AMM-06 Summary CIGRE Work Ford

© 2013 Doble Engineering Company – 80th International Conference of Doble Clients All Rights Reserved

SUMMARY OF CIGRE WORK ON TRANSMISSION ASSET MANAGEMENT

CIGRE Working Group C 1.25

Convener: Eric Rijks [email protected]

ABSTRACT CIGRE is an international technical organization that was formed in 1921 to focus on matters related to bulk power transmission. Its scope of activities is wide ranging, including overhead and underground transmission, power systems, protection and control, rotating machines, substations, transformers, switchgear and materials used in power equipment. Since the emergence of asset management centric utility organizations, CIGRE has devoted considerable efforts in development and documentation of information related to a wide range of asset management topics. This paper is provides a summary of CIGRE work in this area and an update on current activities of working group C1.25 in the area of transmission asset risk management. While the theory of asset management is well understood, much work remains in its practical application. In this regard, more international cooperation would be desirable in the areas of failure statistics, analysis and models, asset replacement/refurbishment tactics, and implementation of risk management methods. Participation and support by US utilities in the work on these topics would be much appreciated in the areas of case studies, data, and experience with risk-based methods as applied to asset investment justification.

INTRODUCTION CIGRE is an international technical organization that was formed in 1921 to focus on matters related to bulk power transmission. Its scope of activities is wide ranging, including over head and underground transmission, power systems, protection and control, rotating machines, substations, transformers, switchgear and materials used in power equipment. Since the emergence of asset management centric utility organizations, CIGRE has devoted considerable efforts in development and documentation of information related to a wide range of asset management topics. Consistent with these efforts, in 2012 CIGRE formed working group C1.25 which was charged with several tasks including the documenting of all of the asset management work that had been completed by all of the various CIGRE study committees and working groups up to the present. In addition, the working group was to provide further insight into the application of risk management in asset management and to identify the information requirements for these processes. Earlier CIGRE work has defined asset management as:

• Asset Management is a total business concept that comprises the management of risks for the business values arising from the asset base and the risks arising from inadequate response to changes of the operating environment

• Asset management is more than maintenance management of specific types of assets; it comprises the complete asset base and all risks that can impact on the business values.

• Asset management includes three primary functions –

– Strategic: Lead asset management (AM) by defining tolerable risk levels and the linkage between KPI’s and risk-based decision making processes

– Tactical: Apply risk-based decision-making to evaluate asset investment options and

develop medium to long-term asset investment plans and their justification for senior management and regulatory approvals

© 2013 Doble Engineering Company – 80th International Conference of Doble Clients All Rights Reserved Page 2 of 12

– Operational: Apply asset condition assessment and criticality ranking methods to make best use of available budgets in the near term

Asset Management Functions Figure 1

Working Group C1.25 terms of reference include the following deliverables:

1. An overview of recent CIGRE work on asset management topics 2. A description of methods for including consideration of environmental requirements into asset risk

management/ asset management decision making. 3. An overview of how utilities quantify the monetary consequences for events impacting business

values that are difficult to quantify in financial terms 4. An overview of the CIGRE work on the development of failure statistics and failure models for

transmission assets 5. A description of the application of Risk Indicators in asset management


6. A description of present and future requirements for asset replacement and life extension tactics 7. An overview on the implementation of risk management for assets / systems, such as

development of risk registers and the development of quantitative evaluation of risk treatment options

The items shown in black text are ongoing and to be completed by the end of 2013. The items in red in the above list have been delivered and will be discussed in more detail in the following paragraphs.

Overview of CIGRE Brochures related to Asset Management CIGRE working groups and study committees (SC) publish the results of their work in reports which are called Technical Brochures. Technical brochures are substantial documents of typically 100 to 200 pages in length which are extensively reviewed before approval and publication. The table below summarizes, by topic and by study committee, the reference numbers of technical brochures relevant to the topic of asset management. All of these brochures are available on the CIGRE web site free of charge to CIGRE members and for a fee to non-members.

