Dr David Hughes and Paul Barnfather EA Technology UK

1. Building Risk Based Investment Programmes Dr David Hughes and Paul Barnfather EA Technology UK David Hughes – UK – Session 6 – Paper 0088

2. Approaches to defining/quantifying RISK • High level, top down • Asset based, bottom up

3. High level, top down risk processes • Define risk categories – network performance, safety, financial, environmental, reputation etc • Create ‘probability v severity’ matrices in each category • Build a risk register Relatively easy – achieved quickly involving a few people Useful – defines corporate values/priorities and identifies significant areas of risk

4. Asset based, bottom up risk processes Use of detailed engineering knowledge, experience and asset data to build asset specific risk models • Reference and refine corporate values • Evaluate specific investment programmes down to individual asset level • Enables comparison of cost/benefit across wide range of investment programmes • Leads to financial optimisation of investment plans

5. Building an asset based risk process • Requires more work than a high level, top down model • Engage with a wide range of engineers, asset managers within a DNO • Access, qualify and use information from (disparate) various sources • But it is quite possible • Inclusive, engaging, empowering process

6. Application to condition based replacement Condition Based Risk Management (CBRM) (papers in CIRED 2003,2005,2007&2009) • Practical process developed and applied with 40plus Electricity Companies worldwide • Define and quantify current and future condition, performance and risk of individual assets – built from detailed engineering knowledge • Risk – multiple categories all expressed in monetary terms - £, €, $

7. Output from a CBRM model Current and future condition linked to POF Current and future risk with different investment programmes

8. Optimising investment, balancing cost against risk (both expressed as £, €, $) Define optimum investment for a single asset group or across multiple groups Demonstrate major savings for same overall outcome

9. Extending the approach to LOAD related investment Quantify; The consequences of increasing load – network performance consequences/risk The benefits (reduction in network performance risk) of investment options Enable; The clear expression of the synergies between load and non load related issues • Provides a direct means of optimising plans across the 2 major investment streams

10. Further development/opportunitiessmart grids and low carbon networks • The same approach can be used to evaluate investment options in any area e.g. ‘smart grids’ and ‘low carbon networks’ • This is not rocket science, it requires a structured approach to quantifying benefits in well defined, tangible terms

11. Conclusions Asset based, bottom up approaches to risk • Are viable and very effective (see CBRM) • Are being extended to include load related investment • Offer the opportunity to prioritise, justify, optimise programmes across all investment streams If you want build effective risk based processes-: Engage with and trust engineering knowledge and experience (Its one of your most significant assets)

12. Thank you for your attention For further information please contact me via the EA Technology stand (D69) in the exhibition hall