quality performance which can produce compet-
itive advantage in the electricity power market. From the cus-
tomer’s point of view the devices reduce the risks of (often) sig-
nificant financial losses due to process interruption and increase
profit margins.
Other additional benefits (not considered in this study) that
could result from the installation of FACTS devices include;
mitigation of harmonics, voltage regulation, damping of electro-
mechanical oscillations and increased power transfers. These
benefits further enhance the case for FACTS device installation
in the utility’s network. If they are to be installed these benefits
should also be taken into account. One of the main challenges of
course, is identifying and quantifying the respective values, both
tangible and intangible, of all potential contributions. Potential
economic impacts could be very large, but major problems arise
when determining who is entitled to these benefits [16].
III. INVESTMENT ANALYSIS
A comprehensive analysis of the investment in FACTS de-
vices must include the capital cost or initial investment, the re-
duction in losses resulting from the installation, the operating
and maintenance expenses and the economic life of the invest-
ment [12]. The main objectives of such analysis therefore are to
determine both, the financial losses due to sags and the costs of
implementing the solution. The financial benefits (and savings)
resulting from the application of mitigating devices are gener-
ated over the device’s lifetime. These reasons mean appropriate
valuation tools are needed.
Several financial tools can be used to determine the financial
benefit of investing in FACTS devices [12].
• Simple payback—A basic, but widely used method, of di-
viding the investment by the periodic project savings. This
allows calculating how many years it requires to recover
the initial investment.
• Net Present Value (NPV)—This method converts future
costs and revenues to today’s money to allow comparisons
against the internal cash cost, or required rate of return. A
positive number indicates that the project will have a pos-
itive return.
• Life cycle costs (LCC)—Utilizes NPV, but instead of an-
alyzing a required rate of return, LCC only analyzes the
IEEE TRANSACTIONS ON POWER DELIVERY, VOL. 25, NO. 1, JANUARY 2010
costs associated with the life of project. A low LCC is
preferred.
• Internal Rate of Return (IRR)—Also derived from NPV.
However, this approach involves varying the discount rate
until NPV goes to zero. A project with an IRR greater than
the required (set) rate of return is worth pursuing.
This study focuses on two of the above financial analysis
tools. It estimates the Payback period and evaluates the Net
Present Value.
A common and simple way to evaluate the economic merit of
an investment is to calculate its payback period, or break-even
time. The payback period is the number of years of energy-cost
savings it takes to recover an investment’s initial cost. To de-
termine the payback, the investor first estimates the FACTS de-
vice’s total initial cost, annual sag-cost savings, and annual op-
erating costs. Dividing total initial cost by the difference be-
tween annual sag-cost savings and annual operating costs gives
the payback period
(1)
where is the difference in financial losses due to
sags before and after mitigation, is the initial capital
investment in installed FACTS devices and is the mainte-
nance cost of FACTS devices.
Since most of the benefits (as well as some incremental costs)
resulting from installation of mitigation devices occur over a pe-
riod of time, their future values are discounted to present values.
With the NPV method, all cash flows during the lifetime of a
project are taken into account. The cash flows involved are: ini-
tial investment, maintenance and standby costs on the negative
side and the avoided costs on the positive side. The discount rate,
, on the capital investment has to be carefully chosen since the
increase in discount rate results in reduction of NPV. FACTS
devices typically require a large initial capital outlay, however
they could provide years of voltage support with only reason-
ably small maintenance costs over their lifetime.
The Net Present Value of these, post investment, cash flows
is given by
(2)
where is discount rate and is the economic life of devices.
The key economic indicators adopted in this study are as
follows.
• Operating and maintenance cost per year expressed as per-
centage of the price of device. 15% for STATCOM and
DVR and 10% for SVC.
• years is the economical life of devices. (This is
somewhat conservative since many utility assets arguable
have useful lifetime of 40–50 years [19].)
• The price of device including installation costs used in this
study are calculated using (3) based on the rating of the
device.
MILANOVIC AND ZHANG: VOLTAGE SAGS WITH FACTS BASED DEVICES 301

(3)

The equations shown in (3) are the result of curve fitting

from a figure published in [17]. It is further assumed that
the prices of DVR and STATCOM are the same.
• The discount rate, , is assumed to be 12% [12], [19], [24].

IV. OPTIMIZATION BY NGA

A. Problem Formulation
The objective of the optimization is to minimize the cost of Fig. 2. Niching GA.
sags and mitigation devices and maximize market benefits. Gen-
erally, the larger the investment in solutions and/or mitigation
measures, the bigger the reduction in costs caused by improved
power quality. What ultimately matters though, are the total
power quality improvement costs, which attain their minimum
at the intersection of reducing costs of sags curve and increasing
cost of solution curve.
Two objective functions are explored to financially analyse
the investment in FACTS devices.
1) The pay back year

(4)
Fig. 3. Sag losses probability analysis.

