Power system planning and grid integration

Power system planning is the process of deciding the future additions to generation, transmission and distribution, with their size, type, location and time, so that forecast demand is met reliably at minimum cost and within environmental and policy limits.

Power system planning in a deregulated sector

In a vertically integrated utility one body plans everything. In a deregulated sector the functions are unbundled:

Planning then changes as follows:

1. Generation planning becomes indicative. The government/system operator publishes a least-cost indicative plan; investors decide on their own, guided by prices and PPAs.
2. Transmission planning is central and must handle uncertainty of where IPPs will come; it must give open access and remove congestion.
3. Market signals (energy price, capacity payments, locational prices) guide investment.
4. Resource adequacy is ensured by reserve rules, capacity markets or long-term contracts.
5. Regulator approves investment plans and tariffs.

In Nepal, the Electricity Act and Nepal Electricity Regulatory Commission Act (2074) move towards unbundling: NEA, IPPs, a separate national transmission grid company and power trading companies.

Integration of two national or regional grids

Pros

• Shared reserves, so less installed capacity is needed.
• Higher reliability; support during outages.
• Use of load diversity and seasonal complementarity (Nepal hydro surplus in monsoon, India peak demand in summer).
• Economic exchange and power trade revenue.
• Better integration of variable renewables.

Cons

• Disturbances can spread, causing cascading blackouts.
• Higher fault levels; switchgear may need upgrading.
• Complex protection, frequency and tie-line control.
• Political and commercial dependence; disputes over pricing.
• High investment in tie-lines/HVDC and need for common grid codes.