Table 1 Overview of CIGRE Brochures related to Asset Management

More information on this topic is provided in CIGRE's journal, Electra No. 262 - June 2012

Consideration of the Environment in AM Decision-Making

Technical brochure 383 "Sustainable Development Performance Indicators for Transmission System Operators" published by CIGRE in 2009 recommends monitoring of:

Direct and indirect energy consumption

Biodiversity, use of protected lands, impacts on biodiversity, use of replacement lands

Emissions, effluents and waste: weights, numbers and volumes of significant spills


Compliance: monetary value of fines & numbers of sanctions for non compliance, expenditures and investments in environmental protection

Examples of such monitoring are illustrated in the following figures

Direct and Indirect energy Consumption (Italy) Figure 2

CO2 Equivalent for Transformer manufacture

Carbon Footprint Figure 3


SF6 Leakage in France

Leakage based ranking system for cable replacement in the Netherlands

Component Score

Probability Production year < 1953 2

1953-1963 1

> 1963 0

Probability Number of times oil added

> 2/year 2

1-2/year 1

Effect Amount of oil added > 1000 3

300-1000 2

10-300 1

0-10 0

Effect Rate of leakage < 5 L/day 2

> 5 L/dag 1

No leakage 0

Spills and Leakage

Figure 4


Investments in the environment - Italy Figure 5

Risk-based Business Case Analysis Risk-based business case analysis, involving comparison of optional investments (run and maintain, monitor and run, refurbish, replace etc. and the timing of such investments) related to aging assets over a planning period of several years requires the use of the hazard rate functions for the assets in question in order to quantify the probabilities of asset failures over the planning period. Determining appropriate hazard rate curves is a critical requirement for many types of the quantitative business case analyses for justification of asset investments that regulators and senior utility executives require. Industry data is available as published in TB 422, in utility rate filings and the technical literature as illustrated for large power transformers in the figure below.

Comparison of industry hazard rate functions for power transformers Figure 6


As can be seen and as is expected, the hazard rate functions vary considerably depending on the type of transformer, its loading history and other factors. Ideally it would be best if utilities had access to data relevant to their own company and specific assets. But, apart from a very few utilities, such specific data will usually not be readily available; however with a lot of data mining effort it can be possible for some utilities to produce the needed data through indirect data inferences (see Kurtz et al, Doble 2007 Client Conference). Alternatively, in TB 422 methods are documented which may allow the use of limited or sparse utility specific data along with industry data in developing confidence in the selection of an appropriate industry-based hazard rate function. Risk-based business case analysis also requires valuation of the costs of the optional investments (these include the run and "do nothing" option, the defer investment option, and several other "do something" investment options (refurbish, replace etc.)). These costs include the direct costs of the investments and costs related to impacts on the corporate key performance indicators (KPI's) related to the optional investments. As indicated, estimation of the direct costs and potential impacts on corporate financial measures are relatively straightforward; however the monetary impacts on some of the other KPI's are more difficult to quantify as summarized in the table below.

Table 2

Monetization of Impacts on Corporate Key Performance Indicators

While this may appear to be a daunting task, the following case study may provide some clarification and encouragement. In this case study, a hypothetical base load generating station has a number of main output transformers (MOT) having mean service lives of 35 years. The steam generating portions of the plant are planned to undergo a major overhaul and refurbishment in ten years and therefore management is considering the risks of deferring replacement and continuing to operate these MOT's. This option risks major failures, bottled generation costs, and other potential environmental, safety and public relations impacts, while on the other hand implementing a program for the immediate replacement of the MOT's requires the significant capital replacement cost to be born immediately. Net present value business case analyses were carried out initially for these options based on best estimates for the costs of KPI impacts. As well, in view of the uncertainty in these estimates, a sensitivity study was carried out to


determine if the resulting decision would be altered if the KPI values were varied over a wide range. The results are illustrated below in Table 3:

Table 3 Sensitivity of investment decision to variation in uncertain KPI values

The results indicate the savings in deferring the capital expenditure are greater than the potential KPI impact costs except in the unlikely event that the impact costs are effectively doubled from the base case best estimates. On the other hand the NPV calculations over the planning period require the use of estimates for the cost of capital or the discount rate and the inflation rate over the period. These data are typically set by senior management and/or regulators, but they also are uncertain. In this example sensitivity of the results to variations in these parameters were more important as shown in the figure below.

Sensitivity to Financial Parameters is significant Figure 7

This case study illustrates that in view of the uncertainty in the estimation KPI impact costs and the financial parameters used in NPV calculations, it is important to test the sensitivity of these estimates and parameters to determine their influence on the resulting decision. The most recent C1.25 technical brochure (currently in publication) also includes an interesting fully monetized risk-based business case example from Australia. In this case, the utility carried out studies to evaluate and compare the fleet risk for adopting transformer replacement policies of: replacement only after failure in service, or replacement proactively at service lives of either 55, 65 or 75 years. The analysis included a full probabilistic model as illustrated below in Figure 8.


