Making nuclear ‘lean’10 January 2020
Global management consultancy Arthur D. Little asserts that nuclear plants generally do not operate at their technical and economic optimum. The authors say the solution lies in ‘lean’ management.
AS ENERGY MARKETS EMBRACE DECENTRALIZATION, renewable energy and cheap fossil fuels, nuclear is finding it difficult to maintain its place.
Since 2013 eight reactors have been shut down before the end of their design life in the USA alone.
Such premature shutdowns are symptoms of an industry- wide trend, and they have a variety of triggers:
- While politics, and the public in general, are empowering renewables, nuclear plants have to contend with possible national phase-outs.
- With low carbon prices, nuclear energy is at a disadvantage compared with other thermal generation sources in terms of the levelised cost of energy (see Figure 1), despite its positive impact on carbon emissions. Nuclear also struggles against renewables because of their subsidy and falling technology prices.
- Increasingly demanding safety requirements imposed by national safety authorities, make it difficult to justify a lifetime extension business case.
As a result there will be less nuclear power in the global energy portfolio in the coming years, despite aggressive new-build projects in China and some other countries. The industry is already responding through initiatives such as the Nuclear Energy Institute’s strategic plan, “Delivering the Nuclear Promise” and its efficiency improvement bulletins.
Other initiatives include productivity and optimisation solutions developed by industry players, such as Bruce Power’s Asset Performance Management (APM) system. However, these measures are not enough to unlock the full cost-saving potential recently observed in other high- reliability organisations, such as airlines, hospitals and the semiconductor industry.
The efficiency potential in nuclear operations
As nuclear plants age, demanding safety requirements inflate the costs of life extension and owners no longer find it has an attractive business case. To be profitable the nuclear industry must improve. We believe a lean management framework can bring significant performance improvements and reduce costs by more than 15%.
The average energy availability factor (EAF) for nuclear power plants in 2015–2017 was 82.2% (excluding the idled Japanese fleet) and this includes some below 70%.
Arthur D. Little’s research on top-performing facilities shows significant room for efficiency improvement. Best- in-class benchmarks can be found, for example in the USA at Dresden 3 and Finland’s Loviisa 1 had EAFs of 100% and 92.7%, respectively, in 2017. Germany’s Isar 2 is above 95%.
The major downtime drivers are equipment failure and inspection and maintenance, combined with refuelling. These represent more than 80% of internally triggered downtime. They are complex processes, involving several activities and departments, with high task management complexity and consequent potential inefficiencies.
Arthur D. Little’s research shows that internally triggered downtimes beyond technical constraints often originate in how the plant is managed and what performance culture is in place, beyond safety. This is well in line with other industry examples and there is cost-saving potential that does not collide with safety constraints.
Lean management in safety-driven industries
Lean management is a leadership and organisational concept to systematically avoid waste, failures and unnecessary cost. It evolved in automotive manufacturing and became a general leadership approach for any kind of operational and administrative business process. It has focused on creating value and establishing a “zero- failure” philosophy while avoiding redundancy by aligning activities. Lean management has been used in safety-driven industries in recent years and have led to substantial downtime reductions. This has brought plant performances up to best-in-class plants (more than 90%), as well as achieving significant cost savings (frequently exceeding 15%), shorter lead times, and increased process compliance.
Arthur D. Little’s ‘nuclear lean’ framework focuses on performance improvement in nuclear operations, respecting the necessary safety principles and general safety culture requirements. It combines performance improvement with long-term leadership and capability building to meet competitive energy market challenges.
Compared with traditional method-based lean concepts, our framework strives to build sustainable lean governance.
End-to-end process management
Nuclear benchmark plants improve their performances by continuously synchronising their nuclear operations processes and professionalising their failure prevention routines. Minimising idle capacity promises efficient, reliable plans and schedules for inspection and maintenance. They need to be designed using a holistic approach, integrating processes from planning and scheduling to execution. Process optimisation should focus on reducing non-critical idle time. New efficiency potential can be realised through end-to-end process harmonisation. This overcomes cross-functional and cross-organisational silos with management supervision and end-to-end key performance indicators (KPIs). Role definition and implementation of process management to monitor and steer process performance improvement is fundamental.
Arthur D. Little has addressed the application of lean management concepts to nuclear plants. In a performance improvement project for a German nuclear operator it restructured the client organisation according to lean principles. This involved moving from a systems-oriented organisation with departments such as ‘mechanical maintenance’ to a new structure that encompassed end-to-end processes. This followed the logic of end- to-end processes such as ‘technology’ (engineering and maintenance), ‘technical services’ (including radiation protection) and ‘commercial services’. This helped the client to re engineer its business processes and identify €34m in waste, representing 17% of total addressable costs (see Figure 2).
Reducing plant equipment failures and outage time requires continuous problem-solving. Because effect and root-cause are often apart in time and department, the problem-solving process must bring together functions and departments. Root-cause analysis should be applied beyond technology to address process inefficiencies and identify optimisation opportunities, such as the total outage downtime for maintenance and repair.
Tools such as benchmarking can identify the root causes of downtime extensions, such as poor planning. These can be remedied with KPIs to monitor the results.
Nuclear plants seek continuous improvement, which fits very well with the lean management approach. From our perspective, a viable lean organisation is built on:
- Leadership, to clearly formulate expectations and help introduce an effective management and delegation culture;
- Concrete objectives in performing end-to-end processes monitored through tailored KPIs
- Use of continuous improvement (‘Kaizen’) platforms, to set up a culture of perpetual improvements through small optimisation steps in order to address the right problem with the right set of employees.
Continuous improvement: Kaizen platforms
There are different options depending on the improvement needs of the nuclear operation. The right Kaizen platform is selected according to the size and importance of the efficiency gap. Daily routines can address smaller improvement needs while following a sustainable continuous improvement approach. However, larger issues need to be delegated to dedicated teams. Establishing continuous improvement as a daily routine involves the entire plant’s workforce, but also ensures sustainability of the changes. However, integration of continuous improvement into work routines is limited to smaller issues. Complex topics must be delegated to assigned work groups and followed up accordingly — for example, very small improvement tasks resolved in daily shop-floor management versus scheduling optimisation designed in cross-functional, end-to-end-process workshops. (See Figure 3).
The following aspects need to be emphasised:
- Daily performance management must be established based on forward-looking steering KPIs.
- Daily performance dialogues must become the main platform for daily deviation management. If possible, measures for problem solving should be defined here.
- Standardised, end-to-end-workshops should become the main cross-functional performance improvement platform.
Based on ‘Nuclear Lean’ by Tommaso Sacco, Michael Kruse, Bernd Schreiber and Kai-Oliver Zander of Arthur D Little