With reliability insurance contract, customers can determine their coverage levels according to their values for reliability services, and pay corresponding premiums to the DG. The DG is then required to reimburse customers for outages according to their outage cost. In the other words, reliability insurance contracts transfer outage risks from customers to the DG, which can take actions to manage reliability as opposed to customers who are passive recipients of reliability. In return for accepting reliability risk, DG is able to profit from improving the reliability.
Current paper primarily introduces the concept of reliability insurance contract and in the presence of these contracts evaluates the revenue opportunities for DG.