1. SYSTEMS AND ENGINEERING TECHNOLOGY Using a Systems Approach in Energy Risk Assessment Dan Wilson The Midlands Energy Graduate School II Annual Conference, 8 th September 2011

2. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Frazer-Nash Consultancy  Around 350 engineers across eight offices  Services across  Technical analysis  Systems engineering  Safety and environmental analysis and management  Range of markets:  Defence  Civil and Military Nuclear  Conventional and Renewable Energy  Transport  Oil and Gas

3. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Agenda  What is risk assessment?  What is a Systems Approach?  Applying a Systems Approach to a Renewable Energy scheme  Benefits of a Systems Approach  Requirements and Acceptance within risk management

4. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Agenda  What is risk assessment?  What is a Systems Approach?  Applying a Systems Approach to a Renewable Energy scheme  Benefits of a Systems Approach  Requirements and Acceptance within risk management

5. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY What is risk assessment?  How likely is it that a project will deliver to:  Performance?  Time?  Cost?  Risk Assessments are conducted to:  Inform investment  Inform Project Management

6. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Systems Approach  A systems approach is about:  Taking a ‘wide view’ across the system  Taking a ‘long view’ through the project

7. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Agenda  What is risk assessment?  What is a Systems Approach?  Applying a Systems Approach to a Renewable Energy scheme  Benefits of a Systems Approach  Requirements and Acceptance within risk management

8. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach  An Investment Proposition: www.tidalstream.co.uk (licensed under Creative Commons Attribution 2.5 Generic)

9. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: A Wide View  Investment Considerations:  What is the return?  What is the risk?  Other considerations:  Strategic positioning  Portfolio balancing

10. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY What Does an Energy Scheme Need to Do?

11. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY What Does an Energy Scheme Need to Do?  Provide Electrical Power  Trade in the Energy Market  Respond to output change demands

12. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: A Wide View

13. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: A Wide View

14. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: A Wide View

15. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: A Wide View

16. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: A Wide View

17. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: A Wide View

18. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: Long View

19. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: Long View Technical Risk

20. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Technology Risk  How much will it cost to get the technology ready for deployment?

21. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: Long View Provider Risk

22. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Applying a Systems Approach: Long View Technical Risk Ongoing Liabilities

23. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Agenda  What is risk assessment?  What is a Systems Approach?  Applying a Systems Approach to a Renewable Energy scheme  Benefits of a Systems Approach  Requirements and Acceptance within risk management

24. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Benefits of a Systems Approach  Structured and auditable assessment method to ensure everything is considered  Identify Dependencies  Target mitigation resources

25. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Structured Assessment

26. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Identify Dependencies

27. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Target Mitigation Effort

28. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Target Mitigation Effort

29. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Agenda  What is risk assessment?  What is a Systems Approach?  Applying a Systems Approach to a Renewable Energy scheme  Benefits of a Systems Approach  Managing risk with Requirements and Acceptance

30. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Ongoing Management of Risk  Risk assessment is about  Performance  Time  Cost  To deliver this:  Requirements define what is required from each element.  Acceptance ensures that the project is on track to meet those objectives.

31. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Requirements

32. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Requirements

33. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Requirements

34. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Requirements

35. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Requirements  Requirements have identified:  What the system needs to be able to do to be a success  What constrains how it can be done  Requirements identify where risks may exist  Quantify risk  Mitigate the risk

36. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Acceptance Time Consequence Design ManufactureInstallation

37. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Acceptance ProbabilityConsequence Time Design ManufactureInstallation Risk Value =Probability x Consequence

38. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Risk Value =Probability x Consequence Acceptance ProbabilityConsequence Design Review Factory Test Commissioning Time Design ManufactureInstallation

39. © Frazer-Nash Consultancy Ltd 2011. All rights reserved. SYSTEMS AND ENGINEERING TECHNOLOGY Summary  Application of a Systems Approach to Risk Assessment gives:  A structured approach to the identification of risks  A means to fully assess the consequence  Target mitigation effort  Application of a Requirements and Acceptance Process  Identifies what is needed into distinct elements  Identifies the constraints imposed by the environment and other parts of the system  Mitigates the risks through progressive acceptance

40. SYSTEMS AND ENGINEERING TECHNOLOGY www.fnc.co.uk Dan Wilson Email: d.wilson@fnc.co.uk Tel: (0117) 922 62 42 For more information; “Utilising a Risk-Based Systems Approach in Renewable Energy Due Diligence”, Wilson, D.M., Rowley, P.R., Watson, S.J., IEEE Systems Journal, Issue 5, Volume 2.