2) The NPV value of investment in the solution

V. SIMULATION AND RESULTS

(5) A. System Under Study

or, after expressing the sum of geometric sequence explic-
itly in (6), shown at the bottom of the page.
The optimization procedure should calculate the values of
variables that minimize these objective functions.
B. Implemented Genetic Algorithm
A Niching Genetic Algorithm (NGA) is employed, which
uses, as the main criteria, sag losses in constructing the objec-
tive function. It applies niching, adaptive genetic operators that
identify multiple optimal profiles by locating several local op-
tima. This is diagrammatically shown in Fig. 3.
The advantage of a NGA, compared to a simple Genetic Al-
gorithm approach, is that it gives several almost equally ef-
fective solutions and offers more flexibility to the decision-
making process. The implemented NGA parameters are listed
in Table III. Further details about NGA can be found in [25].
The study was performed using a generic distribution network
(GDN). GDN comprises four 275-kV transmission in-feeds,
132-kV and 33-kV sub-transmission networks (predominantly
meshed) and 11 kV distribution network (predominantly ra-
dial). There are 295 buses, 276 lines (over head lines and
underground cables) and 37 transformers with various winding
connections. All GDN parameters are based on realistic UK
distribution networks. A single line diagram of the network
is shown in Fig. 8. This figure also indicates the locations of
sensitive loads and allocated FACTS devices.
B. Simulation Results
The sag losses in the system were estimated by applying the
methodology developed, and described in detail, in [3], [4].
Overall network losses are estimated based on 10 representa-
tive buses with sensitive equipment [3], [4]. Their voltage sag
performance is computed using fault position method. All types
of faults; both symmetrical and asymmetrical are considered.

(6)
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TABLE III
CHARACTERISTICS OF IMPLEMENTED GA
Faults are applied at each bus and at 6 points on each line in
the GDN.
The ten chosen buses are split into three groups depending on
the size of load connected. Within each group, a different por-
tion of industrial, commercial and domestic load (with different
financial losses due to sags) is assigned to each bus [3], [4]. It is
assumed that a process’ sensitivity to voltage sags depends on
the sensitivity of the individual equipment participating in the
process. (I.e., the failure of the equipment will lead to process
interruption.) Individual equipment is assumed to be moderately
sensitive (using probabilistic approach as defined in [3], [4],
i.e., normally distributed voltage tolerance curves within defined
areas of uncertainty for each type of equipment) to voltage sags.
A large number (37 in total) of types of industrial process
configurations were considered in this study. The sensitive in-
dustrial equipment considered on these processes included pro-
grammable logic controllers, adjustable speed drives, personal
computers and ac contractors. The individual devices were sim-
ulated as being connected in both series and parallel. The pro-
cesses are allocated randomly to the 10 pre-selected buses using
a Monte Carlo simulation. The Monte Carlo simulation is re-
peated 2000 times. This generates 2000 different values of ex-
pected sag losses in the GDN.
The results are processed using probability theory. This gen-
erates a probability distribution and a cumulative probability
distribution. The probabilistic financial losses due to voltage
sags in the GDN are shown in Fig. 3. These results were
generated using network, system faults, process and equipment
parameters specified in [3], [4], [10]. The same procedure is
used to estimate losses in the network with FACTS devices
connected. The models of FACTS devices developed in [14] are
used in conjunction with the fault position method to calculate
the expected number and characteristics of sags at the 10 buses
of interest.
The results in Fig. 3 show sag costs to be normally distributed
with a mean value of M/year and the most probable loss
of M/year. They also indicate that there is approximately
an 80% chance that sag losses will be below M/year, and
about a 30% chance of them being below M/year.
The optimization algorithm developed to financially appraise
investments in FACTS devices used the mean value of sag losses
as shown in Fig. 3. Other measures of sag loss such as maximum
losses in the network or probability of losses being lower than a
particular value could have been used without loss of generality
of the applied methodology.
IEEE TRANSACTIONS ON POWER DELIVERY, VOL. 25, NO. 1, JANUARY 2010
Fig. 4. Probability of annual sag losses optimized by ‘pay-back year’ (A) So-
lution P1, (B) Solution P2.
a) Minimize the Payback Years: Function (4) is used as
an objective function to optimally place 6 out of 18 available
FACTS devices (6 of each type). The number of devices to be
allocated is one of the variables that can be set by the user. The
number of devices used in this particular example is set arbi-
trarily as a reasonable number for this size of the network to
illustrate the methodology. The maximum possible rating of an
individual device was limited to 100 MVAr for STATCOM and
SVC, and 50 MVAr for DVR. DVRs are series connected de-
vices and as such they were additionally limited to placement in
front of buses with significant load.
The implemented NGA produced several solutions. Two of
those with the smallest value of objective function are illustrated
in the following table as solutions P1 and P2.
The locations of selected FACTS devices in the GDN for solu-
tion P1 are indicated in Fig. 8. Table IV shows that SVCs dom-
inate both solutions. Distributions of associated sag losses are
shown in Fig. 4. The costs of the required FACTS devices and
their associated maintenance costs are also shown.
The sag costs per year reduce significantly with both solu-
tions. The costs still follow a normal distribution but with lower
maximum and mean values and lower standard deviation. P1
shows a most likely financial loss of M/year whilst P2
shows the most likely loss to be M/year. This is a reduc-
tion of M/year and M/year respectively, compared to a
loss of M/year without any mitigation. There is about an
80% chance that the sag losses will be below M/year in
both cases. This is also lower than M/year without any
mitigation. Table V illustrates that 3.47 and 2.9 years are re-
quired to get back the initial investment in mitigation devices
with solution P1 and P2, respectively.
MILANOVIC AND ZHANG: VOLTAGE SAGS WITH FACTS BASED DEVICES 303

