The share of renew able energy sources (RES) in electric power systems (EPS) has increased during the recent years and this trend is expected to continue. The stochastic nature of electricity production from RES imposes new challenges for the EPS operation and control. A large share of undispatchable RES can lead to significant disturbances of EPS components. These disturbances need to be balanced
out and the security of the system has to be preserved. If the resources for providing balancing energy and flexibility are limited, secure operation of the EPS will become highly expensive. Conventional generation units provide the necessary flexibility to maintain a continuous balance between supply and demand. The question is: are these conventional resources the most feasible way of providing system flexibility in the future low carbon systems? During the recent years, plug-in hybrid electric vehicles (PHEV) have become an attractive way of transportation. While passive approach to their integration might cause problems to the system, active utilization of their flexibility might enable higher pe*******on of RES. A similar reasoning can be applied to the distributed generation, especially technologies with the potential of multi energy vector interaction (efficient electric heating, combined heat and power, battery storage etc.). Current grids need to be capable of dealing with mentioned requirements. The concept of Smart Grid (SG) is based on using of novel information and communication technology (ICT) and includes application of a spectrum of innovative and flexible technologies. The purpose of this project is to establish a methodological and comprehensive framework providing the costs and benefits evaluation of SG projects and technologies. Given the sizeable investments needed, there is a need for a fair, consistent and methodological approach for estimation of the best investment option, taking into account economic and environmental aspects of a specific project.
