A risky business

3 June 2002

Effective plant life management must not only consider the engineering aspects of the plant but also the overall business strategy and commercial influences. By Edward Huxley

Life management and licence extension processes can be improved by understanding the true costs, benefits and risks associated with plant investment, both in the short term and over the remaining life of the plant. In order to optimise the benefit gained from any plant investment or licence extension, it is essential to understand the behaviour of the plant within the commercial environment.

Historically, plant investment has often been carried out on a reactive basis, responding to plant failures or poor performance. This reactive approach to plant investment could lead to important potential improvement projects being overlooked. In only investing in plant as a response to actual failures, risks to system availability or business performance are often ignored. In addition, when considering licence extension, it is important to understand what investment may be required in the plant in order to reap the benefits over the additional years.

The challenges presented by life extension planning provide significant opportunity to improve business performance by thorough application of existing knowledge. By using more rigorous techniques to assess the inherent risks in a power plant, alongside the market risks that affect the value of electricity generation, detailed consideration of the potential commercial benefit of the life extension can result in a true understanding of the required investment.

The bigger picture

In order to move away from a reactive approach to plant investment, it is essential to fully understand the current and future condition and requirements of the station systems. While clearly of some use, it is not enough to appreciate current condition and requirements alone. Systems must be understood in the light of future changes that could impact their performance. In this way, more confidence can be gained in appreciation of the behaviour of the plant during an extended life.

Figure 1 illustrates the factors that are required to gain a detailed understanding of the station systems. Initially, both the function of the system and the safety case requirements associated with it must be fully understood to define the operational and safety role of the system. Then, two aspects of considering future changes must be investigated. The first of these, on the left hand side of Figure 1, is consideration of any current or future threat to system performance. This concerns the plant itself, and is understood by assessment of issues such as the current system condition, plant degradation and obsolescence, alongside historical data that may point to the failure characteristics or trends in ageing effects.

The second assessment concerns that of potential changes to system requirements, whether from regulatory requirement to meet modern standards, safety case revisions, or potential operational changes. Much of this will be reviewing the station plans and licensing issues, although such an assessment must clearly look wider than the local station, and should consider ongoing regulatory changes within the industry as a whole.

These types of assessment can be carried out in a variety of ways. Particularly useful tools for the assessment process have been system engineer interviews, plant walkdowns, review of maintenance schedules and performance data, independent review, and assessment of trends in the wider industry. To understand the current and future risks from the station systems, it is therefore essential to balance knowledge of all of the influences shown in Figure 1. Most of the knowledge is likely to be held somewhere within the business or wider industry, and an important step is identifying the most useful channels of communication to access the information. In bringing together the relevant sources of information, a thorough identification of potential performance risks can be established and hence better understanding of the current and future system issues can be achieved.

The potential risk in the systems should describe what the root cause of the issue is. Rather than simply identifying a potential issue with a plant item, the establishment of the underlying issue is essential such that investment is only made where it is genuinely required.

While plant assessment is addressed by the process described above, the commercial viability of a power plant is also clearly dependent on wider business and market risks. Market risks arise from the necessity to trade or sell electricity, and it is essential that both types of risk are considered together. By introducing the market risks and assessment into the consideration of investment strategies, the business performance (rather than system performance) is optimised, which should surely be the aim of any generator.

Risk assessment

Once the potential risks held in the systems are identified, it is useful to quantify the likelihood and impact of the risk. This step means that consideration of the costs and benefits of any proposed investment can incorporate the reduction in risk associated with the system, as well as better-known improvements such as maintenance costs or improved efficiency.

In general terms, the commercial impact of a risk coming from the systems could be a combination of many factors. These include:

• Lost availability of a system.

• Imposed downtime of a system by internal or external regulation.

• Imposed repair or clean-up costs.

Given that the exact impact is unlikely to be known precisely, the probable impact of the risk is likely to be expressed in terms of a range of values for any or all of the above factors. It is normally possible to make some estimate of these on the basis of similar historical events, although in some cases a judgement needs to be made independent of held data.