Australian transformer fleet model Figure 8

The model takes into account the component service life, condition and maintenance planning to select an appropriate hazard rate function as illustrated below.

Condition-based hazard rate functions Figure 8


The results of the study are illustrated below which indicate that the risks associated with transformer failures can be managed though service life based policies for proactive replacement. The actual selection the optimum replacement policy of course depends on the projected CAPEX costs associated with such policies.

Comparison of transformer fleet risk for a range of replacement options Figure 9

Application of Risk Indicators in Asset Management Risk indicators are measures that are symptomatic of risk. Unlike performance indicators which are “lagging “, risk indicators use data and other information to infer a “leading” perspective. Possible examples:

Trends in performance indicators

Maintenance backlog

Service life and loading history System risk indicators are differentiated from Equipment indicators. Severity Risk Index (SRI) calculated by NERC and SAIDI and SAIFI indicate system performance but they don’t directly point to equipment causes. Other NERC system indicators include:

• Event Driven Index (EDI) - measures risk from major system events • Standards Driven Index (SDI) - measures risk from violations of key regulatory standards • Condition Driven Index (CDI) - measures risk from the condition of the system • IRI Integrated Risk Index – A combination of the above

Asset or equipment based risk indicators include for example:

• Monitoring quantities and trends:


– DGA in oil/paper insulated equipment – PD levels – IR or Hot spot temperatures

• Maintenance costs and trends • Cohort experience • Leak rates for cables and GIS

Leakage rate of GIS Leakage rate of Live-tank SF6 breakers

Leak rate trends as an equipment risk indicator

Figure 10

CONCLUSION Since the emergence of asset management centric utility organizations, CIGRE has devoted considerable efforts in development and documentation of information related to a wide range of asset management topics. This paper has provided a summary of CIGRE work in this area and an update on current activities of C1.25 in the area of transmission asset risk management. While the theory of asset management is well understood, much work remains in its practical application. The C1.25 working group now focused on the remaining tasks in its scope:

Failure statistics and models

Asset replacement/refurbishment tactics

Implementation of risk management In this regard more international cooperation would be desirable in the areas of Failure statistics and models, Asset replacement/refurbishment tactics, implementation of risk management. Participation and support by US utilities in the work on these topics would be much appreciated in the areas of provision of case studies and examples, data and results of data analysis related to equipment life, failure rates, and hazard rates, and lastly US utility experience in the implementation and application of risk management and risk-based business case analysis in support of asset management decision-making..


PRESENTER BIOGRAPHY

Gary L. Ford, Ph.D., P.Eng.

Principal, PowerNex associates Inc.

Gary is an asset management practitioner with extensive experience in the electric utility sector, specifically in regard to industry regulatory trends and the challenges and opportunities they create for companies doing business in evolving regulated and competitive business environments. Gary has worked at all levels of client organizations, with skills that include, risk-based and probabilistic financial business case analysis for asset investment planning, project management, team management, and broad transmission equipment technology know-how. He co-launched PowerNex Associates Inc. in 2000 with colleagues from the former Ontario Hydro. PowerNex Associates Inc. provides asset management services to the electric utility sector including: leading practice benchmarking, asset condition assessment, decision support studies and analysis, technical services, services in support of equipment procurement, technology development and training.

In the area of professional development since the formation of PowerNex Associates, he has taught power systems analysis to fourth year engineering students at the University of Toronto, and has been an active member of several technical groups involved in the development and documentation of state-of-the-art asset management methods. This includes specifically CIGRE working group C1.1 which produced TB 309, CIGRE working group C1.16 which produced TB 422 and CIGRE working group B3.12 in which he was leader of a major task to develop and document methods for business case analysis to determine the value of monitoring systems in transmission substations. Presently he is a member of CIGRE C1.25 which is advancing the work of the former C1.16 and in CIGRE D1.39 which is investigating methods for asset diagnostic and failure data collection and analysis.

Born and educated in Canada, he obtained Bachelor's, Master's and Ph.D. degrees in Electrical Engineering from Queen's University, the University of Toronto, and Waterloo University respectively. Dr. Ford has published extensively (>50 publications) in his areas of expertise and has been active in IEEE, and CIGRE in the areas of Substations and the Economics of power systems and is a Registered Professional Engineer in the Province of Ontario.

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AMM-06 Summary CIGRE Work Ford