Why successful power plant operators put energy into risk management

It costs money, time and energy - and yet ongoing risk management pays off for every power plant operator, because the benefits outweigh. Asset risk management delivers more protection for your employees, easier compliance with legal requirements and reduced environmental impact as well as a faster return on investment, higher yields, less downtime and lower insurance costs. We spoke to Dr. Peter Struckmann, Director of Asset Risk at Uniper, about the opportunities, benefits and requirements for successful risk management.

What challenges do power plant operators face when it comes to operating and maintaining their plants?

P. Struckmann:

The big challenge for the owner and operator is to decide which investments for risk mitigation investments and maintenance activities should come first, and when. This is especially true when resources in personnel and budgets are limited, and the profitability of the plants must be optimized. The situation requires an efficient and rational prioritization of activities and corresponding allocation of budgets. At the end of the day, you want to achieve the biggest return for your maintenance spend.

How are the right criteria determined to ensure safe, reliable, compliant and economical operation of the plants?

P. Struckmann:

At Uniper, we recommend power plant operators to use the risk management system ROME (Risk-based O&M Excellence) which has been tried and tested over many years. The early identification of risks is crucial for an effective management of power generation assets, so that people, the environment and asset value can be protected, and income streams secured. ROME enables assets to be managed in the best possible way, applying a risk- based approach ensuring a learning organization aiming for continuous improvement.

What are the core elements of ROME and what do they do?

P. Struckmann:

ROME is composed of multiple risk management methodologies that in turn provide for a safe and efficient generation business. The main methodologies are BowTie and AERO (asset engineering risks and opportunities).

BowTie owes its name from the shape of the diagram that is created from the relationship between the threats that could lead to a critical failure and the resulting consequences. The method not only provides a powerful visual representation, but more importantly supports the identification of risks and is an input to AERO, the main asset risk management process

What are the special features of the AERO method?

P. Struckmann:

The AERO process delivers credible, reliable and consistent risk profiles – for example at plant, and also portfolio level. It always gives you full transparency of the highest risks you’re running within your company. It also provides a platform for recording and assessing potential opportunity projects that could be implemented to improve the declared asset performance. And for the analysis and quantification of risks within AERO, Uniper uses risk based scoping software, which was developed in-house.

What is the advantage of this risk based scoping process?

P. Struckmann:

The process requires users to describe an identified issue and the corresponding control measures already in place, which are intended to prevent or to reduce the consequences of failure. The software gives you a consistent analysis of your risks and can prioritize your maintenance money based on the level of risks across all of your portfolio. This then also allows risks to be catalogued, graded, and ranked, so you can better understand the risk and level of caution required.

Playing catch-up in the US

“In Europe, offshore wind has been there for a number of years, but I think in the United States we're a little bit behind that,” said Karustis.

Should it be successful, Halo’s approach could lead to a surge in US onshore wind, which has historically lagged behind other regions in terms of wind installation and production. Since 2016, according to the International Energy Agency, the US has installed just 22.6GW of new onshore wind capacity, compared to 30.7GW in the EU, and 50.3GW in China, struggles that Karustis hopes to address.

Last December, the Chinese Government approved a number of new offshore wind projects, totalling 13GW of production and costing around $13.3bn, as the country continues to invest in utility-scale power. Karustis hopes projects like Halo’s distributed turbine can contribute to a more balanced wind sector in the US, with both large- and small-scale operations expanding renewable power.

“The large-scale wind turbines wouldn't be phased out, it's kind of an ‘all of the above’ thing,” he said. “The large wind farms play a very important role for us in reducing the carbon footprint globally, and hopefully the micro wind market is going to augment that by producing energy where energy is being used. It's a good two-pronged approach.”

This two-pronged approach also includes other renewable power sources, including solar and utility-scale wind; Halo is not trying to replace all clean energy with its turbines, but offer another option for people eager to engage in renewable power, who may have been historically sidelined due to the high costs of building utility-scale facilities or the unsuitable geographical characteristics of the places they live.

“When you look at that market we're very excited because just as megawatt-scale wind is a large market, I think distributed wind can be as big of a market or bigger over time,” said Karustis.

“When you have incentives and improvements in the technology, the costs go down, so you can be more competitive and compete, and that's certainly the case with megawatt-scale wind,” he continued. “Just 15/20 years ago, it wasn't competitive with natural gas [and] coal, but it is now. So those government policies have helped and they've driven the technology improvements, so it's all bundled together.”

What does this mean in practice?

P. Struckmann:

The aim is to keep the right balance between utilizing the full technical lifetime of a component (for economic reasons) and staying within the agreed tolerable risk ranges.

As soon as a risk exceeds a tolerable threshold, the risk owner is required to develop a risk mitigation strategy, which either fully mitigates the risk, or reduces it to an acceptable level within the company’s risk appetite.

The software captures each risk reduction that will be achieved, and also allows for the assessment of different mitigation strategies to identify the most competitive one.

Are the risks reviewed regularly?

P. Struckmann:

Absolutely. To ensure that our assets are always being operated within the company’s risk appetite, all risks need to be regularly reviewed and updated by the responsible site experts. This includes continuous monitoring of the associated condition of the component to capture any further progress of deterioration, as well as a re-assessment of the potential failure impact. Beyond that we have introduced regular risk review meetings on site between the central risk management department as the owner of the process, and the local site staff as the owner of the risks.

The results of these meetings are shared across the operational team in a non-distorted, objective and comparable form, so that the actual risk situation can be seen and corrective action taken if necessary.

How would you summarize the advantages of asset risk management?

P. Struckmann:

A systematic and consistent evaluation of probabilities and impacts ensures consistent ranking of the identified risks and facilitates an optimal allocation of respective budgets.

However, a systematic evaluation of probabilities using software with "live data" protects against overspending or taking excessive risks and is maximizing the lifetime value of your asset. Put simply, it saves time, money and nerves.