Improving competitivity at Forsmark30 September 1999
Forsmark claims very competitive O&M costs, and total production costs that are low and getting lower. In a competitive market, however, these achievements are of no account. The overriding requirement is to offer power at the best possible price.
Forsmarks Kraftgrupp operates three ABB Atom BWRs with a total electrical power of 3200 MWe. Together they produce around 24 TWh per year, with 820 people including administration, O&M, support and quality assurance staff. The ownership comprises Vattenfall (74.5%) and Mellansvensk Kraftgrupp (25.5%).
Since the first Forsmark unit started up in 1980 there has been a competition-oriented culture in the organisation. Seeing capability factors listed in international media has been a positive driver, influencing the organisation’s safety and economy. Capacity factors have in recent years been more than 90%, reaching 93.3% in 1998.
The need for efficient outages become obvious early on, to improve both capacity factor and O&M economy. Outages have been under 20 days since 1983. We have achieved a 10 day full refuelling outage on Forsmark 1, and a less than 100 hour breaker-to-breaker outage on Forsmark 3, changing two fuel elements. This gives an indicator of the possibilities in reducing outages.
In 1982 a major change in the organisation separated the management of the three units so that costs, such as O&M, were allocated directly, and competition between the units was promoted.
Ahead of the coming deregulation the need to focus on the total production cost became obvious. We have therefore developed into a “market oriented economy” using an economy control model that reflects the owners’ business situation in the deregulated market.
Nordic countries adopted deregulation very early, and there was a deregulated market between Norway and Sweden by 1996.
Half of the countries’ electricity production is in hydro power. This varies in price and availability depending on how much rainfall we have in the mountains each year and these factors have a significant influence on the market. In 1996, for example, price reductions were expected but as it was a dry year the price went up. Since then the price of electricity has been going down, and now it is considerably below the predicted “bottom” level. This obviously affects the owners and the power plant organisations.
Continuing to improve performance is a challenge, and Forsmark has identified five “frontiers” where improvement and change are focused. They are:
• Process performance improvement.
• Balanced score card.
• Plant renewal programme.
• Competence development.
• General cost control.
Process performance improvement began in earnest in 1997 when a “strategic change focus” was defined. This required:
• Sustainable and competitive production.
• Improved and measurable safety.
• World class maintenance.
• Management focus on the main business.
Now more than 100 people are involved in process improvement teams. Part of the process improvement requires them to study the existing organisation performance and identify actions that should be changed. To ensure that each process receives IT support and central co-ordination a project is under way within the Vattenfall group using SAP/R3.
Co-ordinated with Vattenfall Business Area Generation a “balanced score card” was developed for performance communication. Critical figures were identified and targets set. For example, one group of scores considers:
• Earning power.
• Production cost.
• Net present value.
In order to measure earning power an income model is used, defined in a contract every year in October, where production volumes and prices from the actual “therm market” are agreed. Depending on the real production result the coming year, income is adjusted based on the real spot price. The “net present value” is used for basic calculations in the economical optimisation of the plant renewal programme.
In the period 2000 to 2010 a second programme called P40+, now adopted by the board, will be carried out. The aim of the programme is to make it possible to operate the plant economically for more than 40 years, to 2020 and beyond. As part of this, a more accurate way to evaluate the technical condition of the plants is being developed in an R&D project in co-operation with the Norwegian off shore industry and the university of Trondheim.
In order to be prepared for market evaluation Fors-marks Kraftgrupp has implemented a comprehensive EMAS (Eco-management and Audit System, an EU standard) and also received the international ISO 14001 environmental certification.
Carrying out all these improvement programmes requires a competent organisation, now and in the future. Therefore our methods of “competence management” are under development. The development programme begins by studying the work task based on the “business concept”, and explores the task in depth, down to “individual development talks” in a systematic programme. As part of the programme individuals have the opportunity to work for other organisations in the US and the rest of the world, in co-operation with Vattenfall VGS Nuclear.
Still there is one issue that must not be forgotten. In aiming for improvement, the economic risk margin and the overall safety level must be carefully observed, in order to avoid costly mistakes.
By being successful in our ambitions we hope to honour our business concept: competitive electric production that is reliable, safe and environmentally sound.