Frankfurt (Germany), 6-9 June 2011 Dr David Hughes and Paul Barnfather EA Technology UK David Hughes – UK – Session 6 – Paper 0088 Building Risk Based Investment Programmes
Frankfurt (Germany), 6-9 June 2011 Approaches to defining/quantifying RISK 1. High level, top down 2. Asset based, bottom up
Frankfurt (Germany), 6-9 June 2011 High level, top down risk processes Define risk categories – network performance, safety, financial, environmental, reputation etc Create ‘probability v severity’ matrices in each category Build a risk register Relatively easy – achieved quickly involving a few people Useful – defines corporate values/priorities and identifies significant areas of risk
Frankfurt (Germany), 6-9 June 2011 Asset based, bottom up risk processes Use of detailed engineering knowledge, experience and asset data to build asset specific risk models Reference and refine corporate values Evaluate specific investment programmes down to individual asset level Enables comparison of cost/benefit across wide range of investment programmes Leads to financial optimisation of investment plans
Frankfurt (Germany), 6-9 June 2011 Building an asset based risk process Requires more work than a high level, top down model Engage with a wide range of engineers, asset managers within a DNO Access, qualify and use information from (disparate) various sources But it is quite possible Inclusive, engaging, empowering process
Frankfurt (Germany), 6-9 June 2011 Application to condition based replacement Condition Based Risk Management (CBRM) (papers in CIRED 2003,2005,2007&2009) Practical process developed and applied with 40plus Electricity Companies worldwide Define and quantify current and future condition, performance and risk of individual assets – built from detailed engineering knowledge Risk – multiple categories all expressed in monetary terms - £, €, $
Frankfurt (Germany), 6-9 June 2011 Output from a CBRM model Current and future condition linked to POF Current and future risk with different investment programmes
Frankfurt (Germany), 6-9 June 2011 Optimising investment, balancing cost against risk (both expressed as £, €, $) Define optimum investment for a single asset group or across multiple groups Demonstrate major savings for same overall outcome
Frankfurt (Germany), 6-9 June 2011 Extending the approach to LOAD related investment Quantify; The consequences of increasing load – network performance consequences/risk The benefits (reduction in network performance risk) of investment options Enable; The clear expression of the synergies between load and non load related issues Provides a direct means of optimising plans across the 2 major investment streams
Frankfurt (Germany), 6-9 June 2011 Further development/opportunities smart grids and low carbon networks The same approach can be used to evaluate investment options in any area e.g. ‘smart grids’ and ‘low carbon networks’ This is not rocket science, it requires a structured approach to quantifying benefits in well defined, tangible terms
Frankfurt (Germany), 6-9 June 2011 Conclusions Asset based, bottom up approaches to risk Are viable and very effective (see CBRM) Are being extended to include load related investment Offer the opportunity to prioritise, justify, optimise programmes across all investment streams If you want build effective risk based processes-: Engage with and trust engineering knowledge and experience (Its one of your most significant assets)
Frankfurt (Germany), 6-9 June 2011 Thank you for your attention For further information please contact me via the EA Technology stand (D69) in the exhibition hall