The probability of such losses occurring can also be estimated such that an indication of likelihood can be added to the analysis. However, rather than the probabilities and impacts being estimated as one-off values, it is recognised that changes over time mean that a further range of values may be found. By combining these, it is possible to predict the probabilistic loss or cost over time, resulting in a graph similar to that shown in Figure 2.

The shape of this graph gives a good visual representation of the risk and its dependency on time. For example, both of the risks identified in Figure 2 (figures currently not available) start with similar potential losses. However, the degradation characteristics of each are very different as one shows a gradual degradation, whereas the other indicates a step change in loss after a few years. The chart hence gives an initial indication of the time at which any improvement project or other investment could be made.

Investment strategies

Once potential losses have been identified and assessed, it is then time to consider the possible approaches to addressing the risk. As in traditional risk management methods, the options include accepting or transferring the risk. However, for the purposes of the type of assessment proposed here, it is initially assumed that the commercial implications of the risk cannot be transferred to others, and hence that investment in the station must be investigated to mitigate the risk.

It is at this point that the strategies for equipment repair, refurbishment or upgrade can be investigated. It is important to separate identification of the possible shortfall from identification of the solution, or solutions, to that shortfall. By addressing the potential shortfall first, a better understanding is gained of solutions that may apply across systems, rather than approaching the problem with a proposed solution already in mind. For this reason it is preferable to carry out the assessment of risks and solutions as distinct stages of the life management or extension study.

For an isolated plant item, it is not difficult to assess the benefits of each of the approaches. Repair may be a more than acceptable strategy where return time from a failure is not critical. This leads to maximising component life, and ensures that investment is only made when absolutely required.

However, where other influences mean that it is more desirable to maintain reliable and predictable performance, it is clear that a proactive approach may be more desirable for more essential items. In these cases, the opportunities presented by the refurbishment and upgrade options are such that planning projects alongside the trading strategy for the station can yield very valuable returns. The key to these approaches is not simply in looking at the costs and benefits of the work, but also at the timing of the work, alongside the trading and market risks, and the risks associated with deferring any system improvement. In addition, when considering the timing of the work, an important influence is that of other projects which may be carried out on the same or other systems. Should project planning mean that parallel working can yield faster return to availability then this too could clearly be of benefit.

It is useful to investigate each of the options further by looking at the real costs and benefits of the work. A simple cost estimate of the work is not enough to compare between the potential strategies to address the plant risk. Instead, the cost estimate must include allowance for:

• The nature of the work (whether intrusive or not, and hence whether plant availability is lost or reduced).

• The duration of the work.

• The extent to which the work can be planned (hence giving more predictability for trading purposes).

• The lead time before benefit is realised.

Although these are described as costs of the different strategies, there is a distinct overlap with some of the benefits. In particular, the predictability of when work is carried out and the duration of it would be of great benefit under trading arrangements such as those recently introduced in the UK. Similarly, work that maintains or improves the flexibility of the plant could be considered a further benefit. However, the benefit of the work also extends to the obvious improvements in system availability or reduced maintenance costs. Using the example shown in Figure 2, we might express a portion of the benefit in terms of the reduced probabilistic loss.

Clearly the benefit depends on the timing of the work, and would be much reduced should it be carried out later on in the system life. In fact both the costs and the benefits of any project or strategy will also be dependent upon time, and this influence must be appreciated in order to better compare between the options.

Although in many cases the costs and benefits can only be quantified in rough terms, the importance of taking the time to quantify these cannot be stressed highly enough. In fully considering both the costs and the benefits over the life of the system rather than simply the immediate return, comparisons between different improvement projects can be made on more robust grounds, and hence investment can be prioritised within the operational constraints of limited budgets and other business influences.

