The Three Dimensions of Modern Power Systems Operations and Their Optimization

Dimension 1: Reliability

Reliability in the context of electricity services means that electricity is there when you need it. You can flip a switch or plug in a cord to get it. In power systems operations, reliability is the ability of a power system to serve electric loads while withstanding anticipated and unanticipated disturbances. The higher the ability, the more reliable a power system is. Disturbances can happen on transmission elements (e.g., lines and transformers) and generators. In the power industry, we usually refer to anticipated disturbances as planned outages/maintenance and unanticipated disturbances as forced outages/contingencies. At a minimum, power systems should be designed following the “N — 1” rule, which means an outage of any single element should not affect the overall system’s ability to serve loads. To today’s utilities and ISOs in the United States, reliability remains the top service metric because electricity, as one of the basic infrastructure services, is essential to keep essential services and businesses running to support the citizens’ livelihood.

Dimension 2: (Economic) Efficiency

In modern power systems, loads should also be served efficiently, with the least costs possible, while maintaining reliability. According to the data published by the U.S. Energy Information Administration, 72% of U.S. electricity is served by Investor-Owned Utilities (IOUs), and the rest is by publicly-owned and cooperatives. While the nature of the business allows IOUs to pass most of the cost increase down to customers through rate increases, IOUs are still incentivized to reduce their costs for two reasons. First, IOUs are for-profit companies that must bring a decent return to keep their investors. Second, they can only increase rates periodically, and every attempt will be subject to scrutiny and approval by regulators such as Public Utility Commissions (PUCs). On the other hand, publicly-owned utilities and cooperatives are usually formed as not-for-profit companies aiming to serve reliable electricity at an affordable rate. To achieve that, keeping costs low is critical.

Dimension 3: Complexity

Compared to reliability and economy, complexity is a dimension that may not have received as much attention but can be equally important. As advanced algorithms and complicated rules are implemented in software tools and operating procedures to gain accuracy (a benefit), risks — technologies or human-driven — also increase (a cost), sometimes even more significant than the gain. Common risks include undertested features, impossible to debug in real-time, lack of user training, and information overload. Thus, while striving for constant improvement is excellent, we also need to be cautious not to get too intrigued by achieving incremental gains and forget about the law of diminishing marginal returns. The rule is simple: all else equal, the least complex operating plan is always preferred.

Pareto Efficiency and Power System Operations

Pareto efficiency, or Pareto optimality, refers to a state in which it is impossible to reallocate existing resources to make one individual better off without hurting at least one other. It is a concept widely used in solving multi-objective optimization problems. Suppose these dimensions are independent and can be isolated from each other, then operating a power system is equivalent to solving a Pareto efficiency problem.

  1. Mitigate by manually dispatch down the unit that the RAS will run back post-contingency
  2. Enforce the overloaded line as a constraint and activate the contingency in the market. Then, let the market bind the constraint and dispatch units to mitigate.
  3. Run a quick study to confirm that the RAS will mitigate the overload post-contingency without causing other reliability issues and take no further action.


Modern power systems should be operated reliably, economically efficient, and simple where possible. As discussed in this article, Pareto efficiency is a great way to improve one or more of the three critical dimensions without compromising others. In real-time operations, it is important to understand the system conditions, evaluate the available options, and operate with these factors in mind.



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Hui Z

Hui Z

Experienced engineer and team leader with 10+ years of experience in the energy domain | Leading the energy transformation and grid innovations