## 1 Introduction  
Modern electric power grids are undergoing substantial changes to address upcoming environmental compliance challenges while maintaining supply reliability. The replacement of fossil-fired firm generation by intermittent and uncertain renewable energy sources and the electric transformation of the automotive industry will cause increasing difficulty in balancing the electric supply and demand in future power systems. There is ongoing research and development in new and smart technologies in energy storage, power electronics, digital and communication devices that can increase the capability of power systems to continuously meet consumer demands. Long-term system planning requires the optimal selection and allocation of these technologies in the bulk power grid and the necessary network upgrades to comply with existing and future environmental regulations and targets. System planners require appropriate methodologies and assessment tools to determine optimal investment in these bulk power system facilities to maintain acceptable reliability at affordable costs. The value-based reliability investment (VBRI) method analyzes the cost and worth of reliability investment in order to justify the investment in new resources, facilities, and/or system upgrades. This method can be used with necessary modifications or extensions to address system-specific investment decision problems. The VBRI approach requires a comparative study of two aspects of system adequacy and economics, and the resulting cost/worth analysis [1] is performed to estimate the expected investment benefits in decision-making. The adequacy cost is the investment cost needed to achieve a certain level of reliability, whereas adequacy worth is the benefit derived by the utility, consumer, and society in the form of reduced power outages or interruption costs. It quantifies the monetary losses incurred by electricity customers due to the unreliability of the power system. An adequacy assessment is not usually conducted on the entire power system but is performed at the various sub-systems or hierarchical levels (HL) as shown in Figure 1. HL-I assessment considers only the generation system and its ability to meet the overall system demand. HL-II or bulk system adequacy refers to the existence of adequate generation and transmission facilities to meet the bulk load requirements distributed throughout the grid network. HL-I VBRI assessment helps make the investment decision on appropriate and adequate generation resources to minimize the overall societal cost, i.e., the sum of the investment cost and the outage cost as shown in Figure 2 [2]. Similarly, HL-II VBRI studies can be conducted to make investment decisions on transmission facilities while considering both the generation and the transmission systems. VBRI assessment techniques for HL-I and HL-II are illustrated in [2]. Significant work [3; 4; 5; 6; 7; 8; 9; 10; 11; 12] has been performed on VBRI methods and their applications at the HL-I level. Generation facilities comprise the most capital-intensive investment of an electric utility in expansion planning. The interruption cost estimation in a value-based reliability assessment is therefore primarily focused on generation inadequacy. The interruption cost can be estimated using various techniques [13], such as analytical methods, case studies of blackouts, and customer surveys. Among these methods, customer surveys [14; 15; 16; 17; 18; 19; 20] provide the most reliable information related to the usage of electricity and the impact of power outages on the different categories of electricity customers. The customer survey is designed primarily to obtain relevant information to assess the monetary losses associated with various frequencies and duration of power outages at different times of the day and year. The customers are categorized into different sectors, such as residential,  
Figure 1: Composite Power System. Figure 2: Value-based reliability investment approach. commercial, industrial, etc.