TABLE IV
MITIGATION SOLUTIONS P1 AND P2

TABLE V
FINANCIAL ANALYSIS OF SOLUTIONS P1 AND P2 (ALL COSTS ARE IN [M0
L])

TABLE VI Fig. 5. Probability of annual sag losses optimized by NPV. (A) Solution N1.
MITIGATION SOLUTIONS N1 AND N2 (B) Solution N2.

b) Maximise the NPV: Function (5) is used as the objec-

tive function to maximize the NPV. As before, only two solu-
tions (N1 and N2 shown in Table VI) with the minimum ob-
jective function values (corresponding to maximum NPV) are
analyzed.
The locations of the selected FACTS devices in the GDS for
solution P2 are indicated in Fig. 8. Table VI shows that SVC
once again dominates both solutions since it is cheaper than
DVR and STATCOM. The cumulative probability and mean
value of sag losses as well as capital investment and mainte-
nance cost of FACTS devices for solutions N1 and N2 are illus-
trated in Fig. 5. The costs are still normally distributed, though
with lower maximum and mean values and lower standard de- Fig. 6. NPV values. (A) Solution N1. (B) Solution N2.
viation when compared with results from Fig. 3.
The mean value of sag costs reduced from M/year to
M % with solution N1 and M % back year approach above, are obtained with the NPV based
with solution N2. Solution N2, however, requires much higher optimization.
capital investment than solution N1. Taking time into account, both solutions will be financially
Same characteristic numerical values (i.e., mean value of sag beneficial at the end of the FACTS device’s economic life (20
costs) of the two solutions as those discussed in case of pay years). This is illustrated in Fig. 6. The NPV analysis also shows
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TABLE VII
NPV ANALYSIS OF SOLUTION N1 (INITIAL 10 YEARS ONLY)
TABLE VIII
NPV ANALYSIS OF SOLUTION N2 (INITIAL 10 YEARS ONLY)
that investment in solution N1 is much more attractive than in-
vestment in solution N2. Much higher savings accumulate over
the years. Even though the potential savings with solution N2 in
each year are slightly higher than with solution N1, the capital
investment in case of solution N2 is much higher than in case of
solution N1, so solution N1 yields overall higher benefit.
Detailed NPV analysis of solutions N1 and N2 is shown in
Tables VII and VIII for first 10 years after installation. It can be
seen that in the third year after the investment solution N1 re-
sults in positive NPV value. Clear and significant benefits can
be observed after only a few years; for example savings of about
M in the fifth year after installation. Total savings over the
full economic life of a device could amount to M for so-
lution N1 assuming the same network, and industrial processes
performance over that period.
With solution N2, the NPV becomes positive in the fifth year
after installation. The cumulative savings over the economic life
of a FACTS device amount to M. The absolute maximum
benefit (assuming infinitely long economic life of devices) from
solutions N1 and N2 can be determined by finding the limit
of (6). It yields maximum possible savings of M and
M with solutions N1 and N2, respectively. These re-
sults, as well as the shape of graphs in Figs. 5 and 6, show that
IEEE TRANSACTIONS ON POWER DELIVERY, VOL. 25, NO. 1, JANUARY 2010
Fig. 7. Benefit versus investment ratio as a function of discount rate and eco-
nomic life of FACTS devices.
the incremental benefits reduce over the time. They are largest
during the first few years (about 10 years for solutions N1 and
N2), after which they reduce resulting in an curve
entering saturation.
Two types of objective functions are used to demonstrate the
proposed methodology in this study. The variations in results
obtained show that the choice of objective function, and ulti-
mately the final solution, remain a matter of personal judgment.
This is at least partly, because of the absence of empirical studies
of the relative virtues of alternative solutions. The extra benefits
to the network that a particular device may provide also need
to be considered. The basic principle influencing the choice of
objective function is essentially the same: maximise the benefit
from investment in a particular solution and or /device. The ex-
pected benefits may differ depending on the type of financial
analysis considered. Since the NPV analysis takes into account
the change in value of money with years it offers a more real-
istic assessment of the economics of the solution. The niching
technique applied offers further flexibility in choce of final so-
lution as it suggests several possible, almost equally good solu-
tions. These can then be post-processed using additional criteria
in order to select the most suitable one.
VI. FURTHER DISCUSSION
Equation (5) indicateswhen the investment in FACTS devices
will start to pay off. Based on the number of years to pay off, the
equation determines a minimum ratio between the benefit from