Once the costs and benefits of individual projects have been adequately assessed, and the time dependency of these incorporated, decisions can be made as to which strategy to use for an individual component. However, such a decision should also take into account the other risks and projects that exist on the plant. Hence options must be considered across the whole station, or more importantly across the whole business in order to optimise performance.

In essence, the prioritisation of tasks is straightforward once the costs and benefits have been assessed. Simple algorithms can be used to plan work within particular timescales, taking into account any enforced budget limits and external constraints. As a result of these, strategies can be developed that maximise the cost-benefit ratio and reduce risk to an acceptable level.

Two case studies

This process has been tried and tested on a number of UK nuclear power stations. Two cases are chosen to demonstrate the range of uses and levels of detail that were obtained.

Licence Extension Study

A UK nuclear power station was approaching its licensed lifetime, and it was desirable to investigate the options for continuing generation by extending the current licence date. A study was carried out to consider what investment would be required to maintain the performance of the plant over the potential extended life. The study was broken down into four stages:

Stage 1: Identification of shortfalls

In order to fully identify any potential plant shortfalls, a detailed investigation was carried out into the current operational and safety role of the system, followed by assessment of any potential changes to system requirements or performance. This work was carried out using a wide range of techniques in order to ensure that the investigation was thorough and comprehensive. The methods used here included plant walkdown, interviews with system engineers, review of historical data relating to failures and maintenance, review of experience on other stations and assessment of future regulatory changes.

Stage 2: Identification of work

Following the identification of shortfalls, optioneering workshops were held with station staff and external experts to propose solutions to address the shortfalls. An independent facilitator was used to run the workshops such that challenge could be brought to the workshop. The aim of the workshop was to brainstorm a number of options and then to focus in on the most viable for the station's situation.

Stage 3: Development of proposed approach

Detailed assessment of the proposed approach was carried out. This considered all aspects of the cost and contractual arrangements for the work, the generation and investment risks associated with carrying out the work and assessment of the durations and programme requirements for each identified task. The work was mainly carried out using external experience of similar projects, and was then approved by station staff before being input to the station plan.

Stage 4: Optimisation of investment

In order to prioritise projects within the proposed timescale, the recommended actions were assessed for their overall benefit, whether it be improved generation, reduced unplanned losses or other financial benefit. This benefit was compared with the cost of the work, and projects were then prioritised to determine how investment would be best made in the plant.

The approach described here gave a rigorous and detailed plan of what investment would be required at which point within the station's potentially extended life. Projects were identified — along with their costs and benefits — and prioritised to assist the station in determining which investment would be most cost-effective in the short term.

Lifetime planning

Another UK nuclear power station expressed a desire to move towards a more proactive approach to plant management, and recognised the method described above as a way by which this could be achieved.

In this case, as the study concerned ongoing life management rather than a one-off study into licence extension, the approach used was more collaborative with the station staff than an independent study. In addition, the station was looking for an approach that would be less onerous on internal and external resources.

Stage 1: Identification of shortfalls

The identification of shortfalls was carried out by using a proforma interview with the appropriate systems engineer for each plant system. The proforma addressed such issues as current maintenance regime and historical failures, and then estimated the potential for failure of the system (due to technical or compliance issues) to occur in the future. Where systems were understood to be of highest risk (from experience at other stations, for example), separate workshops were held to identify the risks and assess their impact.

Stage 2: Identification of work

In the same interview, and using the same proforma, work was also proposed that would address the identified shortfalls. Costs and durations were estimated from experience.

Stage 3: Optimisation of investment

The results of the proforma - along with the constraints of station budgets and confidence in particular lifetimes - were input directly to the prioritisation tool, which could then schedule the work according to cost-benefit.

The approach used here for ongoing plant management was used as a way of highlighting particular issues within systems and comparing these across the station to identify where investment should be directed to ensure best value for money. The aim is to keep the data within the prioritisation tool continually updated as plant or regulatory issues change, so that investment can continually be made in the most cost-effective areas.

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