Concept of strategic planning in electricity distribution business
International Journal of Energy Sector Management
ISSN: 1750-6220
Article publication date: 22 November 2011
Abstract
Purpose
The purpose of this paper is to establish a methodological framework to address key issues in electricity distribution network development. The paper defines subtasks in the strategy process and presents key elements in the strategy work and long‐term network planning. The results are illustrated by a case network.
Design/methodology/approach
The paper describes the methodology for cost and reliability analyses in the strategy work. The focus is on techno‐economic feasibility of certain network development technologies in the network strategy and the surveys are linked to economic regulation, specifically to reliability of supply and allowed return. The study addresses the stages of strategic decision making and compilation of investment strategies.
Findings
The strategic planning concept and methods are applicable in practice; the results have proven valuable in the long‐term business development and in discussions with the company owners. Outage costs are an essential element in the economic regulation of the business, reliability being a key driver in network planning.
Research limitations/implications
There is no universal solution to strategic decision making, but each development task is highly case specific. This is due to diverging operating environments and targets set by the company owners; these issues strongly influence the strategy process.
Practical implications
The work illustrates strategic planning in an actual distribution company and shows how the methodology can be applied to the strategic network development. Nevertheless, the results cannot be generalised as such, but each network has to be considered individually.
Originality/value
The proposed concept can be applied to the long‐term development of distribution networks. The results are internationally applicable, yet diverging regulatory models call for specific methodology in each country.
Keywords
Citation
Lassila, J., Kaipia, T., Haakana, J. and Partanen, J. (2011), "Concept of strategic planning in electricity distribution business", International Journal of Energy Sector Management, Vol. 5 No. 4, pp. 447-470. https://doi.org/10.1108/17506221111186323
Publisher
:Emerald Group Publishing Limited
Copyright © 2011, Emerald Group Publishing Limited