installation and the initial investment outlay required. Assuming
that the savings resulting from the installation of FACTS devices
and the maintenace costs will be the same over their economic
life, (5) yields
(7)
(8)
A graphical representation of the inequality in (8) is given in
Fig. 7. This figure shows the boundary between economically
viable and nonviable solutions. Solutions above the surface are
economically viable. The longer the investor is prepared to wait
for the solution to start to pay off, the smaller this ratio will be.
MILANOVIC AND ZHANG: VOLTAGE SAGS WITH FACTS BASED DEVICES
Fig. 8. Single line diagram of the GDS with indicated locations of 10 buses with sensitive loads and allocated FACTS devices.
For solutions N1the benefit versus investment ratio is 0.5. For
solution N2 it is 0.3. This results in a positive NPV in 3 years
for solution N1 and 5 years for solution N2.
If additional benefits are to be expected from the installation
of FACTS devices and/or if the maintenance costs increase over
the years the surface of Fig. 7 will be slightly modified and ac-
cordingly shifted up or down along the vertical axis. The ad-
ditional benefits and variable maintenance costs can be easily
incorporated into (5) and taken into account when searching for
the best techno-economic solution. For example, (5) becomes :
(9)
where is the coefficient that accounts for increased bene-
fits resulting from FACTS installation (other benefits in addition
to reduction in sag losses). is the variable mainte-
nance cost expressed as a portion of the cost of FACTS devices.
Time variation of maintenance costs is represented by coeffi-
cient which can be either a linear or exponential function
of the number of years in service.
VII. CONCLUSION
This paper presented a comprehensive methodology for mini-
mization of financial losses due to voltage sags in power system
networks. It builds on the previous work in [3], [4] that considers
financial losses in the network in a probabilistic manner, taking
305
into account the uncertainties involved in process and equipment
sensitivity to voltage sags and work in [14], [15] that discusses
modelling and allocation of FACTS devices for voltage sag
studies. The methodology uses an optimization procedure based
on a Niching Genetic Algorithm to optimally allocate various
FACTS devices. The devices are installed throughout the net-
work to achieve an overall reduction in financial losses due
to voltage sags. The optimization is performed by taking into
account both the financial losses due to sags and costs of FACTS
devices. A proper economic/financial analysis is performed to
adequately assess the economic merits of the proposed solutions.
The analysis presented in the paper presents a working method
to justify the installation of FACTS devices on both technological
and economic grounds. Financial losses in the entire network due
to voltage sags can be significantly reduced by the application of
FACTS devices. Network operators can begin receiving financial
benefits only a few years after the installation of the devices, even
though the initial capital investment in the solution can be signifi-
cant. The overall saving will vary with the type, size and location
of mitigation equipment. In the foreseeable future it is expected
that the cost of FACTS devices will continue to fall whilst their
effectiveness further improves. Both these factors are likely to
make their installation an even more attractive option for voltage
sag mitigation in the future. Finally, since FACTS devices gen-
erally contribute to the enhancement of several electrical power
network functions, the benefits resulting from their installation
will often exceed those identified through their direct contribu-
tions to voltage sag mitigation alone.
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voltage sag mitigation studies in large power systems,” IEEE Trans.
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FACTS based devices,” IEEE Trans. Power Del., accepted for publi-
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2007 IEEE Lausanne Power Tech, Lausanne, Switzerland, Jul. 1–5,
2007.
Jovica V. Milanović (M’95–SM’98–F’10) received the Dipl.Ing. and M.Sc.
degrees from the University of Belgrade, Belgrade, Yugoslavia, the Ph.D. degree
from the University of Newcastle, Newcastle, Australia, and the D.Sc. degree
from The University of Manchester, Manchester, U.K.
Currently, he is a Professor of Electrical Power Engineering and Director of
Research in the School of Electrical and Electronic Engineering, The University
of Manchester, Manchester, U.K.
Yan Zhang received the B.S. degree from the Southwest University, China in
1997, and the M.Sc. and Ph.D. degrees from the University of Manchester, Man-
chester, U.K., in 2005 and 2008, respectively.
Currently, she is with ABB Corporate Research, Baden, Switzerland.